Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
CHINA WEAVING
HKEx Stock Code : 03778 
 
Corporate Profile
Principally engaged in the business of manufacturing and trading of polyester yarns, polyester-cotton blended yarns and cotton yarns.

Business Review - For the year ended December 31, 2012

Despite the difficult market conditions in 2012, the sales volume of the Group increased from approximately 58,223 tonnes for the year ended 31 December 2011 to approximately 61,044 tonnes for the year ended 31 December 2012. The production volume of the Group increased from approximately 57,717 tonnes for the year ended 31 December 2011 to approximately 61,502 tonnes for the year ended 31 December 2012 as a result of increased capacity and improved production process. The revenue of the Group decreased by 15.4% to approximately RMB918.5 million as a result of depressed selling prices. The gross profit and the profit attributable to the owners of the Company for the year ended 31 December 2012 was approximately RMB44.1 million and approximately RMB1.1 million, respectively.

Business Outlook - For the year ended December 31, 2012

In 2012, the textile industry in PRC encountered adversity arising from three major challenges: weak overseas and domestic demand due to sluggish European and US economies and a slowing domestic economy, disparity in domestic and international cotton prices due to exercise of control by PRC government over both the prices and import volume of overseas cotton, and ever increasing manufacturing costs in PRC.

Despite the difficult market conditions, the Group managed to achieve slight profitability. The sales volume of the Group increased from approximately 58,223 tonnes for the year ended 31 December 2011 to approximately 61,044 tonnes for the year ended 31 December 2012. The production volume of the Group increased from approximately 57,717 tonnes for the year ended 31 December 2011 to approximately 61,502 tonnes for the year ended 31 December 2012 as a result of increased capacity and improved production process. The production utilization rate also increased from approximately 90% in 2011 to over 97% in 2012. The group's yarn products were awarded ¡§Famous Brand in Jiangxi¡¨ by the Quality and Technology Bureau of Jiangxi Province in September 2012.

Looking forward, the US economy has showed signs of improvement but European economies seem to remain sluggish. PRC economy appeared to have avoided a hard landing. The PRC government has set the target growth rate for GDP for 2013 at 7.5% and continues to encourage domestic consumption. Against those backgrounds, the Group expects the demand for textile to improve moderately. The price of cotton will continue to influenced by various factors including climates, amount of funds investing in commodities and demand from the textile industry. However, the Group does not expect a huge disparity in price level between domestic and international cotton to persist for a long period. The disparity would be eliminated by upward movement in international cotton price or policy adjustment by the PRC government. The ever increasing manufacturing cost arising from increased labour cost, utility cost and government levies have been a disturbing factor for domestic manufacturers for the past few years. The Group will tackle the escalating cost by continuous improvement in production efficiency by means of improvement in production process, enhancement of automation, continuous training of workers, introduction of advanced and energy efficient machinery.

The Group is making good progress on the expansion plan, with workshop one and other auxiliary building being substantially completed and production machineries being installed. Upon completion of workshop one installation in the second quarter of 2013, the Group's production capacity will be increased from current level of approximately 330,000 spindles to approximately 380,000 spindles. However, in view of market uncertainty, the Group will proceed with caution on the introduction of open-end spun production facilities and delay it until the second half of 2013.

The Group is confident about its future in view of the benefit from the enlarged product portfolio and increased economy of scale as a result of the planned expansion of the production capacity. The Group also strives to be well positioned to take advantage of any positive outlook in the textile industry given its scale of production, strong brand recognition and professional management.

Source: China Weaving (03778) Annual Results Announcement
Chairman Zheng Hong Issued Capital (shares) 1,013M
Par Value HKD 0.1 Market Capitalisation (HKD) 840M
 
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