Texhong Profit up, Fears Trade War

Texhong Textile, based in China, is one of the largest yarn producers in the world. Net profit grew roughly nine per cent as the overall gross profit margin narrowed to 15.4 per cent from 19.8 per cent a year ago on increased costs of raw materials. Net profit for the first half has risen 41.2 per cent from a year ago.

Fearing a trade war with the US, Texhong has shifted assembly lines to regional countries for lower production costs. The company has substantial investments in Vietnam and its main customers are in Japan and South Korea. It is looking to diversify into denim wear. Its assets in Vietnam represent 11 per cent of the company’s total assets.

The company has also continued to add new capacity in China, investing 500 million yuan in a new yarn spinning factory in Xuzhou that is expected to compete in the second quarter of 2018. It now has 12 manufacturing plants in China's Yangtze river delta.

The target is to produce 14 million pairs of jeans this year, which will be translated into 700 million yuan in revenue. The target for next year will be more than 20 million pairs of jeans, which would represent a high-single digit of its total revenue.