Shenzhou Group Has Launched 18 Big Projects In Beilun, Ningbo. It Is A Big Profit Not To Bear 7 Billion 200 Million Investment.

Ningbo Shenzhou Knitting Co., Ltd. (hereinafter referred to as Shenzhou International), the largest vertically integrated knitting manufacturer in China, has recently announced that the company has entered into a framework agreement with the people's Government of Beilun District of Ningbo in July 27th. According to the framework agreement, Shenzhou International will coordinate and manage the construction of 18 projects without having to bear all the investment costs (RMB 7 billion 200 million yuan).


In the process of acquisition and development, partners should provide support, including the promotion of land acquisition, planning and construction approval process and assistance in the construction of supporting facilities in Beilun district and other services and policy support.


The announcement indicates that Shenzhou International will participate in or urge the above 18 projects in 2019 or 2020 when the conditions are suitable. The maximum investment amount of these projects is estimated to be RMB 7 billion 200 million yuan.


Shen Zhou International said that because the above projects could enable the two sides to use their respective advantages, resources and expertise to form a stable and mutually beneficial strategic relationship, a framework agreement would be beneficial to the company.


Wang Xueheng, an analyst with Guoxin Securities, believes that the land resources, sewage resources, financial and tax concessions needed by Shenzhou International expansion capacity need government support. Shen Zhou's international framework agreement with the government will strive for preferential policies, which will create favorable conditions for the long-term good development of the company. Observation shows that the above projects are expected to develop capacity, which accounts for about 15% of the total capacity of Shenzhou International, and the new capacity is expected to be released in 2021 and beyond. The 18 items involved in the framework agreement include the expansion and upgrading of fabric and clothing production capacity, construction of warehouses, staff quarters and office buildings, sewage and solid waste treatment and other environmental protection projects. Among them, the clothing production capacity is about 4000-5000 000 / year, and the fabric production capacity is about 80 tons / day, accounting for 13% and 15% of the existing garments and fabric production capacity (as at the end of 2018).


According to Shenzhou International previous capacity construction and commissioning cycle, Wang Xueheng predicted that the new capacity will be released in 2021 and later. At present, Shenzhou International built garment production capacity includes 6000 people in Vietnam, 18 thousand people in Kampuchea, and 3000 people in Anqing, Anhui. The production capacity is mainly climbing in 2020 and 2021. If Ningbo's new capacity is successfully built and put into operation, it will play a vital role in the long-term steady and rapid growth of the company.


In addition, we need to see that Shenzhou International 18 projects include environmental protection projects such as staff quarters and office buildings, sewage and solid waste treatment, etc., which are conducive to strengthening employment, scientific research, management personnel and environmental protection resources, and play an important role in Shenzhou International's leading competitiveness in clothing R & D and production. Analysis shows that:


First, in terms of R & D, Shenzhou International R & D and production automation research and development is a key factor to promote the company's continuous demand for strong orders, maintain strong bargaining power and profitability. The company's existing R & D personnel are nearly 1000, R & D expenditure accounts for 2-3% of the company's income. In the future, further research and development strength needs to create good working conditions and welfare benefits to attract talents.


Secondly, in terms of environmental protection, Shenzhou International has gained high recognition from the customers by leading environmental standards and processing capacity. At present, the sewage disposal facilities have higher requirements for land and capital resources, and the expansion capacity, especially the upstream fabric capacity, needs stronger sewage disposal capability.


Wang Xueheng believes that the industry's inferior production capacity is facing increasing pressure on human and environmental protection. It will continue to withdraw from the market. Shenzhou International is expected to continue to accumulate talents and environmental resources under the support of the government, and maintain its leading core competitiveness for a long time.


CITIC Securities Research Institute Xue Yuan said that Shenzhou International future capacity planning is clear and definite: 2019 is the capacity construction phase, 2020 is the productivity ramp up period. In 2021, /2022 entered the rapid growth period of production capacity. Specifically, the first is the 2019 even if the extension capacity is insufficient, but through the efficiency improvement, the output will increase by about 10%. At the same time, under the background of dye / wage increase and exchange rate improvement, Shenzhou International material will effectively pass the cost through the appropriate price increase, and look at the double digit growth of revenue. The two is the profit side. In 2018, the freight volume of 200 million yuan is expected to be controlled, and the net profit of the whole year will bring some flexibility. With the release of Vietnam and Kampuchea's new capacity in 2020-2022 years, it is expected to reproduce the harvest performance of Vietnamese fabrics and garment factories after 2015-2017 years of production, and it is expected that output will maintain 10%-15% growth.


The market participants said that Shenzhou International orders in 2019 will maintain a steady growth of 9%, consistent with the company's moderate expansion of capacity. Although global consumption is slowing down, Shenzhou International, a market leader with an efficient business model, effective supply chain management and close ties with leading brands, will be able to lock orders for the world's major brands including Nike, Adidas, UNIQLO and mark Ma, as well as new customers, such as yoga wear brands, which will speed up the growth of Shenzhou International's capacity in 2020.