Textile And Garment Export Tax Rebate Rate Increased From 11% To 13%

In this report, we made an empirical analysis on the policy starting point, pmission mechanism, the change of export growth before and after adjustment, and the impact on earnings.

It needs to be pointed out that this report is mainly to make an in-depth analysis of the topic at the industry level and provide a more systematic reference for the market. Because the export form is not optimistic, we are not based on the recommendation of stocks.

In the five adjustment stages of history, the reduction of export tax rebate rate often occurs when export performance is good, while the State adopts a tightening policy. The starting point of regulation and control mainly includes reducing the burden on the state finance, reducing trade frictions and so on, and adjusting to a minimum of 6%.

The increase of export tax rebate rate often occurs in the stage of deterioration of export environment and difficulties encountered by export enterprises. The starting point of regulation and control mainly includes coping with the outbreak of the Asian financial crisis, promoting exports and supporting the weaving industry, maintaining social stability, and so on, with a maximum adjustment of 17%.

From the point of view of regulation and control, in the 5 reduction of export rebate rate in history, except for the reduction in December 1996, it did not bring down the export growth rate, and the other 4 times brought down to varying degrees. In 1995 and 2007, the two adjustment brought about a more obvious decline, while the second half of the year slipped and the outbreak of the US sub debt crisis had a great relationship. In the 4 increase of export rebate rate in the past, the upward trend in 1998 failed to stop the downward trend of exports, and the growth rate of exports accelerated after the 3 increase in 1999 and 2001. Of course, the extinction of the Asian financial crisis is the fundamental reason for the growth of export growth.

In empirical research, the industry's overall profit data can only be traced back to 2003, so we can only see the impact of the tax rebate rate reduction: the short-term negative effects on income, gross profit margin, pre tax profit and other indicators are more obvious, but after a period of digestion, the overall profitability of enterprises will gradually return to the level before the tax rate adjustment.

The overall background of the increase in tax rebate rate is that the secondary debt crisis and the appreciation of the renminbi weakened in the second half of 2007 will weaken the export competitiveness of the related products, resulting in the deterioration of China's textile and garment export environment.

We expect that the increase in the export tax rebate rate will have obvious effect on the short-term subsidy to the enterprise's profits. However, the growth of export earnings and profits will depend on the changes of the export environment, the comparative advantage of the enterprises, and the purchasing policies of the main importing countries and regions.

The proportion of textile and clothing exports is declining, so the impact of textile and garment tax rebate rate adjustment on fiscal revenue is declining. This industry involves tens of millions of labor force employment and social stability, and the social effect can not be ignored.

On the other hand, the proportion of export tax rebates to industries in China has reached 10.7%. The huge expenditure of post disaster reconstruction and the continuous increase of government subsidies to low-income groups caused by high inflation are estimated to be more prudent.

Historical stock price movements show that the correlation between textile and apparel sector index and export company's stock price performance and export tax rebate adjustment is not large. The main reason is that export tax rebate adjustment has limited impact on earnings of listed companies, and export environment and competitiveness of enterprises are the most important factors.

In the context of the appreciation of the renminbi and the recession of major importing countries such as the United States, we generally ignore export related industries.

The leading export enterprises such as Lu Tai, Wei Qiao and Fu Tian, with a better scale economy and more optimized product structure, have higher bargaining power than those of the same type of enterprises. They can benefit from the rebate rate increase to a certain extent. They show a certain anti risk ability in the downturn of the industry, but the growth will be significantly weaker than that of the brand clothing companies such as Lining, BELLE, seven wolves, YOUNGOR and so on.