Cotton Prices Are Still Up &Nbsp, And Textile And Apparel Stocks Are Mixed.

As report goes,

The international cotton price has dropped from a record high of 1.51 US dollars per pound to 8 trading days. Yesterday it saw a low of 1.13 US dollars, with a total decline of 25%.

In fact, China's cotton price 328 index also fell 8 trading days, from 31281 points to 27881 points, with a total decline of nearly 11%.

Cotton prices increase nearly doubled production costs

What is the future of cotton prices? Wen Jinhui, director of Huatai Finance (Hongkong), said that the cotton price fundamentals are good except for the short-term negative news. First, market funds are still abundant, and two is supply shortage.

Wen pointed out that, as the largest cotton exporter in the world, the area of cotton fields in the United States decreased; India, the second largest cotton grower, issued export restrictions this year; Pakistan, the fourth largest cotton growing country in the world, suffered a dramatic decline in output due to floods. The official estimate of cotton production in 2010 to 2011 was reduced from 2 million 380 thousand tons to 1 million 970 thousand tons.

According to the past experience, the supply gap generally takes two years to fill, and it is estimated that the market for cotton will continue to rise steadily, according to the past experience.

Cotton prices have been rising all the way since August, and the period has increased more than doubled, which has increased the production cost of the textile and garment industry.

According to Credit Suisse, cotton prices have risen significantly in the past two months and have mixed effects on the textile industry. However, due to the shortage of supply, more upstream producers have better ability to shift the cost increase.

The bank is optimistic about Tianhong textile (market, information, commentary) (2678), and expects earnings growth of 114% and 21% in 2010 and 11 years respectively, which is the first choice in the industry. The rating reiterates that "win the market", the target price is raised from 5.7 to 6.7 yuan, and the potential 11% increase from the current price.

According to the company's first half performance report, Tianhong textile gross margin increased by 7.6% to 19.2%, higher than the industry leader Wei Qiao textile (quotes, information, commentary) (2698) 12.5%.

In terms of share prices, the cumulative growth of Tianhong textile has reached 5.81 times this year, and has won a lot of competition.

In terms of apparel stocks, XTEP International (Anta) recommends XTEP (1368), mainly because the company has locked in production costs in the first half of next year. It is estimated that the average selling price has double digit growth, which is larger than that of 331 degrees (quotes, information reviews) (1361) and Anta (2020) units.

The latest target price of the bank is 8.36 yuan.

In addition, XTEP has announced orders for the second quarter of 2011, an increase of 25%, the highest growth rate in the industry. On the contrary, Lining (market, information, commentary) (2331) orders growth in 11 years is lower than that in 2010.

Ye Jianzhong, vice president of International Research Department of Bank of communications, said that XTEP was attacking the two or three tier cities and took the popular route. The average selling price of clothing products was about 52 yuan in the first half of this year, and the average price of clothing products was about 52 yuan.

Interest rate increase in textile industry

Haitong Securities issued a report that the hidden worries of the textile and garment industry will not only be affected by the price of cotton, but also will increase its cost in the mainland.

The bank believes that interest rates increase the textile industry's interest expense by 914 million yuan, accounting for 1.2% of the total profit of 76 billion 421 million yuan. The interest rate increase makes the garment industry increase interest expense by 234 million yuan, accounting for 0.7% of the total profit of 34 billion 533 million yuan.

The bank maintains a neutral rating on the textile industry, and proposes to increase the undervalued shares of the apparel industry.