Standard Stock: Dialectics Under The Pressure Of "Breaking 7"

In April 10th, the US dollar fell to 6.992 yuan against the central parity of RMB, the first time it fell below the 7 yuan mark.

All kinds of events triggered by the appreciation of the renminbi are continuing. This time the protagonist has become a special equipment supplier with the three laureates of "China famous trademark", "China famous brand" and "national inspection free product". Xi'an standard industrial Limited by Share Ltd (hereinafter referred to as "standard share (love stock, market information)", 600302.SH.

In April 1st, standard stock issued the first quarter earnings preannouncement announcement: after preliminary calculation by the financial department, it is expected that the net profit in the first quarter of 2008 will be reduced by more than 50% compared with the same period last year (the net profit for the same period last year was 49 million 248 thousand yuan).

The above announcement was issued on the same day, the standard share opened in the air and opened down, followed by a downward search, eventually closing at 7.56 yuan per share.

It is generally believed that the pressure of RMB appreciation on standard shares is relatively obvious: the appreciation of RMB objectively affects the sales of products in the domestic market; at the same time, after the export tax rebate is lowered, the scale of export that is hard to see is also greatly reduced under the influence of RMB appreciation.

Under pressure

Standard shares are the leading enterprises of China's industrial sewing machines. Their products are exported to 125 countries and regions, such as Europe, America, Southeast Asia and Africa. The market share of sewing equipment is 11.32%, and sales revenue is second of the industry.

But now, the prominent position in the industry has not brought enough benefits to standard stock.

According to the latest statistics, export oriented clothing enterprises are obviously affected by the negative factors of the industry.

China's Machinery Industry Association said: "the recession in the textile industry has a great impact on the standard shares in the sewing equipment industry, because the domestic sales of the sewing machine industry can account for about 60% of the total."

At the same time, the export rebate rate of industrial sewing machines and the continuous appreciation of RMB have directly led to the increase in the cost of export of standard share equipment and the increase in exchange losses.

With the approval of the State Council, the Ministry of Finance and the State Administration of Taxation issued the circular on lowering the export tax rebate rate for some commodities in June 18, 2007.

Wu Tao, a standard share manager, said that the company's net profit reduction in the first quarter was due to the following reasons: in the early part of 2008, snow disaster occurred in most parts of southern China, resulting in the failure of the company's products to reach the sales market in time. At the same time, the appreciation of the renminbi, the export tax rebate rate of the textile and garment industry, the rise in labor costs, the rise in the prices of raw materials, and the demand for sewing equipment in the textile and garment industry were reduced.

In addition, Wu Tao believes that the sharp decline in standard share's profits in the first quarter is most directly related to the continued appreciation of the renminbi.

Dialectical view

Wu Tao expressed his view on the continued appreciation of the RMB: the impact of exchange gains and losses on the company needs to be dialectically treated. The impact of appreciation on various industries is more complex and multi angle. It is often interlaced with profits and profits, and the impact on the company also needs to be treated dialectically.

It is reported that the standard share that exports account for a large proportion of the main business has taken account of the factors of exchange rate loss in the external price, so the appropriate price increase will be considered.

Wu Tao further explained that the price increase is only one aspect, and the company will take different measures to different customers in different countries. The specific gains will depend on the actual situation.

Wu Tao believes that "the development and upgrading of new products is the main factor to enhance the core competitiveness of enterprises. In the face of this situation, the company is actively expanding overseas markets and improving the level of marketing services. While expanding the front line, we should carefully adjust the product mix and further optimize the product mix."

"The company's current product structure upgrading strategy ensures the steady growth trend in the future, and the product structure adjustment strategy is in line with the overall development direction of the industry. Smooth operation should be the main keynote for the future development of the company."

A few days ago, Weng Ximing, the chairman of the standard stock company, was holding the middle level of the company.