Textile Industry Is Beset With Difficulties And Difficulties. Textile Is Forced To Stop Production And Decline In Performance.

Mutual textile is a knitted fabric manufacturer and marketer. The downstream industry is the clothing industry. Originally, the Spring Festival is the peak season for clothing sales under the annual line, and it is a good period for textile and garment enterprises to increase their income and profits. Unexpectedly, the new spring coronavirus pneumonia occurred during the spring Festival in 2020.

In February 12, 2020, mutual textile announced that due to the influence of new coronavirus pneumonia, the company's production in Panyu, Guangdong, was shut down for about three weeks and is now resumed in February 12, 2020.

Some workers in cities and towns that are seriously affected by the epidemic are still unable to return to production units in Guangdong. The production capacity of Panyu factories will decline, which will delay the delivery of products in February 2020 and March.

Although online sales have not been affected or even increased, most of the logistics companies have also stopped, and the sales volume will not increase as a result of logistics drag, which is mainly affected by the sales volume of physical stores under the line. This makes the sales volume of garment enterprises in the first quarter of 2020 be greatly affected.

In the 6 months ended September 30, 2019, the total revenue of customers from China and Hongkong was about HK $912 million, accounting for about 30.16% of the total revenue of the company and over 30%.

Because the epidemic has a great impact on the garment industry in China and Hongkong, the exchange of textiles as an upstream company will also have a great impact on orders. And the delayed work of mutual textiles during the Spring Festival will result in the delay in delivery of the original orders. If the latter is gradually compensated for by overtime work, it will increase the labor costs of the company and other costs brought by the epidemic.

From December 4, 2019 to February 13, 2020, the company's share price fell 13.09%, and after the outbreak, the share price fell 7.90% from January 29, 2020 to February 12th.

It is noticeable that the cash flow of mutual textiles is relatively adequate, and it can cope with the short-term financial pressure caused by the epidemic. As of September 30, 2019, the company's cash and cash equivalents at the end of the year were 943 million yuan, an increase of 233 million yuan over the same period in 2018. Although the cash grew, the company's lending rate was 502 million yuan, an increase of 242 million yuan over the same period in 2018. We can see that the increase in cash and cash equivalents is due to the increase in borrowing. However, as at September 30, 2019, the total assets and liabilities ratio of the company was only 36.26%. Below the average level of the same industry.

Affected by the epidemic, it brings more impact not only on the output of factories, but also on the sales volume of upstream garment manufacturers. It is predicted that the volume of orders in the first quarter of 2020 will be greatly reduced. Due to the impact of the epidemic, it is estimated that the interim performance of the company will continue to decline in 2020.