On March 7, Texhong Textile Group Limited (02678) held 2018 Annual Results Announcement Conference in Hong Kong.
Hong Tianzhu, Chairman and Chief Executive Officer of the Board of Directors, said that the process of vertical integration in two or three years was very hard, mainly because some garment factories purchased earlier were not the best in the industry, but the gross profit rate of some businesses in 2019 is still worth looking forward to. For example, the current vertical integration of Vietnamese cloth factories and yarn factories, the gross profit rate has risen to 14.8%. In the future, it will further integrate its business by establishing a joint venture with Winnitex Limited. As a leading enterprise in the woven dyeing fabric industry, Texhong has a higher gross profit rate of 20% - 25%. It is expected that the gross profit rate of this business will continue to improve in 2019.
In addition, Executive Director Xu Zihui added that the joint venture with Winnitex Limited, would start in March 2019. In addition to Vietnam's grey fabric gross profit rate is expected, the current knitted fabric gross profit rate also reaches 14.5%. With the increase of scale, and relying on the sales and R&D capabilities of Winnitex Limited, the business will also become the main driving force.
As for the jeans business, Hong Tianzhu said that at present, the internal vertical integration is still ongoing, and the jeans industry has the greatest room for innovation, so the integration is the most difficult.