A Shares Rebounded For Two Consecutive Days, Improving Fundamentals Of Home Textile Industry

After the 1.19 plunge, A shares rebounded for two consecutive days. Today, Shanghai stock index has surged more than 100 points to the 3300 point mark under the weight plate, creating the largest single day increase in more than 5 years.

UBS released today's home textile industry research report that, for the leading domestic textile enterprises, the most pressing period of online and offline has passed. It is expected that the 2015 profit will continue to grow steadily, which will benefit from the cost reduction in the short term. It will benefit from consumption upgrading and industry concentration in the long term.

UBS believes that the domestic textile industry has undergone more than two years of adjustment and has basically finished its inventory.

In the second half of 14 years, the industry boom began to recover, and the leading companies of three listed companies hit the bottom.

In terms of revenue, the revenue growth of leading companies stabilizes or rises. Profitability improves faster than revenue.

In terms of cash flow, the average operating cash flow / net profit ratio of the three companies in the three quarter of 14 years was about 0.69, which was significantly improved over the same period of -0.06 over the same period of 13 years, the highest value in the same period in 10 years, of which 1.16 of the domestic textile products reached 1.16, while the average cash content of three companies was 1.17, the same as the highest value since the beginning of the year.

In terms of operating capital turnover, the inventory and receivable turnover of home textiles in the 14 quarter of the first three years have improved year-on-year, while fuanna and Meng Jie have improved year-on-year in receivables and inventory turnover respectively.

In addition to improving fundamentals, three leading enterprises are actively pushing forward the electricity supplier and turning challenges into opportunities. In the face of fast developing online channels, traditional leading enterprises have turned passive into initiative.

After more than two years of active promotion, it is estimated that the 2014 year old online business has increased rapidly to 12%~20%.

Because home textile products are relatively standardized and SKU is relatively small, they should be more suitable for online sales. Therefore, a large number of factory brands or small brands that have risen early have put pressure on traditional leading brands.

But with the active layout of big brands online, based on lower customer costs and more stable supply chain system support, its advantages begin to highlight.

Double eleven of home textile sales, the top three brands can reach 31%, which is far higher than the concentration of offline market.

UBS believes that the short term

It will benefit from falling costs.

The company pointed out that the top part of the home textile production chain is cotton and oil, the cost will be greatly affected by the price of the two commodities, or will benefit from the decrease of the cost, and the sensitivity of the three brands to the price of raw materials will be calculated. We can see that the benefit elasticity of the dream home textiles is the largest. Under the assumption that the cost of raw materials is reduced by 5%,

The net profit of home textiles in 15 years will increase by 13%, 7% and 24% respectively.

In the long run, UBS believes that home textiles are less permeable in consumer goods, and there is still room for growth.

At present, the consumption attributes of home textile products are still biased towards durable goods, mostly for event driven purchase such as moving, marriage, gift giving, etc. in mature markets, home textile purchases are more conventional consumption.

In addition, the majority of consumers

Consumer awareness is still being cultivated, and nearly 2 home textile enterprises are concentrated in the low and middle end market, depending on price war competition.

The low frequency of purchase and the limited willingness to spend make the domestic bedding expenses low. Less than 1% of the per capita consumption expenditure of urban residents is used for bedding consumption, far lower than that of clothing 11%.

UBS believes that for the functional category of home textiles, products are relatively standardized and consumers' individual needs are weak, so the corresponding long tail market is also smaller, and the market concentration ratio should be higher than that of clothing. However, the largest market share of home textile brands is only 2.4%, and there is still considerable room for improvement.

In addition, the competitive environment of the home textile market may be better than that of the general clothing category. The impact of international brands is limited, while the strength of small businesses is weaker. Leading enterprises are easy to form obvious advantages from cost, channel and brand marketing.