2008: The Textile Industry Is Still Stagnant.

Textile and garment enterprises in 2008 are doomed to face the test of internal and external troubles and seek breakthroughs in the fierce competition in the industry.

Internal and external troubles cause exports to decline and profits shrink.

For the textile and garment industry with an export ratio of 40%, the impact of RMB appreciation on enterprises is obvious.

Since the reform in 2005, the total appreciation of RMB has reached 16%, and the appreciation has reached 7% since 2008.

Affected by these unfavorable factors, the actual export growth rate of textile and garment enterprises has gradually declined. In 2008 1~5, the growth rate of textile and clothing exports was 24.64% and 7% respectively. After deducting exchange rate factors, the actual increase was only 14.32% and -1.86%.

From another point of view, the economic stagnation in Europe and the United States since 2007 has also been one of the important factors leading to negative growth in the actual export of clothing.

Textile and garment enterprises are typical labor-intensive enterprises, and labor costs have a significant impact on the profits of enterprises.

The implementation of the new labor law has resulted in a substantial increase in the cost of many small and medium-sized enterprises.

With the improvement of environmental monitoring and inspection, textile and garment enterprises without environmental input will face short-term investment in environmental protection equipment.

On the cost of raw materials, the continuous rise of energy prices and the high price of cotton and hemp further reduced the gross margin of sales of textile and garment enterprises.

Moreover, the price of clothing products is showing a downward trend. The departure of clothing PPI and CPI is no doubt that it is worse for some enterprises whose profitability is not strong (see chart 1).

In addition, the reduction of export tax rebate rate in the middle of 2007 also reduced the profit margins of textile and garment enterprises.

Half of listed companies lost profits.

Textile and garment enterprises have become one of the most important ways to break away from the competitive industry.

Compared with low-end products, the high-end products have higher profit margins, and enterprises with brand advantages have higher pricing power.

This is of great significance for enterprises to ensure the ideal level of profitability in the industry environment where raw material prices are rising.

In the 58 textile and garment industry A share listed companies, the net profit in 2007 dropped 20, accounting for 34.48% of the total number of Companies in the industry. In the first quarter of 2008, the number of net profit fell by 29, and the proportion of the total number of Companies in the industry rose to 50%.

At present, the average price earnings ratio calculated by the whole method is 31.64 times that of the listed companies in the textile and garment industry. The latest price earnings ratio of Lu Tai A is 15 times, at a relatively low level.