Apparel / Textiles & Accessories

According to the Huacheng Import and Export Data Observation Report, as of the evening of January 31, 2023, 45 listed companies of textile and chemical fiber in A-share disclosed the performance forecast of the 2022 annual report, of which, 4 companies increased in advance, 13 companies lost in advance, and 19 companies decreased in advance.

According to the published announcement, the leading enterprises in the industry such as Hengli Petrochemical, Tongkun Group and Dongfang Shenghong are expected to realize the net profit attributable to the shareholders of listed companies in the whole year of 2022, which will generally decrease by 80% to 90% compared with the same period last year.

Enterprises suffer from high cost and low demand

As for the decline in performance, textile and chemical fiber listed companies generally said that the main reason was that the international situation, the energy crisis and the repeated epidemic situation and other domestic and foreign macro factors intertwined driving and influence. The second reason was that the long period of closure and control in the first half of last year led to logistics obstruction and poor customer communication. The third reason was the intensification of industry competition and weak terminal demand. The fourth reason was that the energy crisis in the international environment led to a sharp rise in the price of bulk commodity raw materials.

According to the observation report of Huacheng Import and Export Data, in this successive announcement, some enterprises' net profit was positive, but decreased significantly compared with the same period in the first half of last year, and some enterprises had negative net profit, and the net profit of the whole year was expected to lose.

According to the preliminary calculation of the financial department of Tongkun Group Co., Ltd., it is estimated that the net profit attributable to shareholders of listed companies will reach 300 million yuan to 42 million yuan in 2022, a decrease of 691219900 yuan to 703219900 yuan, or 94.27% to 95.91%, compared with the same period last year.

"During the reporting period, the sharp changes in the international and domestic situation have brought great challenges to the development of the real economy." Tongkun Group Co., Ltd. said in the announcement that, from the perspective of the external environment, the Russian-Uzbekistan conflict has led to a significant increase in the oil price center, the company's raw material costs have risen significantly, and the Federal Reserve has entered the interest rate increase cycle, resulting in weak overseas demand; From the perspective of the internal environment, the impact of the epidemic has expanded unexpectedly, the order of production, circulation and other links has been disturbed, and the real estate, residential consumption and other fields are facing economic downward pressure, which also has a great negative impact on the domestic demand for polyester filament. After the second half of the year, the product price of Zhejiang Petrochemical Company, which shares in the company, fell month-on-month, and the profit margin fell. The investment income contributed to the company fell significantly compared with the same period of the previous year, making the overall profit of the company decline significantly compared with the previous year.

Unlike Tongkun Group, the announcement of Hengyi Petrochemical showed that during the reporting period, the net profit loss attributable to the shareholders of the listed company was 90 million to 120 million yuan, down 126% - 135% from the same period last year.

"During the reporting period, in the face of multiple challenges such as accelerating the evolution of the world, the impact of the COVID-19, and the domestic economic downturn, the company's business environment was affected by multiple adverse factors, the downstream terminal consumption demand was weak, the production costs of energy, transportation, auxiliary materials, etc. significantly increased, and the prices of crude oil and products related to the industrial chain fluctuated sharply." Hengyi Petrochemical Co., Ltd. said in its announcement that during the reporting period, Although the company's polyester sector still maintains the leading competitive advantage in the industry, with filament, staple fiber, bottle chip and other products complementing each other, under the above multiple pressures, the downstream demand of the polyester sector is extremely weak, especially the price difference of polyester fiber (including filament and staple fiber) products has narrowed significantly year-on-year, Huacheng Import and Export Data Observation Report.

In addition, the production and operation capacity of the company's Brunei refining and chemical sector has significantly improved, and the operating efficiency has shown an upward trend. However, since the second half of last year, under the multiple pressures of weak demand, rising costs, and price fluctuations, the price difference of corresponding products in the Brunei refining and chemical sector has dropped significantly, especially the continuous losses of gasoline, chemical light oil and liquefied petroleum gas, and the profit space of the Brunei refining and chemical sector has been greatly compressed.

As an important product raw material of Hengyi Petrochemical and the main reference benchmark for the pricing of upstream and downstream products in the industrial chain, the price of upstream and downstream products is not smooth in the case of sharp price fluctuations and weak downstream demand, which further increases the difficulty of the company's operation and management of raw materials, finished products and other inventories, causing the company's gross profit margin of each product to decline further year-on-year.

The profit of polyester industry is expected to be restored in the new year

According to the observation report of Huacheng Import and Export Data, the domestic chemical fiber industry experienced a double squeeze of high cost and low consumption in 2022. The overall utilization rate of industrial capacity fell, the output was also significantly lower than expected, the overall deviation of industrial profits, and the general decline in the performance of relevant listed enterprises was also expected by the market.

"For the textile and chemical fiber industry, the market situation in 2023 will be significantly different from that in 2022." Pang Chunyan, the chief analyst of China Investment&Credit Suisse Futures Chemical, told the reporter of Futures Daily. On the one hand, the energy price fell after the high in 2022, and now it is mainly stable, which means that the cost of the industry will stabilize. On the other hand, the impact of COVID-19 infection has been significantly weakened. Although new infections may appear in foreign countries, the overall impact is declining. It is expected that the life of residents will gradually become normal in the new year. "The increase in employment will provide a strong guarantee for residents' spending, and it is expected that the increase in travel in the new year will bring about consumption growth in the clothing market. At the same time, the worst of the real estate market has also passed. The recovery in the future may be a matter of time and pace, and the consumption in the home textile market is also expected to improve year on year," she said.

In Pang Chunyan's view, the blocking of terminal consumption last year has caused obvious negative feedback to the entire industry chain. The situation of loss in the whole industry will improve with the recovery of terminal consumption, or the inventory pressure of chemical fiber enterprises that are difficult to be removed last year will be shown as cyclical accumulation and removal this year.

In response, some listed companies also expressed their expectations for the new year of 2023 in the performance forecast.

Hengyi Petrochemical said that as of the disclosure date of this report, the inventory of the company and its downstream products was at a historical low level; At the same time, with the adjustment and optimization of domestic epidemic prevention and control measures, downstream demand has gradually recovered and warmed up, and the price difference of main products in January has improved on a month-on-month basis, laying a solid foundation for production, operation and benefit improvement in 2023.

In this regard, Pang Chunyan also believed that after the inventory pressure that plagued polyester enterprises for a year was relieved at the end of last year, although there was a seasonal accumulation during the Spring Festival this year, the overall pressure on enterprises was not large, especially for the leading polyester enterprises such as Hengyi, which was a good start.

According to Liu Siqi, an analyst at Zijin Tianfeng Futures, in 2023, the domestic epidemic prevention and control policy will be released, the overseas interest rate increase process will slow down, the demand will recover, and the industrial confidence will recover, which will become an important factor affecting the benefits of the polyester industry.

With the improvement of market expectations, the enthusiasm of terminal stock preparation increased before the holiday, and the inventory of finished products of many large polyester factories decreased significantly before the holiday. After the Spring Festival in 2023, polyester prices had a "good start", and polyester cash flow also remained stable and improved. "This phenomenon releases a signal to the market that the downstream is gradually warming up. With the recovery of terminal textile and clothing consumption, the starting rate of weaving is rising, the enthusiasm of raw material procurement is increasing, the inventory pressure is easing, and the transmission of the upstream and downstream of the industrial chain is smooth. The production and operation of enterprises in the polyester industrial chain will be more stable in 2023, and the operating efficiency of enterprises is expected to improve." Liu Siqi said.

In her view, the profit of textile and chemical fiber enterprises in 2023 is expected to improve compared with that in 2022. The main improvement is driven by the recovery of domestic demand and the improvement of market confidence. It is reported that after the holiday, the popularity of wholesale markets in Guangzhou, Hangzhou and other places has returned, and the market's confidence in domestic demand for textile and clothing consumption in the new year has also improved significantly.

"At present, after the Spring Festival, the profit of polyester products is in a state of repair. With the recovery of terminal consumption, the rigid demand of polyester fiber increases, and it is expected that the polyester factory may increase its load simultaneously." Pang Chunyan said that the polyester industry experienced a dark year in 2022, with high inventory, low profit, low start and negative growth in the past, and the profit of the polyester industry is expected to be repaired in the new year, The start and output of the industry are also expected to return to the track of growth, Huacheng Import and Export Data Observation Report.