Shanghai Securities: Brand Enterprises Can Resist The Sharp Rise And Fall Of Cotton Prices

From March to now, cotton prices have plummeted nearly 30% after soaring, and the extreme instability of cotton prices has affected the enterprises in the whole industrial chain to varying degrees.

The fall in cotton prices will lead to Spin The industry is seriously unsalable. On the one hand, the finished products of all cotton spinning enterprises are high. On the other hand, due to the poor sales, the difficulty of returning capital and the tight money, enterprises begin to limit production and stop production. On the export side, the price advantage of domestic textiles has been weakened due to the rising cost of raw materials, manpower and electricity shortage. Especially when the price of raw materials fluctuates violently, domestic textile enterprises are afraid to pick up large quantities of goods. Data show that Indonesia, Vietnam and other countries in Southeast Asia are showing a substantial increase in exports, reaching 25% and 30% respectively. With the arrival of 6 and July, the textile industry will enter the traditional off-season, and the demand for downstream market is not expected to change much. But at this stage, industry differentiation will further intensify. Companies with integrated industrial chain and efficient supply chain integration will have the opportunity to further expand the market share.

The price of cotton can be spanmitted to the terminal garment enterprises for a long time. Moreover, because of the large profit margins and strong bargaining power to the terminal consumers, the brand clothing is not very influential.

Export growth slows in the second half year

In 2011 1-4, China's textile and apparel exports totaled $68 billion 500 million, an increase of 27.39% over the same period last year, and the growth rate increased by 3.43 percentage points from 23.96% in 1-3 months. Among them, the export of textiles was US $28 billion 931 million, an increase of 34.05% over the same period, and exports of clothing and accessories reached US $39 billion 569 million, up 22.93% over the same period last year.

Last year Cotton price The increase in export prices has raised export growth to a certain extent, but as cotton prices plummeted, business orders began to wait and see. We expect textile and garment export growth to slow down in the second half of this year.

Terminal retail growth remains strong

According to the National Bureau of statistics, the total retail sales of consumer goods increased steadily in April, reaching 13649 billion yuan, an increase of 17.1% over the same period last year, down 0.3 percentage points from March. In 1-4, retail sales of consumer goods totaled 56571 billion yuan, up 16.5% from the same period last year, accelerating 0.2 percentage points over that of 1-3 months. In April, the total retail sales of consumer goods increased by 1.35%. Among them, clothing, shoes and hats and knitwear retail sales totaled 256 billion 200 million yuan in 1-4 months, an increase of 23.5% over the same period, and 55 billion 100 million yuan in April, an increase of 26.8% over the same period last year.

The total retail sales of clothing, shoes and hats and needle textiles increased by 7 percentage points over the total retail sales of consumer goods in 1-4 months, and clothing prices rose by 0.6%, up 1.4% compared to the same period last year.

Therefore, we deduce that the growth of clothing shoes and hats and needle spinning products is more dependent on quantity growth and real demand.

From our right brand The overall analysis of the quarterly reports of clothing listed companies shows that the growth of sales revenue of brand clothing enterprises has benefited partly from the increase of prices, and the level of enterprises' raising price is generally 10-20%, and the rate of raising prices is much higher than that given by Statistics Bureau. On the other hand, as the price increase is relatively large, the growth of same store sales is not obvious, but there is no drop in sales. At present, the fall in cotton prices will help to ease the pressure on the continuous rise of some terminal prices.

The trend of consumer confidence is not obvious.

The consumer confidence index has dropped again this month after a sharp rise last month, and is now at a relatively normal level. The promotion of consumption still needs the improvement of residents' income and the good control of inflation.

Monthly investment advice

The key recommendation companies are still brand enterprises. The reasons are: the industry is still in the stage of rapid growth, and the valuation level is reasonable. Brand enterprises have strong bargaining power for upstream enterprises because of their control over the terminal.