Changes in Hong Kong stocks | Tianhong International Group (02678) rose more than 3%, and the medium-term net profit is expected to increase by about 75% year on year, and the company's overseas production capacity and low-cost procurement advantages continue

The Zhitong Finance App learned that Tianhong International Group (02678) rose more than 3%. As of press release, it had risen 2.95% to HK$6.64, with a turnover of HK$19.95 million.

According to the news, recently, Tianhong International Group announced that it is expected that the Group will record net profit for the six months ending June 30, 2026, an increase of about 75% compared to approximately RMB 464 million for the six months ending June 30, 2025. According to the announcement, the Group's expected sharp increase in net profit is mainly due to steady demand in the textile market in the first half of 2026, sufficient business orders, increased product sales and capacity utilization compared to the first half of 2025, and a significant increase in gross profit. Furthermore, thanks to the continuous optimization of the Group's balance and liability structure, financial expenses for the first half of 2026 also declined significantly compared to the first half of 2025.

According to the CICC Research Report, the company's gross margin is expected to increase year-on-year. As cotton prices rise, the low-cost raw material inventory purchased by the company in the early stages is accompanied by smooth sales of products, and it is expected that the inventory price difference will be released; at the same time, the price difference of cotton within and outside 1H26 remains about 2,000-3,000 yuan/ton, and the low-cost procurement advantage of the company's overseas production capacity continues. Along with the increase in orders and the increase in production capacity utilization, fixed costs are further diluted, and technical reform continues to be promoted to reduce costs. It is expected that the company's operating leverage will be released at an accelerated pace, leading to a year-on-year improvement in gross margin.