During the reporting period, global clothing consumption showed a recovery trend, and the structural demand for restocking after destocking in the early stage increased. Due to the epidemic, the supply chains in Southeast Asia, South Asia and other places were affected. Some over

　The world's largest color spinning manufacturer and supplier-Huafu Fashion Co., Ltd. (hereinafter referred to as "Huafu Fashion") recently reported the 2021 annual report and the 2021 first quarter report.

　　In 2021, Huafu Fashion achieved operating income of 16.71 billion yuan, a year-on-year increase of 17.4%, and a net profit attributable to the parent company of 570 million yuan, turning losses into profits. During the reporting period, global clothing consumption showed a recovery trend, and the structural demand for restocking after destocking in the early stage increased. Due to the epidemic, the supply chains in Southeast Asia, South Asia and other places were affected. Some overseas orders were phased back to China, and raw material prices fluctuated upward driven by the United States' policy of leading quantitative easing.

　　Looking at products, during the reporting period, Huafu Fashion's yarn business achieved operating income of 6.631 billion yuan, accounting for 39.7% of the operating income, a year-on-year increase of 16.2%; the network chain business achieved operating income of 9.655 billion yuan, accounting for 57.8% of the operating income), a year-on-year increase of 16.3%; the sock products business achieved operating income of 269 million yuan, accounting for 1.6% of the operating income), a year-on-year increase of 79.9%.

　　By region, during the reporting period, Huafu Fashion's overseas main business achieved operating income of 2.184 billion yuan, accounting for 13.1% of the operating income, a year-on-year increase of 68.5%; domestic main business achieved operating income of 14.413 billion yuan, accounting for 86.3% of the operating income, a year-on-year increase of 12.1%; other income was 111 million yuan, accounting for 0.7% of the operating income, a year-on-year increase of 51.5%.

　　In the context of some overseas brands restricting Xinjiang cotton , Huafu Fashion takes advantage of its brand and product advantages, adjusts market and customer structure, adjusts and optimizes the main yarn business, vigorously develops network chain business, and actively promotes the upgrade of digital and intelligent .

　In terms of the main yarn business, Huafu Fashion actively expands the domestic market and non-US international markets, and establishes strategic cooperative relationships with many domestic brands. The market increase of domestic brands has made up for the gap in overseas orders. The company has taken effective measures to control the rhythm of production and sales balance, allocate company resources based on the order value, improve production capacity efficiency through order aggregation, and improve yarn production efficiency and reduce costs through digital and intelligent improvement, overcoming the test of the impact of the phased epidemic in some regions. A number of measures have significantly increased gross profit margin.

　　At the same time, Huafu Fashion actively developed its network chain business, grasping the market conditions at the front end and achieving both volume and profit growth, and the back-end network chain achieved a breakthrough in the sock industry category.

　　In the first quarter of 2022, Huafu Fashion achieved operating income of 4.147 billion yuan, an increase of 7.87% compared with the same period last year, and a net profit attributable to the parent company of 150 million yuan, an increase of 14.36% compared with the same period last year.

Looking to the future, Huafu Fashion said: First, the company will actively build a domestic market supply chain based on internal circulation. As the world's largest clothing market, the Chinese market has great potential for growth and upgrading, and the national trend brands have risen strongly, tapping value customers and continuously expanding the domestic market space; the second is to adhere to the main business and become bigger and stronger. Digital investment, industry and finance combined with , seize the opportunity to improve the concentration of industry, and focus on the four main lines of functional technology, fashion and fast reaction, sustainable development, and high-quality development of , and become a supplier of all categories; the third is to share industries and cultivate new businesses vertically. Embrace the historical opportunities of industrial Internet and create a professional textile supply chain platform .

　　First Textile Network learned here that since the second half of 2020, Huafu Fashion has actively promoted digital and intelligent upgrades, adjusted the market and product structure, optimistic about the market prospects under domestic consumption upgrading, and actively built a domestic market supply chain based on internal circulation. After nearly a year of hard work, the expected results have been achieved, the orders have returned to normal levels, and the performance has gradually begun to be reflected in 2021.

　　In 2022, Huafu Fashion will increase its support for the four major businesses in the stockings industry. In addition, the company will also build a new 300,000-spinned intelligent spinning industrial park project in Huaibei, Anhui. The company admitted that Huaibei production capacity construction will mainly focus on products with differentiated competitiveness and provide customers with better comprehensive services. Industry insiders believe that with the continued recovery of downstream demand since 2021, Huafu Fashion has quickly adjusted its customer structure after the sanctions list incident and carried out strategic cooperation with domestic brands to digest the impact of overseas orders. According to observation, Huafu Fashion plans to expand production of 800,000 ingots in Anhui and Vietnam, and increase its production capacity by 100,000 ingots each year at home and abroad. The capacity utilization rate after the epidemic will rebound to 95%, fully ensuring order growth.

　　　　Hao Liyuan, an analyst at Guojin Securities, previously pointed out that Huafu Fashion has currently established cooperation with more than 7,000 direct customers and more than 1,000 leading overseas customers. The marketing network covers more than 60 countries and regions, covering categories such as leisure, sports, underwear, children's clothing, etc. The main cooperative brands include H&M, Uniqlo , Gap, Nike, Adidas, Anta , Lining , XP , etc. From 2016 to 2020, the proportion of Huafu Fashion's top 5 customers remained at around 10%, and the customer structure was stable. Huafu Fashion also quickly adjusted its customer structure at home and abroad and continued to deepen its cooperation with high-quality domestic brands. In May 2020, the US Department of Commerce included Huafu's subsidiary Aksu Huafu on the entity list. The company quickly adjusted its customer structure and increased its cooperation with domestic leading sports and leisure brands Li Ning, Anta, 361 Degrees , HaiLan Home , Peacebird , etc. According to channel research data, the proportion of domestic and foreign orders has been adjusted from 3:7 to 6:4, and the return of orders has alleviated the impact of the cancellation of cooperation among some overseas brands. In addition, under the catalysis of the Xinjiang cotton incident, national trend brands have accelerated their rise. Since March 21, domestic sports brands Anta and Li Ning have maintained a good growth momentum on the monthly GMV of Tmall platform, which has promoted the company's orders.

　　Public information shows that Huafu Fashion, as one of the world's largest color spinning manufacturers and suppliers, mainly engages in medium and high-end color spinning yarns, and provides high-end new types of blank yarns and dyed yarns, and also provides value-added services such as fashion trends, raw materials and product certification , technical consultation, etc. Through the integrated innovation of color, material and process technology, we provide customers with high-quality products and services. While adhering to its main business, the company shares the industry and uses yarn to connect the textile and garment industry, integrates cotton planting, cotton processing, warehousing and logistics, flower yarn trading, and textile and clothing supply chains, achieving the connection between front and back industries, and is committed to becoming a global textile and clothing industry fashion operator.

　　In terms of main yarns, Huafu Fashion relies on the national Belt and Road strategy to implement a balanced production capacity layout at home and abroad. Currently, the yarn production capacity is 2.06 million ingots, with an annual output of 290,000 tons of new yarns. The production base covers eastern China, Xinjiang, Vietnam and other places.

　As of the previous trading day before the publication of the First Textile Network tonight, Huafu Fashion closed at 4.64 yuan per share, an increase of 1.39%, with a market value of 6.19 billion yuan. (First Textile Network martin)