Rapid decline in the inventory turnover rate

Mainland garment companies have become the hardest-hit areas for this year's A-share IPO (initial public offering) applications. According to statistics, a total of 11 IPO applications for apparel companies took place this year, of which 6 were denied and only 45% had passed. An investment bank official of Ping An Securities believes that the rapid decline in inventory turnover or the risk of sales and finance is one of the most important reasons for this type of company's IPO application this year.

The investment bank further explained that since last year, the cost of garment enterprises in the Mainland has generally risen sharply. In order to ease the pressure of rising costs, such companies began to increase their sales prices by a large margin, by about 10% to 20%. This has led to a substantial increase in the inventory of clothing companies that are pursuing gross margins, and a sharp drop in inventory turnover rate. Larger sales risks and continued profitability are further affected. The apparel companies that have been denied IPO applications this year have basically had such problems. Facts have proved that the rapid decline in inventory turnover has a greater impact on the stable operation of the company.

On the other hand, the competition in the apparel industry in the Mainland is very fierce, and the entry threshold for the industry is also relatively low. Therefore, whether or not it has strong core competitiveness determines the market prospects of apparel companies to a certain extent. An investment banker of Haitong Securities suggested that R&D design and marketing channel construction are the two core competitiveness of apparel companies. On the one hand, apparel companies planning to market should increase investment in R&D and design; on the other hand, they should increase single store sales. Outlets) average sales volume and sales capacity.

However, the lower meeting rate did not affect the IPO enthusiasm of such companies. It is reported that a number of apparel companies have already submitted A-share IPO applications and are waiting in line to be reviewed.