According to data from the National Bureau of Statistics, in the first three quarters of 2022, the industrial added value of textile enterprises above designated size nationwide decreased by 0.4% year-on-year, operating income increased by 3.1% year-on-year, and total profits decreased by 23.6% year-on-year. The growth rates have all slowed down compared with the same period last year. .
From the perspective of the entire industry chain, the mid- and downstream printing and dyeing, filament weaving, clothing and other sub-industries are generally operating well, with production and sales indicators achieving positive growth; although the production and sales scale of the home textile industry has shrunk, profitability is stable; the upstream chemical fiber and cotton spinning industries are affected by raw materials Affected by factors such as high prices and difficulty in transmitting costs along the industrial chain, profitability pressure is more prominent.
With the pace of production and sales slowing down, the overall prosperity of the textile industry continues to be under pressure. According to survey data from the China Textile Industry Federation, the textile industry prosperity index in the third quarter was 44.3%, continuing to be in the contraction range, down 2 percentage points from the second quarter, but rising by 1.7 percentage points compared with the first quarter.
Industrial winter is coming
The third quarterly reports of leading polyester companies are faced with “increasing revenue but not increasing profits”
Data show that starting from mid-June, the prices of polyester POY, FDY, DTY, and polyester staple fiber, the core products of the polyester industry, have declined. Taking polyester poy as an example, the price of polyester poy dropped from the highest point of 9,200 yuan/ton in June to 7,850 yuan/ton on October 18. The reason is that in the first half of the year, affected by the sharp increase in crude oil, natural gas, coal and other basic energy prices, the cost of major chemical raw materials in the polyester fiber industry increased significantly year-on-year; in terms of downstream demand, on the one hand, the epidemic affected the overall demand of the textile industry; on the other hand, the textile industry Terminal demand has entered the off-season at the end of the year. It is normal for product prices to fall and industry companies’ profits to shrink.
Judging from the companies that have released three quarterly reports so far, most of them are affected by the industry environment. Rongsheng Petrochemical’s third quarter report disclosed on the evening of October 25th showed that the company’s third quarter operating income increased by 74.43% year-on-year; net profit attributable to the parent company decreased by 97.64% year-on-year. On the same day, Wanhua Chemical, known as the “Chemical Industry Leader”, announced its third quarter report. In the third quarter, operating income increased by 4.14% year-on-year, and net profit attributable to the parent company decreased by 46.35% year-on-year. On the evening of October 28, the third quarter report of Oriental Shenghong (000301.SZ) was released. The company achieved operating income of 16.465 billion yuan in the third quarter, a year-on-year increase of 17.14%; the net profit loss attributable to the parent company in the quarter was 58.7978 million yuan, a year-on-year decrease of 105.78%. %. In the first three quarters, the company achieved operating income of 46.707 billion yuan, a year-on-year increase of 16.17%; net profit attributable to owners of the parent company was 1.577 billion yuan, a year-on-year decrease of 59.55%. Hengli Petrochemical also announced its results on the same day. Its third-quarter operating income increased by 9.14% year-on-year, and its net profit fell by 147.66% year-on-year. Tongkun’s third-quarter operating income fell by 14.01% year-on-year, and its net profit fell by 118.09% year-on-year.
Figure 1: Revenue in three quarterly reports and net profit attributable to shareholders of listed companies (data source: company announcement)
Companies that have released three quarterly reports are all facing the phenomenon of “increasing revenue without increasing profits”, with their market value shrinking significantly and their performance lower than the expectations previously given by analysts in public research reports. Against this background, polyester faucets have actively turned to research and development of new technologies to improve product differentiation. For example, Dongfang Shenghong has always been oriented toward creating differentiated fibers in terms of its “large chemical raw material platform”. The company has differentiated, high-end, and high value-added filament production capabilities, which contributes to the company’s higher gross profit margin. , on the other hand, when the industry encounters extreme events, its ability to resist risks is more significant.
Demand falls, raw materials rise
How to overcome internal and external troubles?
For the entire textile industry, since the intensive implementation of various environmental protection policies in 2018, a large number of “scattered and dirty” traditional small textile factories have been gradually eliminated. On the one hand, the overall market growth has stagnated, and on the other hand, the national carbon peak policy Environmental protection requirements, coupled with the threat of advantages from low-labor cost countries such as Southeast Asia, the domestic textile industry is facing a huge transformation crisis.
Let me start with a point of view: the current crisis does not come from the transfer of industries to neighboring countries such as Southeast Asia.
The surrounding low-labor-cost countries in Southeast Asia can currently only undertake the lowest-end and lowest-profit parts of China’s manufacturing industry. They cannot build a complete manufacturing ecosystem and cannot replace China’s status as a manufacturing country. External worries are not a problem yet, and solving internal ones is the top priority. The production chain of the textile industry is very long, starting from the production of raw material cotton, followed by weaving, printing and dyeing and other fabric production, then clothing design and manufacturing, and finally sales, the entire chain is completed.
There are a large number of small and medium-sized enterprises scattered throughout the entire industry chain. From the era when self-built factories were in short supply to the current oversupply situation, only modern textile production factories with high competitiveness and reduced production costs can survive.
Since the market entered the e-commerce era, the textile industry has� From a large-volume, order-based production model to a fragmented, multi-variety, small-batch, and quick-renovation model, most companies have lost their production equipment and processes. Systems, etc. were all established based on the previous large order model, which brought great challenges to the supply chain preparation.