Huafang Textile: Poor Operating Environment, Loss Of The Newspaper Or Being Included In ST Shares.

(600273 SH) issued the semi annual report 2012.

The report shows that in the first half of 2012, Huafang lost 33 million 763 thousand yuan.

The company lost 294 million 866 thousand and 700 yuan in 2011, which shows that the loss of Huafang textile has lasted for a year and a half.

According to the relevant regulations, if Huafang textile products can not turn round this year's performance before December 31, 2012, the company will be placed in the list of ST shares.

Continuous loss of performance

Or be included in ST shares.

According to Huafang textile annual report 2011, the total revenue in the first half of 2012 was 733 million yuan, an increase of 2.28% over the same period last year. However, due to the total business cost of up to 788 million yuan, Huafang achieved a net profit of only -3376 million in the first half of 2012.

In the report of the board of directors, Huafang textile company said that the price of the main raw materials in the textile industry was seriously upside down in the domestic and international markets, and the international cotton price was significantly lower than the domestic cotton price, which seriously affected the efficiency and market sales of the enterprises. On the other hand, the cost of labor involved in the textile industry continued to rise, especially the cost of labor wages increased greatly, and electricity costs and other expenses did not drop due to the overall downturn of the market, including the high interest costs, which further increased the operating costs and burdens of enterprises. In addition, the strain of labor resources also restricted the release of production capacity, because Huafang textile was located in the economically developed areas of the East, and the shortage of labor force became a bottleneck for the production of enterprises. Reasons for losses

Huafang textile said that the above aspects led to a lower production opening rate, which affected the production capacity.

According to the previous data of Huafang textile, the company was also at a loss in 2011.

According to the company's 2011 Annual Report, in 2011, Huafang textile realized its operating profit of -4048.47 million yuan, and its net profit attributable to shareholders of listed companies was -2881.44 million yuan, achieving a basic earnings per share of -0.09 yuan.

According to the relevant provisions of the Shanghai Stock Exchange Listing Rules (2012 Revision), when the company made a continuous loss in the past two years (based on the audited net profit reported in the latest two years' annual report), Shanghai

The exchange will conduct a delisting risk warning for its stock pactions.

That is to say, if China's textile products fail to achieve profitability in the second half of 2012, Huafang textile will inevitably be included in the ST shares.

Poor operating environment

Does the company lack confidence?

Faced with the loss of performance and the risk of being classified as ST shares, how to deal with Huafang textile?

In the report of the board of directors, Huafang textile said: "as a textile industry, the company has increased the number of factors that restrict steady growth.

The sharp reduction of cotton and other textile raw material prices has reduced the profit margins of enterprises. The current cost pressures of textile industry are prominent, and the prices of textile raw materials such as cotton have not yet been reasonably returned. Domestic and international cotton prices are difficult to integrate, labor and energy prices will not drop, credit policies will not be relaxed, and the terminal price pmission of products will be relatively backward and unsmooth.

Above all, the growth rate of the industry will continue to decline in the first half of the year.

For the second half of the business goal, Huafang textile board of directors seems to have some inadequacy, only saying "strive to achieve the goal of turning losses into profits."

As for the measures to be taken, Huafang textile company starts with increasing output and reducing consumption, focusing on internal tap potentials, reducing production costs, reducing personnel costs, reducing labor costs, strengthening two fund management, expanding market, clearing out market, avoiding market risks, accelerating capital turnover, reducing interest cost and improving efficiency of capital utilization, focusing on adjusting operation structure and product structure, improving product quality and technical content, raising gross margin level, developing high end large clients and foreign direct customers, and ensuring the normal operation of main industries through the operation of the company, and striving to make up deficits and increase profits.

"These measures are all empty talk," they said in the report, "shortage of labor has become a bottleneck for enterprises' full production." now, in the response measures, it is proposed to reduce personnel and reduce labor costs. Is this not inconsistent? "It can be seen that investors are not buying the response measures in the report of the board of directors of Huafang textile.

In addition, in the sewage treatment, battery manufacturing and warehousing industry, Hua Fang

Also involved, especially in battery manufacturing, Huafang textile shows higher expectations and strong confidence.

But some investors said: "Huafang textile is a textile enterprise. The proportion of textile industry in its operation is more than 90%. If the industry involved is better, it will be a drop in the bucket for the company."