Textile And Apparel: Season Changing Brand Competition

Market review: the Shanghai Composite Index, Shenzhen stock index and Shanghai and Shenzhen 300 fell 6.83%, 9.02% and 8.30% respectively this month.

The textile and garment sector failed to extend the previous phase of the rally this month, with an adjustment of 10.08%, which is in line with our review. That is, the cumulative price of the industry is too high, and the short-term performance is not enough to support the valuation.

As of the announcement period, we released the "buy" rating of the king of nine and search for the first self assessment commentary rose at the beginning of the cumulative increase of 24.88%, 3.81%, far more than belongs to

Industry tracking: raw material prices rebounded slightly.

This month, the 328 cotton price index rebounded, or 3.64%, and the US cotton spot Cotlook:A index fell by 2.77%, taking into account the country's 19800 yuan / ton purchase and storage price. It has been decided that it will help to prevent excessive cotton prices from being concentrated on the new cotton market. We expect cotton prices to stabilize in the next year.

The price of chemical fiber raw materials increased slightly, polyester filament POY and polyester staple fiber increased by 1.04% and 3.99% respectively, viscose filament and viscose staple fiber increased by 0.48% and 5.04% respectively, and the price of acrylic staple was unchanged from last month.

The upstream manufacturing side is slowing down.

In 2011 1-8, the fixed assets investment of China's textile, clothing, footwear and hat manufacturing reached 136 billion 329 million yuan, and the cumulative year-on-year growth rate increased from 6% in February 2009 to 42.1%.

The volume of retail sales of the major retail enterprises in China has seen negative year-on-year growth for the first time in recent months, and the characteristics of consumers' rational consumption are highlighted.

This month, the volume of retail sales of all kinds of clothing in 100 major large retail enterprises decreased by 1.98% compared with the same period last year, the first decline in garment retail sales in recent months.

Most of the major commodities showed negative year-on-year growth, while anti season clothing such as winter clothes continued to grow, and retail sales grew by 4.9% over the same period last year.

Most of the apparel retail sales showed a decline compared with the same period last year. In particular, women's retail sales, which had always been stable, also showed a decrease compared with the same period last year. This shows that consumers' consumption intention has been affected to a certain extent under the pressure of continuous rising clothing prices, while the year-on-year growth of anti season clothing is illustrated.

Investment suggestions: (1) the price increase factors in the second half of 2011 still exist. The profit margins and price increases of autumn and winter clothing are even more than that of spring and summer wear. Therefore, the overall growth rate of the industry in the second half of the year is expected to continue to maintain a good momentum in the first half of the year.

But the price increase factor in 2012 is weaker than that in 2011, especially for casual wear and home textile industry.

At the same time, the cost of raw materials and the price rigidity of brand clothing will enhance the gross margin level of the industry in 2012, so the profit growth rate should be higher than that of sales revenue.

Therefore, we can judge that the time window from the end of 2011 to the annual report will be the best opportunity for the textile and apparel industry to perform.

At present, the industry's overall investment proposals remain "overweight".

(2) it is recommended to focus on the order meeting situation from 8 to October.

Historical experience shows that the annual performance of brand enterprises in textile and garment industry can be more than half of the order of futures orders. Therefore, we suggest that we focus on the details of subsequent orders.

Considering the inventory risk, the seasonal characteristics of the industry and the concerns of the enterprises and franchisees about the inventory, we will be optimistic and cautious about the next year's spring and summer product orders.

(3) at the company level, we propose to focus on the listed companies that still have the valuation advantage and future growth.

We continue to recommend the listed companies with high growth in the future: Nine herd King (601566), search for (002503) and Meng Jie home textiles (002397).

Risk Disclosure: export tax rebate rate adjustment, channel cost increase, enterprise going stock and order situation will be lower than expected, accompanied by the risk of market valuation downshift, and some recent companies lifted the risk.