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Opportunities And Risks Exist In The Textile Industry

2008/12/8 11:10:00 21

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The current textile industry is indeed rather difficult. In the 1~10 months of 2008, the export of textiles and clothing was US $153 billion 680 million, an increase of 5.86% over the same period last year.

Among them, textile exports amounted to 55 billion 420 million US dollars, the growth rate was 20.6%, while clothing export was 98 billion 270 million US dollars, with a growth rate of only 2.8%.

The 5.86% increase was 5.19 percentage points lower than the first half of this year, down 13.84 percentage points from the same period last year, the lowest in nearly 6 years.

If we take into account 13.5% of the appreciation of the exchange rate, the 1-10 month textile and clothing exports in Renminbi will be reduced by 7.64%, which is also the fifth consecutive month that the RMB export price growth has dropped.

The textile industry, as a large exporter in China and a labor-intensive enterprise, is related to the pfer of a large number of rural surplus labor. Therefore, the decline in the textile industry has attracted the attention of all parties in the market. It not only raised the export tax rebate rate of the textile industry not only in the early stage, but also on the 19 day of the State Council Premier Wen Jiabao chaired a State Council executive meeting, and the study identified 6 policy measures to promote the healthy development of the textile industry.

Among them, two are directed against the textile industry, the first is to further reduce the tax burden and alleviate the cost pressure.

We should continue to raise the export tax rebate rate of textiles, clothing and some light industrial products, and clean up and cancel all unreasonable charges involved in light textile enterprises.

Two is to increase the intensity of technological pformation of light textile industry, and promote industrial upgrading.

Enterprises should strengthen technological research and development and industrialization of achievements and brand building to enhance market competitiveness and risk tolerance.

The central budget funds should be arranged to support special textile and other key industries to carry out special technical pformation.

Such a strong textile industry policy will play an active role in boosting the textile industry out of the predicament, thus giving investors confidence in the textile industry's smooth out of the mire.

According to relevant information, this is expected to be supported by two such data: first, the impact of the increase in export tax rebate rate on earnings growth.

In October 21st, the Ministry of Finance announced that from November 1st, the export rebate rate of textiles and clothing increased by 1 percentage points to 14%.

This is the second increase in the year. The export tax rebate rate for textile and garment has increased by 3 percentage points this year.

According to relevant industry analysts, the annual export tax rebate increased by 3% over 09 years, and the overall profit of the industry will increase substantially.

The two is the impact of VAT reform.

The value added tax reform has been implemented since January 1, 2009, assuming that the fixed assets investment in the textile industry can maintain a 10% growth in 2008, while the investment in 2009 is basically the same as that in 2007, that is, the investment in fixed assets of the textile industry in 2009 is 280 billion yuan, and 45% of the fixed assets investment belongs to the category of fixed assets that can be deducted. Then, the total preferential tax revenue enjoyed by the textile industry in 2009 is about 16 billion 100 million yuan.

From this we can see that after the value-added tax reform, net profit and operating cash flow both show a growth trend, and the business environment of textile enterprises will also be improved significantly, and it will also encourage enterprises to upgrade their technology and upgrade their industries.

Therefore, we believe that the rise of textile stocks is not simply a rebound effect but a strong expectation for the improvement of the industry prospects, especially the strong expectations of the central economic conference.

It is suggested that investors pay close attention to those listed companies with brand advantages and large export volume and stable profitability. Such companies can fully enjoy the investment opportunities brought about by the changes in the industry's prosperity, but less attention should be paid to the listed textile companies with poor growth performance, poor management efficiency and low profitability.