Super suppliers behind Nike, Uniqlo, Adidas and Hummer

Since the beginning of this year, the continued popularity of sports and leisure apparel, the transformation of footwear production and the depreciation of the RMB against the US dollar, the euro and the Japanese yen have brought new growth opportunities to the Chinese textile industry. Shenzhou International Group Holdings Limited (02313.HK) It is one of the big winners - it is a super-supplier behind the international brands such as Nike, Uniqlo, Adidas and Puma.

“Shenzhou International was listed in Hong Kong in 2005 and has quietly grown into the world's largest manufacturer of vertically integrated knitwear for many years,” Forbes reported on October 26. The Hong Kong-listed company also appeared in the list of the top 50 best-listed companies in the Asia-Pacific Forbes this year.

Official website shows, Shenzhou International Group Holdings Limited and its subsidiaries as China's largest integrated manufacturer of knitted portrait, one of the largest textile and clothing exporter to China, the main production base is located in Ningbo Economic and Technological Development Zone, covering products All kinds of knitted garments, including sportswear, casual wear, underwear, pajamas, etc.

In the first half of this year, many Chinese suppliers were affected by the poor sales of American apparel brands, such as Virginie (2199.HK), which is listed in Hong Kong. However, due to the market's increased demand for sportswear fabrics and casual wear, Shenzhou International has achieved growth. The purchases from international sports brands and Uniqlo contributed a significant portion of the company's revenue. In the first half of the year, orders from Nike, Uniqlo, Adidas and Hummer contributed about 80% of the company's revenue.

The company's 2016 interim financial report released recently showed that the Group's revenue in the first half of this year increased by 24.6% year-on-year to 6.95 billion yuan, and its profit increased by 29.4% year-on-year to 1.45 billion yuan (EPS: 1.04 yuan), which was better than analysts' expectations. According to the announcement, during the period, the reasons for the increase in sales included the expansion of overseas production bases to increase production capacity, and automated production to increase production efficiency; the increase in gross profit margin benefited from product structure optimization and the depreciation of the RMB.

This company, which is not familiar to mass consumers, has a considerable supply ratio in the procurement of clothing for many international brands: Nike 12%, Adidas 12%, Uniqlo 14%, and Hummer 30%. Forbes quoted a September report saying that Citibank predicts that these numbers will increase by 3-5 percentage points by 2020. In the past year, Shenzhou International's stable business has helped its stocks rise more than 40%.

Shenzhou International is currently the largest supplier of Nike knit uppers. As a textile company, its expansion in the footwear business stems from the replacement of a part of artificial leather by knitwear on shoes. Citibank said that the future growth rate of this type of knitted uppers is expected to exceed that of clothing.

The chairman of the group, Ma Jianrong, is from the company's knitting and weaving department to the position of the boss. At the end of the 1990s, he took over the seal from his father's hands and took control of Shenzhou. At that time, Shenzhou's output value was 1.2 billion, and the book profit was 15.06 million. After 7 years, the company's output value has doubled and the profit has increased 23 times. According to Forbes' 2016 China Rich List, Ma Jianrong, 52, is ranked 39th with a net worth of about 4.3 billion US dollars (about 29.11 billion yuan).