Investment Strategy Of Textile And Garment Industry In 2012

GF Securities held its 2012 Investment Strategy Report in Shenzhen.

GF Securities analyst Ma Tao released 2012.

Industry investment strategy, entitled "crossing cycle, focusing on growth".

The following is a summary of his report:

To alleviate the plight of the theory of life cycle: the rise of domestic demand and the sustainable predicament of high growth of brand enterprises: following the theory of industrial life cycle, it is a historical rule to grow from maturity to maturity, and then gradually decline or even withdraw.

Although most of China's textile and garment enterprises are mainly outside demand, they have not formed high-end brand and channel control power in the international market. Therefore, enterprises have encountered the embarrassing situation that the manufacturing links are passively moved out and the high-end areas are hard to break through in the short term.

Opportunity: the rise of China's demand will become the biggest opportunity for local enterprises to cross the traditional life cycle, and is expected to alleviate the embarrassing situation.

China already has the largest population base in the world, and the rich and powerful people have greatly increased their spending power and willingness.

Domestic brand

Enterprises will make full use of the relatively relaxed environment to create and enhance the awareness and reputation of their own brands, so that they can grow sustainably.

Coping with the downward trend of inflation in 2012 and the downward cycle of economic growth: focusing on growth challenges: it is estimated that the fall of CPI in the first half of 12 years will be accompanied by a slowdown in economic growth.

1, inflation is falling and price rises are hard to sustain.

The fall of CPI in the first half of next year will obviously weaken the effect of raising prices, and the growth of the industry will be expected to increase.

2, economic downturn, consumption will be suppressed.

The fall of GDP will reduce people's consumer confidence and indirectly reduce their consumption power, and the release of quantity will be under pressure.

Strategy: a company with brand premium is expected to go through the cycle and continue to raise its price on the premise of volume increase.

Since the 08 financial crisis, the growth rate of men's clothing has been consistently higher than that of the industry. The 12 year spring and summer orders will synchronously increase the price while the order grows, and the relative advantage is obvious.

It is an important embodiment of the brand premium capability that the price can still be raised smoothly under the disadvantage.

Through the cycle, focusing on Growth -- optimistic about the men's clothing industry

The PEG of most brand clothing companies is between 0.5-0.8 and has a strong margin of safety.

Considering the high growth space brought by the rise of domestic demand to local brand enterprises and the macro environment of inflation decline and economic growth decline in the first half of 12 years, the recommended varieties are men's clothing and home textile sub sectors (the growth rate is above 30%, and 12 years PE is between 20-23X).

The promising companies are seven wolves (002029), nine herd Kings (601566), Hinur (002485), wedding birds (002154), Luo Lai home textiles (002293), fuanna (002327), and Meng Jie home textiles (002397).

Risk warning

The economic downturn has slowed down.

Volume, raw materials, labor and channel costs rose more than expected.