The epidemic has suppressed demand momentum, and major clothing brands have cut orders. Hong Zhenhai, chairman of textile stock Wang Ruhong, said that the decline in orders from major customers Nike and Lululemon in the third quarter may reach 30-40%. A total of tens of millions of garments will be delayed in shipment.
Ruhong held an online legal conference on May 11. Chairman Hong admitted at the beginning that “the last legal conference was overly optimistic.” He said that due to the impact of the new coronavirus Due to the impact of the epidemic, many European and American customers have stopped working one after another, and orders have been frozen rapidly since late March. “Some customers have canceled orders, and some have postponed orders.”
As for the performance in the second quarter, Ruhong estimates that April will be the weakest, and May and June are expected to recover slightly. However, the delay in customer orders has not changed, and some Orders have been deferred to the third and fourth quarters, and at worst, even to the first quarter of next year. Currently, more than 10 million pieces of ready-made garments have been delayed in shipment. “Overall, it is impossible to grow in the second quarter.”
Observing Ruhong’s major customers, the order decline rate for Nike and Lululemon in the third quarter reached about 30-40%.
In terms of customer payment status, Chairman Hong said that except for Nike and Lululemon, the vast majority of customers have delayed payment, even up to 120 days.
Looking forward to the future, Chairman Hong believes that “the suspension of consumption for one quarter will affect the second quarter.” Downstream customers are bound to consume inventory, and the performance in the third quarter is likely to continue. Extend the weak trend. The epidemic is full of uncertainties, and it is still impossible to predict the future. One month after the United States announces the unblocking, the order visibility will be clear after observing the market buying momentum and customer inventory depletion.
This year’s performance may not be as good as before. Chairman Hong said that the progress of the Indonesian factory construction plan remains unchanged, but the scale of the production lines will be halved. 60 production lines will be completed first. In the future Depending on the order structure, consider the next step. In addition, he emphasized that the company will not take unpaid leave at present and work will continue as usual. Employees will not be fired unless they commit serious deficiencies.
Ruhong recently announced that its net profit after tax in the first quarter was NT$696 million, an annual decrease of 22.66%, leaving only NT$2.54 in earnings per share.
