Textile And Clothing: Hidden Troubles Reappear Under Steady Growth Of Performance

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Interim results continue to grow

According to statistics, as of June 15th, 40 listed companies in the Shenyang Wanguo textile and garment industry have announced the interim results for the 2011. Most of the company's profits have maintained a good growth momentum compared with the same period last year.

Among them, 34 companies pre - pleased, accounting for 85%, 6 companies in the first half of the performance loss or year-on-year decline.

It is noteworthy that the company's forecast net profit in the medium term increased by more than 50%, reaching 12, accounting for 30%.

The medium-term performance forecast reflects that this year, in the context of good export and domestic demand, the overall operation environment of the textile and garment industry has improved considerably. The enterprises have expanded the market to bring in income increase, and the product price increase has also improved profitability. In the first quarter, the overall trend of the industry has been extended in the middle of this year.

First half year

In fact, as many textile and garment enterprises are in line with the order production, from the spring and summer ordering situation of some brand clothing enterprises, the growth rate of their orders is good, the growth rate is basically above 30%, which basically locked the performance this year. The industry therefore expects that the average profit growth of the textile and garment industry this year may exceed 40%.

Pathfinder (300005) expects medium term net profit to grow by 50%-100% compared with the same period last year. The reason for the substantial increase in performance is that the company's main business is developing well and the market scale is expanding. In 2011, the products and futures bookings in spring and summer are in good condition and are expected to be basically implemented effectively.

Kaiser clothing (002425) and seven wolves (002029) and other brand clothing enterprises also expect growth in performance due to the good order of orders.

Hidden worries appear

Although the overall operation environment of textile and apparel industry is getting better, there are unavoidable worries, such as the rising cost of raw materials and labor, the pressure of exports, the difficulties in the operation of some small and medium-sized enterprises, and the unstable consumption environment of domestic demand.

Customs data show that in 2011 1-5, China's textile and apparel exports totaled $88 billion 835 million, an increase of 26.55% over the previous year, and the growth rate dropped by 0.84 percentage points compared with 27.39% in the previous 4 months.

Among them, the export of textiles was US $37 billion 549 million, an increase of 31.52% over the previous year, and exports of clothing and accessories reached US $51 billion 286 million, up 23.14% over the same period last year.

The industry pointed out that the substantial increase in export volume was mainly due to the increase in the prices of export products, while the number of exports that really reflected the export level did not increase significantly. In the context of the huge foreign trade base, considering the changes in the world economic situation and economic demand, the export growth rate will inevitably decline. The growth rate of textile exports will be reduced to around 15% in 2011, and the increase will be the main driving factor for export growth.

In terms of cost, although cotton prices continue to weaken in the near future, they still maintain a higher price, and the rise of labor costs is also increasing.

Jin Feida (002239) expects net profit in the first half of this year to decline by 50%-70%, mainly due to the rapid rise of cost factors such as domestic fabrics, accessories, exchange rate and employment and so on.

Dongfang securities Shi Hongmei said that under the influence of factors such as high cost of raw materials, labor costs and RMB appreciation, some small and medium-sized textile and garment enterprises that are not competitive will be in a state of shutting down production. Transformation and upgrading of competitiveness will become their only way out. It is predicted that the market share of leading enterprises with real competitive advantages will be further concentrated in the process of the more passive industries suffering from pain. China's textile and garment industry will also move to a new stage, changing from a big country of textile and garment to a strong country.