2019 Annual Results Presentation 16 March 2020Mar 16, 2020 · circular knitting machine and 7...
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2019 Annual Results Presentation 16 March 2020
Transcript of 2019 Annual Results Presentation 16 March 2020Mar 16, 2020 · circular knitting machine and 7...
2019 Annual Results Presentation
16 March 2020
Content
1
Business Review
2 Financial Review
3 Future Plans
1
4 Q&A
2
Business Review
01
02
03 Ranked third by China Cotton Textile Association among cotton textile enterprises in terms of comprehensive competitiveness
Revenue of midstream and downstream businesses up nearly 50% YoY, with sales revenue reached RMB5.3 billion
04
Revenue hit record high at RMB22 billion
Revenue
RMB22 Billion
Gross Profit
RMB2.99 Billion
Profit attributable to shareholders
RMB884 Million
2019 Annual Results Highlights
Revenue from sales of yarn hit record high at RMB16.7 billion
4
Yarns (76.0%)
(Stretchable core-spun yarns and other yarns)
The Group’s core product
Revenue up 7.5% to RMB16.7 billion
Sales volume up 13.5% to 749,000 tonnes
Gross profit margin was 13.5%
Jeanswear (4.5%)
Revenue up 19.6% YoY to
RMB980 million
Gross profit margin up from
3.7% to 5.4%
Garment Fabrics ( 16.3%)
(Woven garment fabrics and knitted
garment fabrics)
Revenue up 87.0% to RMB3.59 billion
Sales volume of woven garment fabrics and knitted garment fabrics were 140 million metres and 18,000 tonnes
Gross profit margin of woven garment fabrics up to 16.6%
Grey Fabrics (3.2%)
(Stretchable grey fabrics and
other grey fabrics)
Revenue amounted to RMB710 million
Volume amounted to 79.2 million metres
Benefited from the advantages of vertical integration, gross profit margin up from 14.8% to 17.2%
Diversified Business Development
5
LocationAs of 31 Dec 2019
Production facilities As of 31 Dec 2018
Production facilities
The PRC
2.45 million spindles,1,231 looms and
circular knitting machine ,7 production lines of jeans and 7 dyeing and
finishing production line
2.12 million spindles,941 looms and
circular knitting machine and7 production lines of jeans
Vietnam
1.47 million spindles,448 looms and
circular knitting machine , 15 production lines of jeans,
3 dyeing and finishing production lines and 1 non-woven fabric production line
1.38 million spindles,448 looms and
circular knitting machine , 14 production lines of jeans and
2 dyeing and finishing production lines
Nicaragua2 dyeing and finishingproduction lines and
140 looms
1 dyeing and finishingproduction line
Turkey 76,000 spindles -
Internationalized Production Base
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Over 5,000 customers, of which more than 4,000 are domestic and morethan 1,000 are overseas customers. About 68.7% of products are sold in the
PRC. Overseas sales cover Japan, Korea, Vietnam, Turkey, Brazil and North
America.
Diversified Customer Base
7
Strengthen vertical
integration of business
segments
Establish overseas
production facilities
Reorganise & reform business
Flexible product mix
Confront market adversity &Swiftly adapt to the changes
in dynamic market demand
With the vertical integration of the three-in-one textile production bases of garment fabrics, the overall profit margin can be effectively improved
Performance of the knitted fabrics was improved in the
fourth quarter after reorganisation
Avoid impact from international trade barriers and tariffs
Enhance Vertical Integration &
Actively Confront Market Challenges
Profitability of Jeanswear business improved as the Group
concentrated its operations on a production base in Vietnam
8
Financial Review
76.0%
3.2%
16.3%
4.5%
Yarns Grey Fabrics Garment Fabrics Jeans
1,122.4
2,694.5799.9
900.2
2018 2019
Knitted garment fabrics
Woven garment fabrics
1,922.3
3,594.7
Revenue reached RMB22 billion
Revenue breakdown by productsYarns
649.1 560.5
208.1 150.0
2018 2019
Other grey fabrics
Stretchable grey fabrics
710.5
Grey fabrics
JeansGarment Fabrics
2019
RMB (million)
7,993.9 8,062.8
7,560.2 8,651.5
2018 2019
Other yarns
Stretchable core-spun yarns
822.1 983.5
2018 2019
Revenue
15,554.116,714.3
857.2
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3,145.8 2,993.4
16.4%
13.6%
2018 2019
Gross ProfitRMB （Million）
Gross profit margin
Gross profit
Profit Attributable to ShareholdersRMB（Million）
Profit
Profit Margin*
1,163.1
883.7
6.1%
4.0%
2018 2019
Profit & Net Profit Margin
* This represents profit attributable to shareholders divided by sales revenue
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69.9
25.6
59.7
19.5
Stretchable grey fabrics Other grey fabrics
2018 2019
329,954 330,438351,061 398,157
Stretchable core-spun yarns Other yarns
2018 2019
Yarns (Tonne)
RMB per tonne
Stretchable core-spun yarns
Other yarns
2019 22,967 21,729
2018 24,227 22,879
Grey fabrics (Million meters)
RMB per meter
Stretchablegrey fabrics
Other grey fabrics
2019 9.4 7.7
2018 9.3 8.1
15.5 17.0
Jeans
2018 2019
RMB per pair
Jeans
2019 57.9
2018 53.0
RMBper tonne
Knitted garment fabrics
2019 49,382
2018 47,745
18,230.0
Knitted garment fabrics
2018 2019
16,753.0
Sales Volume & Selling Price
66.4
138.7
Woven garment fabrics
2018 2019
RMBper meter
WovenGarment fabrics
2019 19.4
2018 16.9
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Knitted garment fabrics (Tonne)
Woven garment fabrics (Million meters)
Jeans (Million pairs)
Raw Materials77.6%
Direct labour9.9%
Depreciation3.7%
Utilities5.8%
Consumables1.9%
Others1.1%
2018
Consumables2.4%
Utilities 6.4%
Depreciation3.6%
Direct labour10.0%
Raw Materials76.5%
Others1.1%
2019
Cost Structure
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RMB (million)
One-off Policy Incentives
OperatingSubsidies1 Total
As of the year ended 31 December 2019
Xinjiang 0.3 57.5 57.8
Other areas 62.0 24.2 86.2
Total 62.3 81.7 144.0
1) Operating subsidies refer to business-related recurring subsidies, such as the grants provided by municipal governments based on the amounts of value added tax and income tax paid , subsidies for transportation offered by the State, etc.
Other Income
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RMB (million) 2019 2018
Revenue 22,002.9 19,155.7
Cost of sales (19,009.5) (16,009.9)
Gross profit 2,993.4 3,145.8
Selling and distribution costs (847.2) (685.1)
General and administrative expenses (1,010.4) (721.0)
Net (accruals)/reversal of impairment losses on financial assets
(3.6) 0.6
Other income 144.0 214.2
Other gains / (losses) — net 358.3 (59.0)
Operating profit 1,634.5 1,895.5
Finance income 28.5 18.4
Finance costs (576.2) (511.9)
Finance costs — net (547.8) (493.5)
Share of profits less losses of investments accounted for using the equity method
28.1 21.9
Profit before income tax 1,114.8 1,423.9
Income tax expense 192.1 (256.0)
Profit for the period 922.7 1,168.0
Profit attributable to owners of the Company 883.7 1,163.1
Consolidated Income Statement
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RMB (million) At 31 December 2019 At 31 December 2018
Freehold land and land use rights* 170.0 1,011.2
Property, plant and equipment 9,445.7 7,716.9
Right-of-use assets 1,344.3 -
Intangible assets 67.1 70.7
Investments accounted for the equity method 243.3 204.7
Deferred income tax assets 103.7 96.4
Other non-current assets - 236.1
Total non-current assets 11,374.1 9,336.0
Balance Sheet – Assets
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*In 2019, land use rights were reclassified as right-of-use assets as a result of adopting HKFRS 16‘Leases’.
RMB (million) At 31 December 2019 At 31 December 2018
Inventories 5,100.1 5,211.3
Properties under development 227.6 226.1
Trade and bills receivables 1,534.7 1,783.8
Prepayments, deposits and other receivables 798.5 867.9
Derivative financial instruments 287.4 145.2
Pledged bank deposits 21.5 145.0
Cash and cash equivalents 1,830.9 1,054.7
Total current assets 9,800.6 9,434.0
Total assets 21,174.7 18,770.0
Balance Sheet – Assets
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RMB (million)At 31 December 2019 At 31 December 2018
Trade and bills payables 3,035.9 3,522.7
Contract liabilities 133.0 88.3
Accruals and other payables 798.0 727.2
Current income tax liabilities 96.9 70.1
Borrowings 3,359.6 2,252.5
Derivative financial instruments 29.5 89.5
Lease liabilities 35.8 -
Finance lease obligations - 0.8
Long-term payables due within 1 year 94.6 22.3
Total current liabilities 7,583.2 6,773.4
Balance Sheet – Liabilities and Equity
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RMB (million)At 31 December 2019 At 31 December 2018
Borrowings 4,925.0 4,875.2
Lease liabilities 135.4 -
Deferred income tax liabilities 287.5 161.7
Long-term payables 144.2 122.9
Total non-current liabilities 5,492.1 5,159.8
Share capital: nominal value 96.7 96.7
Share premium 433.8 433.8
Other reserves 905.0 712.9
Retained earnings 6,038.0 5,495.3
Non-controlling interests 625.9 98.2
Total equity 8,099.4 6,836.8
Balance Sheet – Liabilities and Equity
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RMB (million) 2019 2018
Net cash generated from operating activities 2,418.4 766.7
Net cash used in investing activities (1,939.3) (1,821.9)
Net cash generated from financing activities 297.1 643.2
Cash and cash equivalents at end of the year 1,830.9 1,054.7
Cash Flow Statement
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1) Based on total borrowings over equity attributable to shareholders2) Based on total borrowings net of cash and cash equivalents and pledged bank deposits over equity
attributable to shareholders3) Based on profit attributable to shareholders over the average of the equity attributable to shareholders at the
beginning and ending of the period
At 31 December 2019 At 31 December 2018
Inventory Turnover Days 98 101
Trade and Bill Receivables Turnover Days 27 32
Trade and Bill Payables Turnover Days 62 73
Current Ratio 1.29 1.39
Debt to Equity Ratio 1 1.11 1.06
Net debt to Equity Ratio 2 0.86 0.88
Return on Equity 3 12% 18%
Other Financial Ratios
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Future Plans
Growth Strategies
Continue the construction of three-in-one textile production bases in Vietnam and Nicaragua
Avoid the impact of Sino-U.S. trade friction
Improve the overall profit margin
Strengthen profit stability
Alleviate the impact of raw material price fluctuations
Significantly reduce capital expenditure in 2020
Enhance the profitability and financial stability of
the Group, and reduce the gearing ratio
Completed the reorganisation of the knitted
fabric management team to improve efficiency
and strengthen business capabilities
Has prepared for the application for
construction of a large-scale knitted dyed
fabric production base in Vietnam
Reorganised jeanswear business to focus on
the development of a profitable production
base in Vietnam
1. Persist in the development of internationalisation and vertical integration
2. Make full use of existing capacity to enhance profitability and stability
3. Reorganise business and have multifaceted development
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Q&A
