The inflow of overseas orders brought about by the global epidemic has promoted the performance growth of the leading textile manufacturing industry last year. The net profit growth rate of Huafu Fashion Co.Ltd(002042) (002042. SZ) is expected to exceed 100% in 2021. Will the performance of 2022 continue to be strong?
The financial Associated Press reporter recently visited Huafu Fashion Co.Ltd(002042) a leading enterprise in color spinning production and learned that the company is expected to complete the digital transformation of production capacity except Vietnam within this year. At that time, the income of socks industry is expected to increase by 50% over last year.
“Digitalization has expanded a new way of asset light expansion for the company. In the future, the company can improve the order efficiency through the industrial Internet instead of self built capacity, and realize its asset light expansion while integrating the industry. In the second half of 2022, we will try systematic external services.” Chen Han, general manager of digital intelligence strategy center, told the financial associated press.
He also said that, for example, after the transformation of the factory, the downtime of the equipment was reduced by 80-90% compared with that before. At present, the company has completed the digital transformation of 1 million ingot capacity in Aksu, Xinjiang, accounting for 1 / 2 of the total capacity. It is expected to complete the transformation of other capacity except Vietnam in 2022.
According to the company’s calculation, after the transformation of Xinjiang factory, the production efficiency of equipment will be increased by 7%, and the output of finished products will increase by 5% – 10%. It is estimated that the cost can be saved by 4 million yuan a year, and the profit margin is expected to increase by 1%.
Huafu Fashion Co.Ltd(002042) is a global leading enterprise in color spinning production. This year is the first year for it to complete the integration from yarn to socks industry. Huafu Fashion Co.Ltd(002042) in 2021, it completed the merger and acquisition of kalalara, Boyi and Yifu socks industries located in Zhuji, Zhejiang Province, and established ADA Internet Technology Co., Ltd., extending from yarn to downstream socks industry.
Zhong Yaodong, general manager of ADA Internet technology and chairman of kalalara, told the financial associated press that ” Huafu Fashion Co.Ltd(002042) extends from yarn to socks industry, with its own brand, brand authorization and OEM as its main business, and has the advantage of vertical integration. The income of socks industry this year is expected to increase by 50% over last year.”
production capacity will be gradually transferred to Huaibei and Vietnam
In the process of digital transformation, Huafu plans to gradually transfer the production capacity of color spinning from Zhejiang to Huaibei, Anhui and Vietnam. At the same time, it will no longer rely on its own production capacity for market expansion, but through the promotion of the system model of cost reduction and efficiency increase, access other companies in the industry for outsourced production and include more social production capacity.
Chen Han mentioned that technology integration will be completed in the first half of 2022, and foreign services will be tried in the second half of 2022, “first select factories with high capacity matching”.
The financial Associated Press reporter noted that Huafu Fashion Co.Ltd(002042) tried to bind the waist spinning factory through the full digital management system. The subsequent goal is to connect more equipment quantity and factory quantity, further open up the upstream and downstream supply and demand, integrate and optimize industry orders, and provide B2B online trade platform matching services. In the future, the company plans to connect more than 360 enterprises in the socks industry in Zhuji on the socks industry platform, provide raw materials and orders, and open up the supply chain.
“The reason why we choose the sock industry as the starting point is that if we cut into ready-made clothes, on the one hand, the supply chain is too long, and on the other hand, we will compete with the company’s existing customers. However, socks are directly formed from yarn, which is equivalent to a new incremental track. 97% of the yarn used in socks is our own, which has a cost advantage.” Zhong Yaodong said.
At present, the company has 1000 hosiery machines in Zhuji and Aksu, Xinjiang, with a production capacity of 30 million pairs / year. This year, it plans to add 500 hosiery machines in Huaibei. The industrial Internet transformation of hosiery machine in Xinjiang will be completed in the first half of this year. The overall planning is the same as that of yarn. More small and medium-sized manufacturers will be connected to carry out centralized purchase of raw materials, order output, equipment maintenance, etc.
In terms of the gross profit margin of the four business segments of the socks industry, the company said that the gross profit margin of the private brand at the to C end is more than 60%, and the gross profit margin of the OEM business at the to B end is about 20% according to different brand positioning. The OEM business used to be concentrated in the markets of Russia and Eastern Europe, and is currently laying out medium and high-end markets such as other European countries and Japan.
Zhong Yaodong mentioned to the financial associated press that in terms of private brand incubation, kalala’s offline selling points will expand to more than 7000 this year. In addition to shopping malls and trendy stores, it plans to shop in supermarkets, hotels, home stay and other places. Over the past three years, kalala’s annual revenue growth has maintained more than 100%.
