Clothing Enterprises Win The Shanghai Composite Index Collectively

　　 Since the beginning of this year, there have been many grim changes in the textile and garment industry. Under the impetus of the export growth, the rapid rebound of the performance of listed companies and the innovation of textile products, the share prices of 61 A share listed companies have risen strongly, and the pattern of collective win over Shanghai stock index has emerged.

Insiders have analyzed that although the textile and garment industry has not yet completely escaped the shadow of the financial crisis, many companies have been running well, adding vitality to the spring this year.

　　 Textile and apparel prices shifted upward 14%

According to the latest statistics of WIND information, as of April 12th, the total market value of 61 textile and apparel A shares was 297 billion 442 million yuan, accounting for 1.01% of A shares, and 11.53% compared with the total market value of 266 billion 682 million yuan at the beginning of this year. The weighted average latest stock price of the 61 stocks is 11.81 yuan, compared with 10.36 yuan in the beginning of the year, and the average share price has shifted 14%. Compared with the 4.51% decline in the Shanghai Composite Index in the same period, textile and apparel stocks have obviously declined this year.

The share price increases show that 9 textile and apparel stocks have risen by more than 30% this year, and the top two have all spent small and medium-sized board companies. Yi Ke Technology rose the largest, and the share price rose from 7.68 yuan in January 4th to 13.2 yuan in April 12th. The cumulative increase reached 70.76%. Hongda warp knitting increased second, and the share price rose from 13.36 yuan at the beginning of the year to 18.65 yuan, or 40.86%. Xinhua Jin, San Mao Pai Shen, Shanshan stock and other companies followed closely, and this year's share price rose by 38.93%, 33.58% and 33.29% respectively. Among the sixth listed companies in textile and apparel stocks, a gem company, the market share of the Pathfinder rose by 32.15%, not only in the textile and garment sector, but also in the upper and middle reaches of the whole gem stock market. In addition, there are 29 textile and apparel stocks rose between 10% to 30%, 19 against the market rose less than 10%, the remaining 4 companies share price fell, but the average decline of 1.85%, obviously outperformed the market.

From this year's single month average share price rise contrast situation, it is confirmed that the textile and garment sector rose and fell when it fell. In January, the Shanghai Composite Index fell 8.78%, while the textile and garment sector fell by only 3.06% during the same period. The characteristics of the anti fall were more obvious. In February, the Shanghai Composite Index rose 2.1%, while the textile and garment sector rose 6.72% during the same period, and the leading characteristics were more obvious. In the following March and April (up to April 12th), the Shanghai Composite Index rose 1.87% and 0.65% respectively, while the textile and garment sector rose 4.91% and 4.01% respectively over the same period. Obviously, during the recent rise in the market, textile and apparel stocks maintained strong leading characteristics.

In fact, the rise and fall of textile and apparel stocks has been very strong since the second half of 2008. Trading data showed that between October 28, 2008 and August 4, 2009, the Shanghai Composite Index rose 101.44%, while the textile and garment sector rose by 134.65% over the same period. From August 5, 2009 to August 31, 2009, the Shanghai Composite Index fell 23.15%, while the textile and garment sector fell 19.11% during the same period.

Since the beginning of this year, the market has been in a state of continuous adjustment, and the obvious advantage of the textile and apparel companies in winning the market has proved its strong character.

The strong impetus is due to the analysis of the three major driving forces, which show that textile and apparel stocks have three strong driving forces this year: first, the growth of China's textile and clothing exports; two, the recovery of industry boom, and the performance of listed companies; three, continuous product innovation driving the new development of traditional industries.

First of all, domestic textile and garment exports continued to grow. According to the latest statistics released by the General Administration of customs, China's textile and apparel exports totaled 39 billion 246 million US dollars in the first quarter of 2010, an increase of 15.2% over the same period last year. Among them, the total export volume of textiles was 15 billion 207 million US dollars, the total export volume of clothing was 24 billion 39 million US dollars, the growth rate was 26.54% and 9.03% respectively, and the export volume continued to show an increasing trend, and exceeded the same period in 2008.

Under the environment of demand in Europe and America, production orders of domestic export enterprises are gradually increasing. At present, although there are second risks in the European and American economies, the employment rate index has stabilized, and there are signs of improvement. With the improvement of employment rate, consumer demand will gradually pick up, especially after more than a year of clothing consumption atrophy, clothing demand will show a greater degree of rigid demand pull. Therefore, the volume of orders for domestic textile and garment export enterprises will not decrease in the same period.

In addition, higher raw material costs will push manufacturers to further raise prices and transfer raw material cost pressures. In the future, the order price of domestic textile and garment exports will be further improved. In the case of a steady increase in prices, the domestic textile and clothing export volume will continue to grow. It is not ruled out that if the economic recovery in Europe and the United States exceeds expectations, the growth of textile and clothing exports throughout the year is likely to exceed the market expectation of 10% growth in the whole year.

Secondly, the textile industry will continue to recover. The tourism industry will benefit first in the recovery process, and the performance of the listed companies will increase rapidly. In 2010, when the textile export situation improved, and the domestic market continued to grow steadily, with the increase of raw materials, environmental protection costs and "shortage of migrant workers" and other factors, the domestic small and medium-sized textile enterprises began to operate at a low rate, and the disorderly competition in the market and low-grade products was alleviated, and large textile enterprises benefited from it. For example, printing and dyeing leading enterprises with environmental advantages will benefit from the revival of the industry; the yarn market will perform well in the near future and will continue to maintain; the garment accessories company will benefit from the rise in garment processing.

As of April 12th, the total annual net profit of 44 textile and apparel listed companies that had disclosed annual reports was 6 billion 336 million yuan, up 72.18% from the same period last year, much higher than the 24.12% of the total annual reports disclosed by the same period, and 19 companies realized the simultaneous growth of main revenue and net profit. What is more noteworthy is that the 39 companies with comparable performance increased 82.39% in the fourth quarter net profit, which is in sharp contrast to the 7.36% decline in all A share companies.

Thirdly, continuous product innovation has become a magic weapon for textile enterprises to get good results in the predicament, and strongly supports the stock price. Since 2009, Chinese textile enterprises have been striving to realize market diversification strategy while maintaining the stability of their main export markets, and have opened up new marketing channels to cultivate new export growth points. As product innovation has become the focus of innovation driven by China's textile industry, more and more textile enterprises begin to change the development mode of investment based and simply expand the scale, instead of choosing an innovation driven development mode to increase the added value of products.

On the whole, according to the main line of export warming in 2010, the industry generally agreed that we should focus on export oriented listed companies with bargaining power and the "bottleneck" sub sectors in the recovery process of textile industry. Due to the rigid international demand, domestic garment exports will not deteriorate in the future and will only improve. According to the characteristics of the current international market demand (rigid demand still needs "made in China"), the demand for the future international market will gradually recover with the recovery of the economy. The leading companies with strong bargaining power will be worthy of attention, such as Lu Tai A and Shandong Ruyi.