Shenzhou International (02313) Fa Ying Guang expects profit attributable to parent company owners to decrease by about 38% to 43% year-on-year in the medium term

According to Zhitong Finance App, Shenzhou International (02313) issued an announcement. The Group expects profit attributable to parent company owners during this period to be reduced by about 38% to 43% compared to the profit of about RMB 3.177 billion for the same period in 2025.

According to the Group's current data, the above profit decline was mainly due to multiple challenges in the Group's business environment, rising raw material costs and labor costs during the period, compounded by a marked appreciation in the exchange rate of RMB against the US dollar, and a slight decline in sales scale due to weak demand, which had a negative impact on the Group's gross margin and caused exchange losses during the current period (exchange earnings for the same period of 2025). Further analysis is as follows:

1. The impact of the increase in the exchange rate of RMB against the US dollar: The average exchange rate of RMB against the US dollar in the first half of 2026 increased by about 4% compared to the same period in 2025. The Group's main business is exports, the US dollar is also the main revenue currency, and the currency for preparing financial statements is RMB. The rapid appreciation of RMB during this period had a negative impact on the Group's trade and the revaluation of net current assets in US dollars (mainly bank balances and accounts receivable);

2. Impact of rising labor and retirement benefit costs and raw material costs: Salaries and retirement benefits in various parts of the Group increased during this period. With the expansion of the Group's production capacity in Vietnam and Cambodia, the overall number of workers in the Group has increased. These new production capacities are still climbing, and there is still room for improvement in production efficiency. At the same time, as the cost of raw materials for yarn rises in international oil prices, labor-related expenses and rising raw material prices for yarn have jointly boosted overall labor and manufacturing costs; and

3. Insufficient demand and the impact of the external environment: Affected by macroeconomic uncertainty, tariff policies and inflation risks, terminal stocking demand was conservative, and brand customers were more cautious in placing orders during this period, leading to increased fluctuations in order demand during this period. The Group's operating income decreased compared to the same period last year, and tariff concessions also had a negative impact.

The Group will continue to closely monitor changes in the global political and economic environment, and will continue to respond with rapid response as the core to balance domestic and foreign production capacity needs and improve operational efficiency.