【Blue Chip Earnings】Shenzhou International's profit decreased by 6.7% last year, final dividend of 1.2 yuan. The industry shows a "strong supply, weak demand" pattern, and Middle Eastern geopolitical conflicts have driven up the costs of chemical fiber raw materials.

Shenzhou International (02313) announced its 2025 results, reporting a net profit of 5.83 billion yuan (RMB, same below), a year-on-year decline of 6.7%. The main reason is that the net profit for 2024 included a gain of approximately 330 million yuan from the transfer of a wholly-owned subsidiary’s equity, and the appreciation of the RMB against the USD led to a foreign exchange loss of about 260 million yuan. Shenzhou International plans to declare a final dividend of 1.2 HKD, a year-on-year decline of 6.3%, with total annual dividends of 2.58 HKD per share, an increase of 2%. The dividend payout ratio is approximately 60.9%.

Last year, Shenzhou International’s sales amounted to approximately 30.99 billion yuan, an increase of 8.1% year-on-year. Sales of sports products increased by about 5.9%, mainly due to increased demand for sports products in the U.S. and European markets. Sales of leisure products rose by about 16.7%, primarily due to a significant increase in demand for leisure products in Japan and other markets. However, affected by a decline in lingerie demand in the Japanese market, sales of lingerie products slightly dropped by about 2.3%.

Shenzhou noted that during the year, the number of employees at the group’s overseas production bases further increased, and production capacity was gradually released, providing capacity assurance for continuous sales revenue growth. However, the rise in labor costs, sharing a portion of the import tariffs for the U.S. market with customers, and the appreciation of the RMB against the USD weakened the recovery of profit levels. The group’s gross profit margin fell by about 1.8 percentage points year-on-year to approximately 26.3%.

The global textile and apparel industry faces multiple pressures and challenges

The group mentioned that currently, the global textile and apparel industry faces multiple pressures and challenges, mainly characterized by weak growth in end demand, intense market price competition, continuous rise in production costs, increased volatility in raw material prices, tense geopolitical situations, and a complex and changing trade environment. The overall industry presents a “strong supply and weak demand” operational pattern. Domestic production capacity is squeezed by multiple factors such as weak recovery in domestic demand, the shift of overseas demand, and rising comprehensive costs. Some enterprises have adopted a business model that exchanges price for quantity, with production capacity continuously shifting to Southeast Asia and other regions. At the same time, labor costs are rising year by year, and the volatility of the RMB against the USD has increased the foreign exchange risk for export enterprises, further compressing the industry’s profit space.

The group also indicated that geopolitical conflicts in the Middle East have led to significant fluctuations in international oil prices, which not only raise the costs of synthetic fiber raw materials but also cause extended logistics cycles and increased transportation costs. The uncertainty of U.S. tariff policies and increased scrutiny on re-export trade continue to exert pressure on the market share of Chinese textile and apparel products in the U.S. market.

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