Shenzhou International Group Holdings Ltd (02313) has released its interim results for the 2026 fiscal year, showing sales of approximately RMB 14.179 billion, a year-on-year decline of about 5.3%. Gross profit reached roughly RMB 3.197 billion, down approximately 21.2% year-on-year.
Net profit attributable to parent company shareholders stood at around RMB 1.905 billion, a decrease of about 40% compared to the same period last year. Basic earnings per share were RMB 1.27, with an interim dividend of HK$0.88 per share.
Key reasons for the significant profit decline
The company attributed the larger-than-expected profit drop to several factors. First, since its sales are primarily derived from export business settled in US dollars while financial statements are prepared in RMB, the rapid appreciation of the RMB against the US dollar negatively impacted the gross margin during the period. This also resulted in book losses from the revaluation of net US dollar liquid assets, mainly bank balances and accounts receivable.
Second, due to the macroeconomic environment, terminal inventory demand remained conservative, prompting brand customers to place orders more cautiously and causing greater volatility in order demand from certain clients. Additionally, wages and retirement benefit costs rose at the company's domestic and Vietnamese production bases. As capacity expanded in Vietnam and Cambodia, overall employee numbers increased, pushing labour-related expenses as a percentage of revenue up by approximately 2 percentage points during the period.
Third, the cost of chemical fibre raw materials increased with fluctuations in international oil prices, driving up overall production costs.
Global capacity expansion and operational optimisation
The group continues to optimise its global production capacity layout, steadily expanding overseas base capacity while deepening vertical integration across the industry chain. At the same time, it has intensified technical upgrades at domestic production bases, improving production automation to reduce headcount and enhance efficiency, thereby offsetting rising labour and manufacturing costs across the industry.
At its overseas bases, the new second fabric factory in Tay Ninh Province, Vietnam, is ramping up production smoothly and now has a daily fabric capacity of 100 tonnes. The flexible production line configuration better accommodates multi-category, differentiated order requirements.
Regarding domestic operations, the civil construction of new buildings at the Anhui apparel base has been fully completed. The company is currently advancing the installation of supporting facilities and production equipment, freeing up ample working space for a comprehensive technical upgrade of the base.
New overseas base expansion is progressing in an orderly manner. Land for the new Indonesian apparel project was officially transferred to the group in early August 2026, with civil construction scheduled to commence immediately, steadily advancing the diversified layout of overseas production capacity.