Spring of automotive textiles continues

Huayu (Xiamen) New Materials Technology Co., Ltd., a domestic automotive airbag core component supplier, conducted an online roadshow. Huasheng Technology successfully met at the end of July and will be listed on the Shanghai Stock Exchange. The company plans to publicly issue new shares of no more than 35 million shares, and the transfer of old shares does not exceed 17.5 million shares. It plans to raise funds of 471 million yuan for investment in airbag fabrics for new plant projects, industrial fabrics for new R&D center projects, and additional working capital.

In the past few years, problems such as fluctuations in performance, product quality inspections, high inventory, overcapacity, high production costs, and persistently low exports have caused textile and garment companies to become the IPO-prone areas. As of September 11th, the number of enterprises queuing for IPO in the textile and clothing industry was 23. There were six IPOs of textile and garment companies including Piggy Banner, Wissman, etc., and the IPOs of seven companies were suspended for review. And Chinachem Technology has become the only new conference company among 23 companies applying for IPO.

For the listing of Huasheng Technology, CSCIC believes that its technology and production capacity are already in the leading position in the industry. The company’s major customers, Brillant, Autolif, and Githert, are all outstanding manufacturers of automotive safety products. The three companies contribute more than 65% of their total revenue, and their customer base is solid. At present, the market share of domestic automotive safety cloth is about 10%, which is in the leading position in the industry. The market share of automobile air bag is about 2%, and the market status is not prominent yet, but the growth momentum is good. In the future, the company’s market share in airbag bags will be the main driving force for its revenue growth.

2013 revenue of RMB 396 million. Upstream and downstream customers concentrate Chinachem Technology is a major automotive airbag core component supplier in China. The main products are airbag fabrics and airbags. It is the first company in China to produce airbag fabrics. The company was formerly known as Huayu (Xiamen) Textile Co., Ltd. and was established in May 2002. It is a wholly foreign-owned enterprise invested by British Virgin Islands Kingway International Co., Ltd. in Xiamen. It was put into production in April 2004 and the company was renamed in April 2010. Huayu (Xiamen) New Material Technology Co., Ltd., was renamed Chinachem Technology in June 2010.

According to the prospectus, the company's operating income for 2011 to 2013 was 275 million yuan, 297 million yuan, and 396 million yuan respectively. During the reporting period, operating income remained stable.

At present, China Resources Technology has ample capacity in the upper reaches of the industry, with steady growth in downstream demand and a stable competitive landscape. The airbag fabric industry upstream is the chemical fiber industry. The main raw material for airbag fabrics is the nylon 66 industrial yarn for airbag fabric in nylon filaments, which belongs to the chemical fiber industry. Nylon filaments are characterized by high strength, wear resistance and good resilience. The development status of the upstream industry is directly related to the issuer’s product quality, raw material procurement costs and the company’s normal production and operation.

According to the prospectus, only the German company (POLYAMIDEHIGHPERFORMANCEGMBH, a world-famous supplier of high-performance polyamides), Bolimar Shenma (a joint venture between the German PHP and Shenma Group) and INVISTA, etc., can produce airbags. The main raw material of cloth is nylon 66 industrial yarn, which makes the company's main raw material suppliers more concentrated. The company's airbag fabric, the main raw material for the company's airbag fabrics, is mainly derived from the Palléma Shenma, the German PHP and INVISTA. According to the data provided in the prospectus, from 2011 to 2013, the company’s total purchases to the top five suppliers accounted for 89.34%, 87.07%, and 83.73%, respectively, and the company’s purchases from the top suppliers in 2012 and 2013 The proportion of the total purchase amount exceeded 50%, which was 53.08% and 63.11% respectively.

According to the disclosure of the prospectus, a small number of airbag system suppliers that accounted for a major share of the sector in the country are major customers of the company. For example, Otoliv, Githert, Jinzhou Jinheng, Shanghai Huitai and Yanfeng Bailide. In 2011, 2012, 2013 and the first quarter of 2014, the sales revenue of the company to the top five customers accounted for 71.15%, 70.30%, 71.55% and 77.40%, respectively. Among them, the world-leading supplier of automotive safety systems, Bai Lide's joint venture in China, Yanfeng Bally has been the company's largest customer. From 2011 to 2013, the revenue contributed by Yanfeng Bai Lide to the company accounted for 23.46%, 20.94% and 23.95% of the company's total revenue respectively, with the specific amounts of 64.53 million yuan, 62.14 million yuan and 94.94 million yuan, respectively. At a stable level.

The changes in the profitability of the airbag industry mainly depend on the production and sales volume of downstream vehicles and the increase or decrease in the allocation rate of single vehicles. According to the prospectus, although Huasheng Technology's operating revenue from 2011 to 2013 were 275 million yuan, 297 million yuan, and 396 million yuan respectively, showing an upward trend, it is noteworthy that the airbag fabric accounted for the company from 2011 to 2013. The proportion of operating revenue decreased year-by-year to 92.80%, 87.57%, and 76.20%, respectively. In the first quarter of 2014, the proportion of airbag fabrics in operating revenue even fell to 63.14%.

In the prospectus, Huasheng Technology stated that at present, sales of airbag fabrics and airbags of the company are mainly based on the domestic market, and the proportion of exports is low. Its international marketing capabilities still need to be strengthened. In addition, the capital strength of Huasheng Technology Co., Ltd. has a large gap with the large international manufacturers. Technological R&D, business expansion, and capacity increase all need to be based on strong capital. The company needs to further enhance the company’s capital strength in order to enhance its international competitiveness.

The demand for airbag fabrics grows brightly for automotive textiles

Downstream of the airbag fabric industry is the automotive industry. The continuous high growth of domestic car sales has accelerated the development of the airbag fabric industry.

In 2011 and 2012, China's auto production and sales both exceeded 18 million units. In 2013, China's auto production and sales volume were 22,116,800 and 21,479,100 respectively, an increase of 14.76% and 13.87% year-on-year (Data Source: China Automobile Association, Flushing Industry Data). It not only ranks first in the world, but also hits a new high in global history.

Judging from the production data, according to the "Automotive Production Data of All Countries in 2013" issued by the Korea Automobile Industry Association, the global automobile production in 2013 reached 87.38 million, an increase of 2.7% year-on-year, of which China's automobile output was 22.117 million, an increase of 14.8%. The proportion of global total output reached 25.3%, ranking first in the world for five consecutive years. Some experts pointed out that by 2020, the global car ownership will exceed 1 billion vehicles, that is to say, in the next 7 years, the annual increase in car ownership will reach 12% to 15%.

In recent years, transport textiles have shown a rapid growth, and the industry’s total sales revenue and profits have increased by more than 15%. According to statistics, there are currently more than 80 types of textile materials used in automobiles, and each car needs about 20 kilograms of textile materials. Therefore, automotive textiles will have tremendous room for development in the future and will move toward high-end series.

The research and production of domestic airbags are relatively late, and the products are mainly based on independent design. At present, domestic manufacturers of airbag fabrics, in addition to Chinachem Technology, mainly include Kelon (Nanjing) Special Textile Co., Ltd., Marui Fabrics (Nantong) Co., Ltd., Jiangyin Duol Automotive Fabrics Co., Ltd., and Shanghai Boshe Textile Technology Co., Ltd. Company, Toyobo Automobile Fittings (Changshu) Co., Ltd., and Riyan Teijin Automotive Safety Fabrics (Nantong) Co., Ltd.

It is understood that the Chinese government has already requested that from 2004 onwards, all light vehicles under 9 rows should be equipped with airbag devices in the main and copilot positions. Otherwise, they will not be allowed to drive on the road. More and more automobiles in China are equipped with airbags, which makes the demand for airbag fabrics grow rapidly.

The “13th Five-Year Plan” of the textile industry is expected to be introduced at the end of next year, and the emphasis will be placed on expanding the scale of high-tech fibers and increasing the market share of industrial textiles. Gao Yong, vice president of the China National Textile and Apparel Industry Federation, said that focusing on the development of high-tech fiber is to do large-scale industrial textile market scale and increase its share of the entire textile industry. It can be foreseen that automotive textiles represented by airbag cloth will become a new growth point for China's textile industry in the coming period.