Cotton Prices Narrowed Inside And Outside, High Priced Cotton Stocks Digest Smoothly

< p > at worst, hope for recovery.

In 2012, China's a href= "http://www.91se91.com/news/index_c.asp" > textile > /a > industry fell into a trough. The whole year's textile "a" href= "http://www.91se91.com/news/index_f.asp" > clothing < /a > exports increased by 2.83% year-on-year, and the growth rate slowed down 17 percentage points over the 11 years. However, the industry also breeds hope: (1) from the export orders: the 11 year price increase and the drop in volume, the export volume "false inflation" caused by the increase in prices concealed the reduction of orders, 12 years of price reduction and volume stability, while the export volume continued to decline, but the shrinkage situation eased somewhat, and the 13 year is expected to return to a reasonable trend.

(2) from the stock of raw materials: 12 years yarn stock is running high but no longer rising, inventory digestion is relatively smooth.

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< p > in the short term, the structural recovery of exports has achieved a good start in 1-2 months, and the steady trend in 13 years is clearer.

In 2012, external demand continued to slump, China's exports to the EU decreased by 12% compared with the same period last year, and the increase in exports to the US and Japan was only 3.3% and 0.5%. Under the rising trend of labor costs and operating costs, "made in China" has become increasingly expensive, leading to a decline in China's export competitiveness, an obvious shift in orders, and a fall in the main export market share.

With the further improvement of foreign demand, especially in the US economy, China's export showed a structural recovery. The cumulative export of textile clothing increased by 31.8% in 1-2 months, 69.6% in February, of which the export of textiles increased by 38.1%, and the export of clothing and accessories increased by 94.4%.

In the medium to long term, the textile industry will enter the era of "high cost and low growth", and resources will further concentrate on large enterprises.

It is estimated that the average annual growth rate of textile exports will remain at around 5% in the future. We must reinvent and grasp the competitive advantages of high-end manufacturing, and promote the expansion of the dominant enterprises to the upstream and downstream of the industrial chain, and promote the pformation and upgrading of the textile industry when the rising trend of cost rigidity is irreversible.

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< p > China's cotton price trend is expected to be stable, and the difference between domestic and foreign cotton prices is expected to narrow. < a href= "http://www.91se91.com/news/index_q.asp" > cotton spinning < /a > the gross profit margin of enterprises has bottomed up.

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< p > China's cotton pricing depends on two core factors of supply and demand, and is influenced by factors such as policy (macro and industrial policies, cotton reserve plan, etc.), international market (world economic situation and international cotton supply and demand), and price changes of alternatives (chemical fiber, etc.).

From within cotton view: (1) according to the first textile net calculation, if excluding the impact of the rejection and rejection plan, the cotton supply and demand balance in 2012/13 is basically balanced, and the cotton price fluctuation is not large; (2) the global and Chinese inventory consumption ratio is still high, and the price increase is not large; (3) the cotton yarn output is approaching the peak value of spinning volume, and the cotton demand in the latter market is difficult to rise; (4) the risk of cotton price falling under the policy of purchasing and storage policy is also small.

As of March 8th, the domestic cotton grade 328 was reported at 193 yuan to 44 yuan / ton, we believe that the price of cotton will become stable, and the next 20 thousand yuan will gradually become a new value center.

From the perspective of external cotton, the increase in demand brought by the decrease in planting area and the increase in clothing consumption in the United States and Europe have led to the uplink of cotton prices.

In conclusion, we estimate that the difference between domestic and foreign cotton prices is expected to narrow.

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< p > for cotton spinning enterprises, the price of inner cotton determines the cost, and the trend of outer cotton determines the price, and the gross profit margin will rise to the bottom.

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< p > investment ideas: Income Stabilization and improvement of gross profit margin are expected to drive the improvement of textile manufacturing enterprises in the past 13 years.

Raw materials such as upstream cotton, chemical fiber and other raw materials are made into garments through midstream spinning, manufacturing and dyeing. Downstream products are exported and sold domestically, thus forming a complete industrial chain of textile and garment industry.

The 13 year operation improvement expectation of textile manufacturing enterprises is: from the perspective of revenue: (1) quantity: leading enterprises' capacity is growing steadily; (2) price: recovery of overseas demand and marginal increase of product pricing capability.

From the perspective of gross profit margin: (1) high inventory cotton is gradually digested; (2) the cotton price difference between inside and outside is narrowed.

At present, the PB of key manufacturing enterprises is relatively low, about 1.1-1.4 times, and there will be room for growth in the future.

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< p > investment target: (1) stable growth of production capacity, narrowing of the difference between inside and outside cotton prices, and smooth digestion of high priced cotton stocks. The coloured spinning industry will usher in a turning point: pay attention to the improvement process of "duopoly" Bailong Oriental (601339) and Huafu color spinning (002042); (2) the external demand is getting warmer, and the performance of advantageous export manufacturing enterprises is expected to gradually recover: attention to Lu Tai A (000726) and Weixing shares (002003), and we expect a quarterly report to see improvement in performance.

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