India, the second largest textile country, supplies “flameout” and several A-share companies undertake transfer orders

India’s epidemic continues to spread, bringing chain reaction to the textile industry chain. India’s textile industry plays an important role in the global textile industry and is the second largest textile producer in the world after China. For India’s economy, the textile and garment industry is also one of the pillar industries, accounting for about 15% of India’s total export revenue. According to reports, affected by the blockade measures during the epidemic period, the export of India’s clothing industry shrank seriously, and the export of India’s clothing industry will decrease by 24% in 2020. In the new round of the epidemic, due to the workers can not come to the post, India’s related enterprises lost a large number of clothing export contracts. This brings opportunities to China, the world’s largest textile country. A large number of textile orders previously transferred from China to India began to flow back.

“Affected by the epidemic, the textile industry in India and Southeast Asia has stopped, and some orders have been transferred to China, bringing some orders to the company.” Vosges (002083. SZ) recently replied to investors on the interactive platform.

According to the investigation of 21st century business reporter, a number of textile companies have successively accepted the return orders from Southeast Asia. However, for this part of orders, enterprises also maintain a cautious attitude, because once the overseas epidemic situation improves, the return orders will also leave.

Some enterprises started to run at full capacity in the fourth quarter of last year

Vosges is China’s largest exporter of home textiles, mainly exporting towel, bedding and other home textile products. At the end of April this year, Vosges said on the investor interaction platform that the company was operating at full capacity and its orders were scheduled for July.

The 21st century business reporter learned from Vosges that the company’s orders are growing continuously, and now they are in August.

The relevant person in charge of the company told reporters, “we have indeed undertaken the transfer orders from Southeast Asia, most of which are from India, mainly in the middle and low end. But there are not many parts to undertake, accounting for 10% at most. The company’s orders have always been dominated by old customers, and new customers account for a small proportion. “

In fact, the transfer of orders in Southeast Asia began in the second half of last year, and since the first quarter of this year, the backflow has been slightly obvious, the person said“ This year, the epidemic in India is more serious. Other overseas customers are worried about carrying COVID-19 on textile products, so they dare not place an order in India.

Lianfa (002394. SZ), the world’s leading manufacturer of yarn dyed fabrics, also mentioned the backflow of orders. On the interactive platform, it said that COVID-19 made some clothing orders back to China, but stressed that this is “short and limited”.

Novel coronavirus pneumonia is still spreading around the world, and the external environment is more uncertain. It is difficult to predict the annual order situation, the company also said.

In the first quarter of this year, the net profit returned to parent company was 223 million yuan, a year-on-year increase of 213%.

In a recent interview with the media, an insider of Blum Oriental said that the company undertook a wave of return orders in the second half of last year. Since the fourth quarter of last year, the order situation of the company has been very good, close to full production. According to the order scheduling situation, it is prudently estimated that the performance in the first half of this year will rise significantly compared with the same period of 2020 when the base is relatively low, and even better than the same period of 2019 before the epidemic.

While paying attention to the return of orders, investors also pay attention to the production situation of textile enterprises in overseas factories. Previously, due to cost, trade policy and other factors, many textile enterprises chose to set up factories in Southeast Asia.

Huali group, a footwear manufacturer, said, “the company has no factories in India, and its mass production factories are mainly in Vietnam. Vietnamese factories have formulated relatively strict epidemic prevention and control measures, and the epidemic control is relatively good.”

Liu Tiantian, chief analyst of textile and clothing light industry of Dongxing securities, pointed out that the recent epidemic situation in Southeast Asia, including Vietnam and Indonesia, has increased, and the epidemic situation in these regions continues to ferment, which will have an impact on the global supply chain. The overseas production bases of China’s textile enterprises are mainly in Southeast Asia. The companies where the factories are located have no epidemic situation or do a good job in epidemic prevention can better undertake this round of order transfer, and are expected to seize the opportunity to realize capacity expansion against the trend and increase the share of core customers.

The return is just a short-term dividend

Although there are opportunities for overseas orders to flow back, in the view of many business people, many orders are “unprofitable”.

“There were a lot of home textile orders in India last year, but the prices were not high and the profits were low. These low-end products will make a loss, so our business personnel will also judge whether to undertake them. Moreover, from now on, the impact of this part of return orders on the company’s performance is not great, but the impact of RMB exchange rate fluctuation on the company is greater. ” A person in charge of a large textile company in Jiangsu told reporters.

The above-mentioned person in charge of Vosges also said, “India’s textile production is mainly at the middle and low end, and its own orders can’t catch up, so we have to choose these transfer orders, and try our best to choose some products with high added value.”

The person said that the transfer orders had been predicted for a long time, and the dividend must be temporary. First of all, the quantity is not much. Once the epidemic situation in India turns better, it will still return to India.

Lin Xiangyi, an analyst in the textile and garment industry of galaxy securities, believes that “in the long run, if the epidemic situation in India is controlled in the future, orders may return to India, because India’s costs in terms of manpower, taxation, trade environment are lower than China’s, and China’s textile enterprises have obvious advantages in management experience, technological manufacturing, labor efficiency, etc, It can be used as a favorable basis for domestic textile enterprises to set up factories at sea. “

But in any case, the epidemic has accelerated the opening of a new cycle of the global textile and garment industry. China is the country with the most complete textile industry chain, and its current advantages are reflected in the stability and security of the supply chain.

“At present, China’s textile manufacturing industry is basically in the mature stage. The leading enterprises benefit from the increasing trend of industry concentration with their technology, experience and scale advantages. At the same time, affected by the epidemic in 2020, some small and medium-sized enterprises are cleared, and the industry concentration is expected to be further improved. With the rapid upgrading of domestic industrial technology, the machine replacement rate is higher and higher, and the long-term development space of domestic leading textile enterprises is still broad. ” Lin Xiangyi said.

Export data also confirmed the advantages of China’s textile industry chain. According to customs statistics, from January to May this year, China’s textile and clothing exports reached 112.69 billion US dollars, up 17.3% year on year. Among them, textile exports reached 56.08 billion US dollars, an increase of 16.1% over the same period in 2019; In May, clothing exports reached US $12.2 billion, up 37.1% year on year.


Post time: Jul-12-2021

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