I. introduction of the company

1. A brief historical review:

The company was founded in 2000 and completed two major events before it went public in October 2017: the first is the functional protective glove production line, which was implemented in 2006 and officially put into production in 2008, upgrading the original ordinary gloves to functional gloves. including wear resistance, cutting resistance, puncture resistance, tear resistance, flame retardant, oil resistance, acid resistance, corrosion resistance, antistatic, thermal insulation and other properties. The second joint-stock reform in September 2011, capital securitization began to prepare for listing.

2. The main problems in the past development:

China's labor dividend has declined: half of the company's processes are automated, but half of them are labor-intensive, such as knitting, packaging, etc., so it is difficult to recruit workers, especially good employees. It is disadvantageous to the stability of the team and the improvement of proficiency. At the same time, domestic labor costs are rising.

The homogenization of products in the industry is relatively serious, and the competition intensifies: now the technology spreads rapidly, and the technical threshold of the industry is lower than when the company joined the industry in 2008, so the number of competitors has increased, and some small enterprises take advantage of low prices to seize market share, resulting in lower product prices.

Exchange rate issue: with the continuous improvement of the country's economic fundamentals and the continuous adjustment of the economic industry, the RMB must be strong and in the appreciation range in the long run, and the RMB is challenging the status of the US dollar. The appreciation of the renminbi at the beginning of this year has put more pressure on companies than in 2008.

The international trade environment of Chinese enterprises is getting worse: recently, tariff and non-tariff barriers have appeared in international trade, and tariff barriers have relatively little impact, mainly other barriers, such as anti-terrorism factories, and companies have to take cameras in all aspects of production, including loading and unloading, increasing costs. In addition, environmental barriers, product standard performance barriers are also very high.

The product is relatively single, at present, the company mainly produces labor protection gloves, other gloves such as medical, life, sports protection and so on need to be expanded.

3. How does the company deal with the problem:

Promote equipment automation and machine replacement, mainly including automated printing, inspection, packaging and other processes, earlier than all domestic competitors.

Through automation, the company has installed two robots and four more in debugging, all of which are customized and flexible robots. The company has also studied automatic printing robots for five years, and the technology has been relatively mature. Automatic printing and packaging robots are expected to be introduced into the company.

With the pre-evolution of the glove weaving machine, the production efficiency has been increased by 40%, the energy consumption has been reduced by 50%, and the labor cost has been reduced by 1%. The robot can monitor the data online, monitor the production situation on-line and adjust some processes automatically.

The whole value chain operation of products, including R & D, design, production and sales, is relatively weak at present. In the future, it is necessary to create technical and channel advantages and create an "olive" structure, that is, R & D and channels are relatively strong, and production can be appropriately weakened to improve the company's gross profit margin.

The company's glove business started relatively late, but it was able to catch up with its competitors who had been operating for 20-30 years, because of its accumulated advantages in technology.

The company plans to issue convertible bonds to produce 24 million tons of high-strength and high-modulus polyethylene fiber, which is involved in the upstream raw materials. The heat distribution of the fiber is uniform in the production process, so the fiber performance is balanced, the quality is better, the output is higher and the cost is lower.

The third aspect is internationalization, reduce costs and improve efficiency, improve performance through international production to evade tariffs, and combine sales and production in foreign markets.

At present, the company has laid out the production line in Vietnam, the local labor cost is 40% of that in China, the cost of raw materials is lower than that in China, the cost of electricity is 60% of that in China, and the value-added tax rate is 10%, and the import and export of export enterprises are exempt from customs duties. The income tax rate is reduced by four and a half, and the income tax for high-tech enterprises is exempt for nine years.

Vietnam's textile industry is developing rapidly. At present, Japanese-funded enterprises are the largest foreign-funded enterprises, while Korean-funded enterprises are the second largest. If the company produces in Vietnam for 17 years, it can increase its profit by 90 million yuan.

The company mainly makes protective gloves products. In November 2009, it acquired a stake in a glove distribution company in the United States, extending to the lower reaches of the industrial chain. The company will increase its product range, such as applied protection products, and increase its profit level in the future.

After globalization, the company will seize global market share through a low-cost product portfolio.

The company develops medical protective clothing and other products on the basis of strengthening the strength of high-performance polyester fiber. Foreign companies block the import of materials from China and only sell finished products. If they do not have high-strength materials, the bulletproof jackets produced will cause problems of sag and collapse.

Second, Quan A link

1. Statistics show that global labor glove imports totaled only US $3 billion in 2016. How much room for the company's future development?

Statistics can not represent the actual space, because this data is only customs statistics of import and export trade, there are a lot of smuggling, domestic data do not have statistics.

Secondly, the improvement of the performance-to-price ratio of protective products has led to the growth of market demand. at present, there are no less than 300000 glove knitting machines in China, and the annual sales volume of glove knitting machinery is more than 10, 000, indicating that the production demand is relatively strong.

In addition, the demand for terminal gloves for daily use is also increasing.

The price of a glove knitting machine is between 1.55-17500 yuan, the company is independent research and development, fixed-point procurement of production equipment.

2. How to view the trend of industry competition in the future?

After the technology diffusion, the threshold is lowered and the competition is intensified. At present, the investment of medical gloves is higher and the threshold is higher than that of industrial gloves. the investment of a medical production line is 30 million, while that of industrial production line is only about 1 million.

Small enterprises in social security, taxation, environmental protection and other aspects of non-standard operation, and unfair competition with the company, the company invested more than 20 million in environmental protection, in the future through internationalization to set up local factories, reduce costs and improve the competitiveness of the company.

Therefore, the company has competitive pressure, especially the middle and low-end conventional products, but take various measures to reduce costs. The company focuses on the mid-and high-end market, and a high-end product previously developed brings a profit of 2000-30 million a year.

3. The production capacity expansion plan of the company's labor protection gloves?

The company also makes ordinary gloves with a low gross profit margin, mainly to meet customers' one-stop service. In 2017, it produced 6.2 million sets and sold 6.05 million sets.

The company has a production capacity of 8.9 million sets of functional gloves, some of which were produced by outsourced factories in 2017, with a total sales volume of 10.24 million sets.

In terms of capacity expansion, the company's IPO investment projects include an annual production capacity of 10.5 million dozen special protective gloves and an annual production capacity of 3 million dozen special protective gloves hand wick projects, as well as the old factory capacity transfer project, but so far the new project has not been put into production, and the company's production target is 15 million dozen.

In the future, on the one hand, the intelligent equipment is still going on, on the other hand, the company has cooperated with three schools in the past five years to develop high-strength anti-cutting gloves, which has successfully surpassed the Dutch competitors and is in the stage of market promotion. The proportion of middle and high-end gloves is increasing.

4. In the future, the growth point of the company will mainly come from old customers or new customers?

The company's biggest customer is the trader Hong Kong Xinya, which is an intermediate service provider, as the front sales role, the company is responsible for R & D and production, is the backstage role, the two sides sign a strategic agreement, the company meets Xinya's orders according to production capacity.

The end customers faced by Xinya will also come to the company to inspect the factory. Xinye only plays the role of its service provider to facilitate the management of the supply chain. If Xinya does not cooperate with the company, the company can directly find the final brand to cooperate.

The company will enlarge the old customers and gradually increase the number of varieties and orders for a single variety, but at the same time the company will also open up new customers.

In addition, sales growth also depends on combined orders, that is, if customers want to use the company's new products, the company will also need them to buy some regular products for matching sales.

The company adopts an one-household, one-policy sales policy to carry out targeted services, some customers focus on quality, some customers focus on price, and some customers focus on new products, for example, the affordable price of the same products in Eastern Europe is lower than that in Western Europe, and that in Western Europe is lower than that in Northern Europe.

5. Will the company's acquisition of distribution trademarks threaten existing customers and dealers?

The scale of dealers acquired by the company is relatively small, with revenue of US $70 million and EBITDA of US $16 million in 2017, with good economic benefits.

The company attaches great importance to the Mexican market, the acquisition of the main channel resources and markets are located in Mexico, the company can use the target to expand the local labor protection equipment market, but there will not be a big contradiction with existing customers.

6. The appreciation of RMB exchange rate is relatively large, which has an impact on the company's gross profit margin. What measures does the company have to deal with it?

The measures taken by the company are mainly in three aspects:

One is to control costs, reform and deepen production cost management, and promote the application of automated production equipment and robots; n the second is to increase the proportion of income from value-added gloves and improve the product structure. At present, high, medium and low levels of product income each account for 33%, which can also increase profits; n the third is to do financial derivatives, and 16 million foreign exchange has been settled so far this year to lock in the exchange rate through financial products.

7. Why did the company choose to build a factory in Vietnam?

The main reason is cost.

Secondly, there is the sustainability of development. Vietnam still has a demographic dividend period of at least 10 years, with a total population of 91 million, of which 70 per cent are under the age of 30.

Finally, there is the trade environment. China's exports to Japan are subject to tariffs, but Vietnam's exports to Japan are duty-free, and low tariffs can benefit customers.

8. Is the company's international talent reserve adequate?

The company introduces more automatic and information-based equipment, reducing the dependence on manual management; labor protection gloves are non-standard products, need to adjust temperature and other indicators in the production process, labor is not stable enough, need machines to adjust.

The company has upgraded the management model, and the management team of the Vietnam factory has been put in place, including vice president, workshop director and technical backbone. Vietnamese workers will come to the Chinese headquarters for training and become production monitor when they go back.

9. Why does the company invest in the upstream production capacity of high-strength and high-modulus polyethylene fiber?

High-strength and high-modulus polyethylene fiber is used in military industry, aviation, safety protection, medical and health and other fields, the demand is relatively large, the global market is in short supply, domestic high-end products are mainly imported.

At present, there are more than a dozen domestic enterprises can produce high-strength and high-modulus polyethylene fiber, the company's production capacity is the smallest, the largest is Likang shares, but the first few major fibers are on the low-end side. After years of research and development technology has been basically mature, positioning in the high-end market, competitors a piece of fiber weight 150 grams, sell 200 yuan per kilogram, the company a piece of fiber weight 80 grams, sell 300 yuan per kilogram.

10. What are the advantages of dry process and wet process in the production of high strength and high modulus polyethylene fiber?

The dry production process is shorter, the output is higher, the production is safer, and the fine denier can be achieved.

The technical threshold of the wet process is low, the process is mature, and the investment is relatively low. the company is the second enterprise in China to produce high-strength and high-modulus polyethylene fiber by wet process, but the technology is more advanced than the first one. This time, advanced production equipment is introduced through fund-raising through convertible bonds, and the dry process is used to upgrade the existing wet process to produce fiber products with higher performance.