Strong Competition In Textile Industry

The current market is generally very pessimistic about the industry, but this survey shows us the other side of the coin.

Despite the brutal competition in this industry, enterprises are not "one glory, one glory, one damage". Under the weak market, the characteristics of "strong and strong" are more obvious.

There are still investment opportunities and good investment targets in the industry. Some enterprises are worth paying close attention to nowadays. The value of investment of some enterprises may appear in the year after tomorrow.

Mei Bang clothing: we think that its investment opportunities are mainly in the mining of its growth space, and the growth comes from two aspects: brand operation effect and channel development ability.

From the market research, we feel that the status of "Mts. Bang Bang" brand is continuing to consolidate in the leisure wear industry. The promotion of the new brand ME&|CITY is also very robust and smooth, and financing from the capital market strengthens the company's financial strength, ensuring that the company maintains the speed of expansion while not increasing the financial pressure.

Overall, the company is in the growth path of ascension, is worthy of attention now good investment targets.

Jin Jin Ying: the biggest advantage of the company lies in the close combination of textile product R & D and textile technology practice. However, due to its low cycle in the spinning and weaving industry, the performance has not been ideal in recent years. But we think that 2008 may be the worst period, because from the fourth quarter, the company will be able to purchase flax raw materials whose price is down. The new process of silk spinning and the drying and wet spinning machine of flax will enhance the efficiency of production and management. The increase of the rebate rate is another good for the company. The bad environment of the company is expected to be eased.

Although this year's performance is not satisfactory, we think that next year may be a turning point, which deserves continuous attention.

Jin Fei Da: as one of the largest high-end clothing (Ladies) ODM and OBM manufacturers in the country, the company's orders this year are not increasing, mainly due to its scale advantages and fabric independent design advantages.

With the appreciation of the renminbi and the rapid fall of the US economy, annual income growth and gross margin will be suppressed. The cancellation of preferential tax policies will have a further negative impact on net profit growth.

Although some unfavorable factors will be eliminated or weakened in the future, and the competitive advantage is obvious compared with the similar enterprises, whether the global economy will continue to deteriorate is the biggest risk affecting the growth of company performance.

Our point of view: on October 17, 2008 -24, we investigated three textile and garment enterprises in Zhejiang, namely, American bond clothing, Jin Ying shares and Jin Feida. They live in the middle and lower reaches of the industrial chain, or are the leading domestic market leaders, or have a considerable proportion of export business. For the inspection of these three companies, we think it is representative and can reflect the current status of the industry.

Previously, the market has a very pessimistic view on the textile and garment industry: 1: consumption is slowed down by the economic crisis and the domestic market is hard to maintain; 2, the textile enterprises basically have no investment opportunities, mainly due to the double squeeze from the upstream and downstream, the tight capital chain and the increasingly thin profit margins; 3, the impact of the appreciation of the local currency and the decline of the US European economy, the export sector is the most vulnerable, and export enterprises, especially garment export enterprises, will fail because of the lack of orders.

We conducted a survey of three companies with the same doubt, but found that although the above analysis was true, we only saw "one side of the coin".

Despite the brutal competition, the industry is not "one glory and one glory", but the characteristics of "strong and strong" under the weak market are more obvious. Enterprises with obvious competitive advantages such as scale advantage, independent innovation advantage, technological leading edge and brand channel advantage can survive and tide over difficulties.

So in general, we believe that there are still investment opportunities and good investment targets in the industry. Some enterprises need to pay close attention to them. The value of investment of some enterprises may appear in the following years.

Investment opportunities: the growth space is still vast. As the second largest enterprises in the industry, we believe that the investment opportunities of American Bon apparel mainly lie in the mining of its growth space, and the growth comes from two aspects: the brand operation effect and the channel expansion ability, that is, the breadth of the brand series and the deep excavation of the target customers.

At present, the uncertainty of the growth of the market is also centered on these two aspects: 1, the company has focused on the operation of the "mus and bang bang Wei" brand, focusing on the 18-25 year olds. At present, its market share has reached the top of the same industry.

For such an intensely competitive market, it has become more and more difficult to expand the market share. (2) although the company has developed rapidly in recent years, it has always been in the mid-range level from the perspective of product pricing and design, and has won the scale and sales volume.

Whether the future can continue to raise the brand image to achieve the purpose of raising the price and raising the gross margin space, or achieving the smooth overrun from the middle end to the high-end or even high-end, is unknown; 3, the company has enough experience in running a single brand, but there is still some doubt about the promotion effect of the brand new "ME&|CITY" with different styles. The target customers of ME&|CITY are relatively independent, and need to develop new sales channels, and also increase the market's concern about the company's channel expansion capability and financial strength.

Through the 09 spring summer new fashion conference and the direct communication with the company, we have a more intuitive understanding of its brand operation mode and capabilities. We believe that the company has the strength to successfully promote the new brand, and successfully expand the market share.

In the survey, we paid more attention to the new brand "ME&|CITY". We learned that the company adopted a high and cautious attitude towards the promotion of "ME&|CITY". That is to say, we should be careful about the channel's development while promoting the brand's connotation, image and appeal.

The company initially plans to first refer to the flagship store of Nanjing East Road in 2009 to open 100 or so "ME&|CITY" independent stores. It hopes to set up a franchise and join it again, and on the basis of correctly conveying the brand concept contained in "ME&|CITY", will promote the sales of franchised stores with the demonstration effect of Direct stores.

We think that "ME&|CITY" is priced higher in the high-end fashion and leisure, and the price of products is much higher than that of the "mus."

Its style and design fully cater to the current trend of development and extends to the 22-35 year old market with more consumption capacity. In the future, it is likely to surpass the sales scale of the main brand of "mus." and become a breakthrough for opening up the growth space of the company.

And for the series of "America's S & B" campus, the company will continue to take advantage of the expansion of stores and the radiation role of Direct stores to expand sales and raise gross margins.

In terms of price increase, the company will increase the average price of products through the continuous introduction of new ways, but at the same time, reference to the price of similar competitors to float downward to maintain the price advantage; on the one hand, the expansion of stores will expand the store area and enhance the image of shops; on the other hand, adjust the expansion speed of new stores according to the actual situation; cooperate with the supply chain management system, improve the turnover efficiency of goods, reduce the discount rate, enhance the management efficiency, and achieve endogenous growth through the enhancement of operational efficiency.

In order to be more intuitive, we still use the five factor model to analyze its brand operation ability, and the brand operation diagram belongs to "mus." we can see the advantage of the company in brand operation.

Besides, the development opportunities of the company also come from the adjustment of the industry. Because the consumption is weakened by the economy or more or less, many competitive brands are limited by the financial strength, and the investment speed is slowing down, which gives the company the opportunity to distance itself from the homogeneous competitors.

Earnings forecast company recently released the three quarterly report in 2008, showing that business income reached 2 billion 855 million yuan, an increase of 41.57% over the same period last year, operating profit reached 491 million yuan, an increase of 235.98% over the same period last year, the main reason for the increase is the substantial increase in gross margin and the reduction in the cost of the period.

Under the adverse effect of the income tax rate increased from 15% to 25%, the net profit of the company still increased by 203.64%, reaching 340 million yuan.

The company expects its net profit attributable to parent company will grow by 60%-70% over the same period last year, mainly due to the continuous increase in sales volume driven by channel expansion, the increase in the average selling price and the increase in cost savings brought about by the cost savings. The company is expected to increase its net profit margin in 2008.

As of September this year, the number of stores has increased from 2211 in the first quarter to 2641, with a gross margin of 44%.

This is mainly due to the strong brand influence and financial strength of the company, so that it can maintain a faster expansion speed and strong bargaining power in the current economic weakness, and achieve continuous improvement in performance.

In addition, due to the overcapacity of the garment industry, the situation of supply exceeding demand persists, and the production cost does not rise or fall, which further pushes forward the gross profit.

Although the economic slowdown will increase the pessimism of the market, we believe that the strong brand will prompt different brand clothing enterprises to show different results in the face of the same economic background.

From the market research, we feel that the position of "meitsg Bang Bang" brand is continuing to consolidate in the leisure wear industry. The promotion of the new brand ME&|CITY is also very robust and smooth. Financing from the capital market strengthens the financial strength of the company, and ensures that the company maintains the expansion speed of the canal while not increasing the pressure on the capital.

Overall, the company is in the growth path of growth, is worthy of attention now good investment targets.

It is estimated that EPS in 2008 -2010 will be 0.91 yuan, 1.12 yuan and 1.36 yuan respectively.

Potential risk is the risk of sustained macroeconomic deterioration; the Golden Eagle stock company started in the production of hemp and spun silk complete sets of textile machinery and plastic machinery, and then extended to related flax and silk spinning industries, gradually forming textile machinery, plastic machinery production, 60 thousand spindles silk spinning and 72 thousand flax yarn (cloth), silk making, and the corresponding weaving, dyeing and finishing, clothing comprehensive business.

According to the composition of sales revenue, the income of linen spinning accounts for about 38% of the total income, about 28% of the silk spinning products, and about 8.3% of the textile machinery income.

The biggest advantage of the company lies in the close combination of textile product R & D and textile technology practice. At present, it has gained about 85% market share of linen and silk spinning machine, 14% of the market share of flax yarn (cloth) and spun silk. It is the largest manufacturer of hemp and silk spinning machinery and equipment in China, the largest linen, silk spinning and weaving enterprise and the only linen textile enterprise with the longest flax industrial chain with raw material planting, complete hemp spinning machinery manufacturing and hemp textile production.

Investment opportunities: waiting for the arrival of the bottom of the industry. Although the company has a significant scale advantage and monopoly position in the spinning and spinning industry, but because of the low cycle of the spinning and spinning industry itself, the performance in recent years has not been ideal.

The first half of this year was affected by the earthquake disaster, which aggravated the difficulties of the company.

On the whole, the main factors that restrict the development of the company lie in: 1, raw material prices continue to rise; the main raw materials of the company's textile are silk spinning raw materials (silkworm cocoon inferior products) and flax, of which the cost of silk spinning raw materials is about 65% of the total cost, and the cost of linen raw materials is about 60% of the total cost of the production of linen yarns.

The raw material of spun spinning and flax spinning has a certain scarcity, especially the good linen spinning material still depends on the import.

But in recent years, imported linen materials are of high quality and low quality. According to customs statistics, the quantity and amount of imported flax raw materials in 1-5 this year