Two Of The Epidemic Prevention And Rehabilitation Work Is Correct. Shenzhou International Has Been Restored To 95%+ In Late February.

Because of the impact of the epidemic, the market panic has amplified the short-term impact of Shenzhou group's business, and the long-term competitiveness of the company will become more prominent in the face of challenges. The current stock price adjustment makes its valuation attractive, providing a historic opportunity for long-term investment.

Shenzhou group's domestic plant resumed in February 10, 2020. By the end of February, the overall capacity of the Shenzhou group has been restored to 95%+, and its overseas Vietnam and Kampuchea factories have not been affected by the epidemic. Production activities have been carried out normally. In February 25th, the group's domestic factories have resumed recruitment. As of February 28th, Shenzhou group's overall capacity has reached 95% of the original normal capacity. 　　

Shenzhou group has complete production chain, comprehensive production capacity layout, and customer orders are expected to be concentrated. The company has vertical integration production chain, saving logistics transportation and order connection time, ensuring stable delivery time. Capacity layout and fabric production capacity are estimated both at home and abroad. We estimate that overseas capacity is 45%, and garment production capacity is estimated to be 30%+.

The new crown outbreak in China, Shenzhou group's overseas production capacity is developing normally. At present, domestic capacity is also restored to a large extent and supplies are stable. The company's short-term orders are stable. It is expected that 2020H1 order production and transactions will be carried out normally. Long term orders will have long-term core competitiveness due to stable cooperation with customers, and the gradual expansion of capacity will bring steady business growth.

Shenzhou group integrates R & D and comprehensive production management capabilities to create a modular production mode to improve production efficiency through high investment in equipment (annual capital expenditure accounts for more than 30% of net profit).

Shenzhou group attaches great importance to staff welfare management, employee costs account for more than 20% of revenue, and production team is stable, with a monthly turnover rate of only about 5%.

In addition, with the change of the global terminal consumer demand, the leading brand business associations in the future will have a higher demand for suppliers' quick response, and the production stability of small and medium-sized manufacturing enterprises will be challenged during the health events. Shen Zhou group is the leader, and its production stability and short term competitiveness will be highlighted, and the order is expected to be concentrated.