Textile And Apparel Industry Three Quarterly Performance Prospects: Performance Differentiation

Since the three quarter, apparel retail terminals have bottomed up.

From the total retail sales of consumer goods, the growth rate in August and September is around 12%, and the 10%+ growth rate is expected to remain stable in the four quarter.

In August, the sales volume of clothing products of 100 and 50 key large enterprises increased by 8.6% and 8.8% compared to the same period last year, reaching a new high of the year.

Overall, entering the three quarter.

The retail terminal began to recover and the bottom up trend was obvious.

Three quarterly performance continued to differentiate, and consumer leading performance improved significantly.

From the three quarterly data, we can see: (1) the performance of the consumer leader is better: the leading men's home of Ping men's men's clothing (600398) still maintains a high growth rate of over 50% with its "high performance price ratio + direct camp mode"; casual wear and children's wear Semir clothing (002563), children's wear business maintains a high growth rate of 20%+, casual wear business has bottomed out and expects to start a positive growth in the second half of the year; Home Textile Leader Luo Lai home textile (002293) and fuanna (002327) have achieved stable results, and the three quarter results are expected to improve, and the recovery can be achieved throughout the year.

(2) the traditional brand clothing is still in the bottom: Men's clothing brand orders have not yet been revised. It is estimated that the companies with negative growth throughout the year will be the majority. High-end brands such as the group of long (002612) and the card slave Road (002656) will still suffer from negative growth pressure.

We expect the three quarterly bulletin of the textile and garment industry in 2014 to be reported as follows: (1) there are 8 companies whose growth rate is above 20%: Hai Lan home (growth rate 50%+, exceeding expectations), Semir clothing (22% growth rate, exceeding expectations), China Textile share (600448) (growth rate 40%, pre maturity), YOUNGOR (600177) (growth rate 50%, expected), Pathfinder (300005) (growth rate 20%, expected), Huas share (002494), Meng Jie home textiles (growth rate, expectations), Huafu color spinning (growth rate), meeting expectations.

(2) there are 5 companies with a growth rate of 0-20%: Luo Lai home textiles (growth rate of 15%, exceeding expectations), fuanna (growth rate of 15%, meeting expectations), Jihua Group (601718) (growth rate of 10%, meeting expectations), Lu Tai A (growth rate of 8%, meeting expectations), and Shanghai Jiahua (600315) (with 15% growth rate, which is in line with expectations).

(3) the growth rate of the company below 0% is 9: seven wolves (up to -40%, in line with expectations), nine Mu Wang (601566) (growth rate -25%, meeting expectations), reporting birds (growth rate of -15%, expected), card slave Road (growth rate -75%, lower than expected), Smith Barney apparel (002269) (growth rate -30%, below expectations), search for special (002503) (growth rate -30%, expected), Jia Lin Jie (002486) (growth -10%, expected), AOKANG International (603001) (growth rate -35%, expected), and Baron East (601339) (growth rate -15%, in line with the lead time).

Investment recommendations: actively optimistic about the four quarter consumer leading performance improvement, continuous attention to innovation and pformation company.

From the three quarterly report we expect, three quarterly reports show obvious polarization.

Leading performance is strong, traditional men's clothing and high-end clothing pressure is still larger.

We believe that the main line of investment in the second half of this year can be divided into two parts: (1) pay close attention to the company with good fundamentals, especially the consumption leading companies whose performance is better than the other ones: the mode innovation and the management of excellent men's wear leading men's LAN family still maintain the high growth of 50%+'s trend. It is expected that the household registration reform system will help them to open up larger market; the Home Textile Leader Luo Lai home textile has stabilized after two years of adjustment, and the order will increase for the two consecutive season. The three quarter will be better than that in the two quarter; the casual wear and children's wear leading Semir clothing, the leisure wear business is revival, and the children's clothing business is developing rapidly to help them actively create children's related industry chain.

(2) concerned about the innovation and pformation of the company: INTERCHINA group as a central enterprise munitions leading value seriously underestimated, major shareholder emerging China group is one of the six central enterprises pilot units, the pformation into the sports industry direction clear; Huafang shares large shareholders equity has been straightened out, the future will promote its own brand LINPURE, to create "big home textile" O2O mode.

To sum up, we believe that the worst time for the textile and garment industry has passed, over two years.

The adjustment of the terminal has begun to see the bottom of the clothing macro retail data. Home textile and other sectors have begun to resume growth. It is expected that the industry will break up in the first half of next year. Therefore, we have upgraded the industry rating to a good level (since January 2012, we have maintained a neutral rating since the downgrading of the industry).

Fourth quarter, we are optimistic about the performance of the leading consumer chain, recommended Home Textile Leader Luo Lai home textiles and fuanna, cheap men's wear leading sea LAN home and casual wear children's clothing leading Semir dress, these companies valuation less than 20 times, next year growth certainty is strong, can focus on, advance the layout.