2011 Parity Clothing Is More Resistant To Inflation.

In 2011, the growth of garment sub sectors was more optimistic. Under the inflation situation, the cost pressure faced by the clothing industry was small, especially the price clothing's stronger ability to resist inflation.

Textile and clothing are divided into two parts: processing and brand retail, and we are optimistic about the growth of the brand retail sector. Compared with the sub sectors such as clothing, home textiles and shoes, we are most optimistic about the clothing sub industry. The logic is that the growth rate of the clothing sub industry in 2011 should be more optimistic.

Processing and manufacturing:

At present, the price of raw materials based on cotton has reached a new high in recent years due to the factors of capital speculation under loose monetary policy.

Whatever the trend of late stage, it has seriously affected the production plan, inventory management and profitability of enterprises. At the same time, the order may lead to insufficient orders in the later stage, and the plate boom will be faced with a turning point.

We judge that the export growth of industry will maintain about 10% in 2011, but the price of raw materials has already been separated from the fundamentals.

Especially in the first half of 2011, manufacturing enterprises may face another shuffle.

From enterprise

Production plan: previously, the price of downstream cotton textile products has achieved higher growth, but it has not been able to keep up with cotton price increase.

Most of the small and medium sized cotton spinning enterprises have been afraid to make quotations and dare not receive large single orders. The production plan has been affected.

Inventory management: in 2009, the company maintained high inventory of raw materials and finished goods, but most enterprises do not have high inventory level at present.

It is estimated that the inventory of large cotton enterprises such as Lu Tai will be enough to support the first quarter of 2011.

Nearly 30 thousand yuan / ton cotton price level, it is difficult for enterprises to reduce exposure through inventory management.

Earnings: at present, cotton prices rise or fall, both of which have a negative impact on corporate earnings growth.

If cotton prices continue to rise, enterprise pfer cost pressure is greater; if cotton prices fall, the price of products in 2011 will be lower than in 2010, affecting income and profit growth.

Brand retail:

The overall situation is that the ideal price of clothing is more than inflation.

The rapid growth of China's textile and apparel consumption constitutes the foundation of our long-term brand retail sector.

As far as 2011 is concerned, we expect that the growth of domestic textile and apparel consumption will still maintain the 25% level.

First, the logic of long term high growth cycle of brand clothing consumption has not changed. Industry consumption growth will still maintain 2-3 times the GDP growth rate.

Second, it is estimated that the Hong Kong stock and A share listed brand clothing companies will increase more than expected in spring / Summer 2011, with an average order growth of over 20%, and some companies reach 30% or even higher. This shows that the terminal franchisees are optimistic about the intuitive perception of the latter consumption and form the basis of annual revenue growth in 2011.

Third, Brand Company constantly excavate deep demand through new brand series and novel design, which have obvious pull on sales growth and price promotion.

We are optimistic about the growth of the brand retail sector, but compared with the sub sectors such as clothing, home textiles, shoes and so on, we are most optimistic about the "clothing sub industry". Its logic is that the growth of the clothing sub industry in 2011 is more optimistic, and the cost pressure faced by the inflation situation is small, especially the price clothing has stronger resistance to inflation.

First, the cost of raw materials, cotton prices soaring pressure on clothing far less than home textile products.

Cotton prices have risen by 80% since the beginning of 2010, and the theoretical calculation of the price of clothing and home textile terminals needs to be increased by 13% and 19%.

Since the price increase of clothing is smaller than that of home textiles, the demand for purchasing power of consumers is also lower than that of home textiles.

Secondly, compared with home textiles and footwear, the sales of clothing industry stores are higher than that of department stores, and retail channels are more sinks and the rental pressure is smaller.

Finally, the price of clothing in clothing is more than inflation.

Parity clothing is more essential and rigid.

And more importantly, the price clothing itself is precisely the lowest cost pressure in the industry, the lowest price range.

The price of clothing is more concentrated in the three or four line market, and the rental ratio and the upward pressure are obviously lower than those of other products.

At the same time, the growth of clothing companies is more certain.

Compared with home textile companies, the growth of garment companies is not affected by industry cycle factors.

The main driving factor of clothing consumption is the income level of residents.

At least 20% of the domestic textile industry's income comes from real estate related pulling, which has become an uncertain factor for the growth of home textile companies.