Tianhong Textile (02678-Hk) Made 41.5% Less Profit Last Year, What Target Has Been Set For Sales In 2021

Tianhong textile (02678-hk) announced that as of December 31, 2020, its annual revenue was 19.577 billion yuan (RMB. The same below), with a year-on-year decrease of 11.03%; a profit of 517 million yuan, a year-on-year decrease of 41.49%; a profit of 0.57 yuan per share, and the proposed distribution of final interest of HK $0.2 per share.

The gross profit rate increased by 0.2 percentage points to 13.8%, driven by the recovery of textile and clothing market and the rise of raw material prices in the fourth quarter of 2020. Compared with the average gross profit rate of 11.4% in the first half of 2020, the gross profit rate has risen from the bottom in the second half of 2020. In addition, the net profit margin decreased by 1.5 percentage points to 2.7%.

As of December 31, 2020, the group's main production facilities include about 4.1 million spindles, 1900 sets of shuttle and knitting looms and corresponding dyeing and finishing equipment, including 2.51 million spindles in China and 1.59 million spindles overseas. In 2021, the group will continue to focus on making the best use of its existing capacity to ensure the best utility after a safe transition to adverse business impacts. Under the circumstances that the original yarn product portfolio is restored, the overseas production base of woven fabric begins to increase production, and the new production capacity of knitted fabric business in China's original production base and Vietnam gradually contributes to the income, assuming that the global epidemic situation gradually comes to an end, the trade friction between China and the United States has not further deteriorated, and there is no other black swan incident affecting the global economy, we expect that The group's profit margin is likely to improve significantly in 2021, and we also expect the group's total sales revenue to grow significantly.

At present, the group's ongoing projects are mainly the construction of a new production base for Vietnamese knitted fabrics. In addition, it is also preparing to improve automation for the existing yarn production base and reduce the number of employees. It is expected that the group's business will recover significantly in 2021. According to the current market situation, excluding the trade-related sales volume, the sales target of the group in 2021 is 840000 tons of yarn, 60 million meters of grey cloth, 140 million meters of woven fabrics, 30000 tons of knitted fabrics and 11 million pieces of jeans.