Performance Continued To Rise, UNIQLO Factory Shen Zhou International Market Value Approaching 140 Billion

Despite the low profit margins in recent years

The manufacturing industry is desolate, but Shenzhou International backed by moat, such as Nike and UNIQLO, has become the first apparel group in China with a market value exceeding 100 billion.

Shenzhou International shares continued to rise more than 1% to 91 yuan per share, a record high, according to the fashion business express.

Some industry analysts pointed out that the reason why Shenzhou International has been able to maintain the positive growth of stock prices is its own strong profitability.

In the year ended December 31, 2017, the group's sales rose 19.8% to 18 billion 85 million yuan, gross profit margin was 31.4%, and net profit rose 27.6% to 3 billion 760 million yuan.

And its rival Jingyuan international, last year's operating income was only 2 billion 178 million yuan, gross margin was 20.31%.

During the period, sales of group sports products accounted for about 66.6% of total sales, up 22.8% from the same period last year. Sales of leisure products accounted for about 25.4% of total sales, up 18.4% from the same period last year, and sales of underwear products accounted for 7.2% of total sales, up 0.7% from the same sales.

With Shenzhou International Products

From Japan to Asia Pacific and European and American markets, analysts have pointed out that Shenzhou International vertically integrated production line, diversified products, customers and markets can effectively reduce the group's business risks and enhance its overall competitiveness.

Shenzhou International Co founded in 1989 by Chairman Ma Jianrong, President Guan Yunlin and Ma Renhe, mainly produces knitted sporting goods, casual wear and underwear garments.

Ma Jianrong's ambition can be seen from the name of the group. "Shen" represents Shanghai, and "Zhou" means that he wants to do business in Wuzhou.

The real turning point of Shenzhou International is in 1997. At the most severe time of the Asian financial turmoil, the group seized up to 350 thousand orders of production in UNIQLO, which required that it be completed within 20 days. If it could not be completed on schedule, it would face the risk of bankruptcy.

Eventually, the order was successfully completed. Shenzhou International also won the trust of UNIQLO. So far, the two sides have been working together for more than 20 years.

Subsequently, Shenzhou International also signed Adidas, Nike and Puma three sports brands and other international brands, and was listed in Hongkong in November 24, 2005.

According to Bloomberg data, 21.2% of the four important customers in the Shenzhou International Group account for 21.2% of the fast sales from UNIQLO parent company, 20% from Adidas, and 19% from the Nike.

In addition, new customers such as Ralph Lauren and New Balance contribute to group revenue.

Since 2010, Nike, Adidas's Greater China business, UNIQLO's international business and Puma Asia Pacific's business income contribution has been increasing.

With the consumption capacity and demand being aroused, the Greater China region is the key growth point of foreign brands. Some analysts believe that the above core customers' business is expected to continue to drive sustainable growth and drive Shenzhou International orders to rise.

Now Shenzhou International has become China's largest knitwear manufacturer and exporter. In the past ten years, the combined growth rate of Shenzhou International Income and net profit has reached 17% and 22% respectively.

It is noteworthy that in the past 9 years, thanks to the sustained growth of performance, Shenzhou International stock price has doubled 60 times, and it is the group with the highest return on investment in the apparel industry.

In order to further enhance its profitability, Shenzhou International launched its own clothing brand Maxwin in 2010. It is regarded as the future "UNIQLO" to accelerate the overall layout of Maxwin. However, in 2016, the group sold 49% of Maxwin to NetEase to enhance its strong data marketing cooperation with NetEase.

Some people in the industry have questioned whether the Shenzhou International Company, which has been the foundry business, has its own brand violation.

In response, Ma Jianrong responded that when a traditional clothing enterprise has a certain production capacity, it is a steady attempt to make the brand. Maxwin is still in the exploratory stage.

Shenzhou International also said that in the future, it will focus on improving product innovation capability, improving enterprise operation efficiency, improving production automation and optimizing human resources management and so on. It also attaches importance to continuous improvement of environmental protection from product selection, processing, equipment selection and terminal treatment, so as to achieve sustainable development of the group as a whole.

For the latest US $50 billion tax bill proposed by the United States, some analysts believe that the Sino US trade war has a slight impact on Shenzhou International because the group has a lot of capacity outside China, once the United States is in China.

When importing tariffs, the group can adjust the distribution of orders in time.

After Shenzhou International financial report was released last year, Morgan Stanley and Citibank were optimistic about Shenzhou international outlook. Dadu predicted that Shenzhou International orders in 2018 will continue to grow, and expected output growth will outperform competitors.

Fu Rui group analysts pointed out earlier that, benefiting from favorable factors such as strong growth of sporting goods, textile integration, Vietnam expansion and optimistic product prospects, Shen Zhou International Revenue in fiscal year 2018 increased by 17.2% to 21 billion 200 million yuan, while net profit rose 20.2% to 4 billion 500 million yuan, and expected that the group's revenue in the 2019 fiscal year will rise 16.7% to 24 billion 700 million yuan, and net profit will further increase by 20.6% to 5 billion 500 million yuan.

Over the past year, Shenzhou International stock price has risen 66%, and its market value has recorded HK $135 billion 800 million.