The Attractiveness Of The Valuation Of The Clothing Sector Is Gradually Strengthening.

　　 Textile and garment sector In the whole month of October, the decline was ranked third in Shen Wanquan's first class industry decline. By the end of October 31st, the Shanghai composite index was down 0.83%, Shenzhen composite index fell 2.41%, Shanghai and Shenzhen 300 fell 0.9%, and shwan textile and clothing index fell 3.55%. Among them, the textile manufacturing sector rose by 2.1%, and the home textile home plate decreased by 4.73%. On the stock market, the top gainers were Zhejiang Fu run, Jiaxin silk, Fujian Nanfang, hang min shares and Lukang technology. The top companies in the decline were United States apparel, Luo Lai home textiles, seven wolves, nine Mu Wang and Yi Ke technology. In October, the brand clothing white horse stock was generally lower than expected by the three quarterly report and the balance sheet was not ideal.

Industry three quarterly summary. Revenue growth and net profit growth declined, net interest rate dropped by nearly 2 percentage points: in 2012, 1-9, the total operating income of Listed Companies in textile and apparel industry increased by 135 billion 400 million yuan, up 4.62% compared to the same period last year; net profit was 9 billion 200 million yuan, down 19% compared to the same period last year; the growth rate declined compared with the same period last year, and also declined compared with the two quarter. Gross margins and net interest rates in the textile and garment industry were 22.7% and 6.77%, respectively, representing a decline of 0.65 percentage points and 1.99 percentage points over the same period last year. Brand clothing inventory, receivables rose, operating cash flow is not ideal: our focus on 18 brand clothing enterprises, inventory / cost ratio rose rapidly in the three quarterly report, the same period last year inventory / cost ratio of 77%, the proportion increased 12 percentage points to 89% this year, and accounts receivable proportion of current assets is also rising, from 13% in the same period last year to three 16% this year.

Key data tracking. In September 2012, there were hundreds of key large-scale projects in China. Clothing retail enterprises Sales grew by 7.8% year-on-year; retail sales in the Mid Autumn Festival and the National Day golden week increased by 8.49% compared to the same period in 2012; in 1-9, China's textile and clothing exports increased by 0.54%, and the export scale in the single month reached a record high.

Investment strategy in November. Textile manufacturing: at present, the valuation of textile manufacturing is not high, and the performance of the whole industry has been lowered. In September, exports rebounded under the stimulation of Christmas and Halloween in Europe and the United States, but it is still necessary to observe whether it can continue. Cotton prices have stabilised near the reserve price, and chemical raw materials have dropped slightly. In the future, an important factor in judging the recovery of the manufacturing industry will be the steady rise in cotton prices after the rise in downstream demand. We believe that the price of cotton will continue to rise little and maintain the "neutral" rating of the textile manufacturing sector. Clothing home textiles: after pre adjustment, the valuation of the clothing sector is close to the bottom of history, and the attractiveness of the valuation of the plate is gradually strengthened. However, due to the unclear consumption recovery next year, there are not many catalysts in the near future. Looking forward to the next 2 months, there are two factors in the industry's stock price or supporting factors: the cold winter caused the over expected sales of winter clothing, and the low base factor of the Spring Festival last year made the data rebounded this year. Combined with the low valuation and poor fundamentals, the opportunity for the overall rise of the sector is not obvious. We downgraded the clothing home textile sector as a "neutral" rating.

　　 Textile and garment industry The four stock portfolios recommended by our fourth quarter strategy (Pathfinder, card slave Road, search special, and nine herdmen) won a significant profit in the middle of 10, with a combined yield of 1.48%, while the textile and apparel index fell 1.57% during the same period, and the combined winning index was 3 percentage points. In the light of recent stock price performance, we continue to choose some support for the whole year's performance, as well as the companies with a deeper decline in the early stage. In November, they were: Pathfinder, card slave road and seven wolves. Medium and long term suggestions: Nine Mu Wang, AOKANG international, and Luo Lai home textiles.