Everbright Solid Collection: Debt And Danger Of Textile And Garment Industry

Two thousand and eighteen

1.

industry chain

Since 2018, the outbreak of private enterprise bond defaults has caused widespread concern in the market. The main body of the default is scattered in a number of industries, of which there is a breach of contract in the textile and garment industry. In April 23, 2018, the rich birds could not pay back the principal and interest of the sale, and a substantial breach occurred.

Judging from the number of historical default subjects, as of October 12, 2018, there were 5 textile and garment subjects in the interbank and exchange markets, which were defaulted, respectively.

The main body of textile and garment industry default is larger than most industries.

Through sorting out the credit qualification of the issuers of textile and garment industry, we will identify the risks and opportunities of the industry.

This article is an industry section, focusing on the analysis of the operation of the textile and garment industry.

The industrial chain of textile and garment industry consists of three basic industrial chains, namely, upstream and downstream accessories manufacturing, mid stream textile manufacturing and downstream garment manufacturing.

The upstream raw material manufacturing industry chain is the basis and prerequisite for the textile and garment industry chain, including natural fiber and chemical fiber.

Among them, natural fiber contains plant fiber, cotton, hemp, animal fiber, wool, silk and so on. Chemical fiber includes synthetic fiber polyester, cotton, spandex, acrylic fiber, rayon viscose fiber and new environment-friendly fiber.

Textile manufacturing in the middle reaches includes spinning, weaving, printing and dyeing, finishing and so on.

Downstream garment manufacturing includes garment manufacturing and apparel retailing, processed garments, home textiles and other finished products, forming brand clothing home textile products for consumers.

Considering that upstream plants and animal fibers are more involved in agricultural production, the comparability of chemical fiber and chemical industry products is stronger.

2.

Industry profile

In the framework of manufacturing credit analysis, profit is the core factor.

The income side income and the cost side cost constitute the profits of the textile and garment industry. The income side, the fluctuating supply and the fluctuating demand jointly determine the price changes. The influencing factors of the demand side are mainly domestic sales and exports. The influencing factors of the supply side are fixed assets investment, product output and inventory. The cost end includes the upstream raw material cost, manpower cost, machine depreciation, fuel cost and channel cost.

2.1, demand analysis: domestic sales and exports

In terms of demand, the demand of China's textile and garment industry mainly includes domestic sales and exports, and exports account for a relatively large proportion, which is a traditional export oriented industry.

In terms of domestic demand, in recent years, with the increase of labor costs and the warming of international trade protectionism, the retail sales volume of the total retail sales of Enterprises above designated size has been increasing more slowly, but the growth of clothing retail sales is faster than the overall growth rate.

In August 2018, the total retail sales increased by 5% compared to the same period last year, and the retail sales of clothing increased by 7% over the same period last year.

In terms of external demand, China is the largest textile exporter in the world. Textile exports have been warmer since 2017, but this trend will be restrained by the impact of the escalation of trade frictions between China and the United States.

China's textile exports showed a negative growth trend since 2015, but this trend was improved in 2017. In 2017, the global economy recovered and the external demand improved. In 2017, the export value of textile manufacturing enterprises above designated size was 344 billion 520 million yuan.

Textile export volume index continued to rise, reaching 120.83 in the first quarter of 2018, a slight decline in the two quarter, and export price index remained stable, except for 2015 slightly higher than the export volume index.

This shows that textile manufacturing exports are subject to price declines, and export growth is mainly dependent on rising numbers.

With the impact of Sino US trade friction, the trend of textile industry warming will be restrained to a certain extent.

As of the end of 8 2018, China's textile and apparel exports totaled US $181 billion 400 million, an increase of 3% over the same period last year, and the growth rate slowed down.

From the export area, the main export countries and regions of China's textile and garment industry are still the United States, Japan, the European Union, China's Hongkong and South Korea, accounting for more than 50%.

Among them, the European Union, the United States and Japan are the three largest export areas of textile and clothing products in China, accounting for 18.39%, 16.52% and 7.67% respectively.

The export volume of China's textile and garment products exported to Japan has been declining, and the export volume of the EU market has reached the peak of 56 million 855 thousand and 200 US dollars in recent years, and then it has been declining continuously since 2014.

2016 and 2017 were basically at a level.

The export of textile and clothing products in the US has basically maintained an upward trend, and the growth rate has slowed down in the past two years.

2.2. Supply analysis: output and inventory

In terms of supply, the textile and garment industry is currently a fully competitive market, with a large number of enterprises, low barriers to entry, low concentration of industries and relatively large number of private enterprises. There are 22 non-state-owned enterprises in the 29 textile and garment industries, with a ratio of 76%.

In recent years, the fixed assets investment volume of textile industry and apparel industry has basically maintained a sustained growth trend. The economic downturn in 2012 led to a marked decline in the growth rate of investment in the textile and garment industry. In 2013, the textile industry and clothing and clothing industry all warmed up, followed by a downward trend. In recent years, the growth rate of fixed assets investment continued to slow down.

In terms of output, the output of cloth and yarn declined. In August 2018, the output of cloth and yarn in the same month was negative year-on-year, up by -0.9% and -1.1% respectively.

In terms of inventory, the inventory ratio of cloth and yarn also declined in August 2018.

From the perspective of productivity distribution, China's textile enterprises and production capacity mostly concentrate on 7 provinces, such as Jiangsu, Zhejiang, Shandong, Guangdong, Fujian, Hubei and Hebei. The seven provinces at the end of 2016 accounted for 88% of the total output, while the yarn production accounted for 79%.

Jiangsu and Zhejiang provinces are mainly textile raw materials, home textile products, woolen sweaters, down garments, leisure men's wear and footwear; Shandong is mainly cotton textiles and home textiles; Guangdong is a gathering place for casual wear, shoes, fabrics, sweaters, women's wear and underwear; Fujian Jinjiang is a gathering place for sports goods and men's clothing industry.

2.3. Cost analysis: cotton prices

In terms of cost, cotton is the main raw material in the textile and garment industry. The purchasing cost of cotton has a great impact on its total cost and product price.

The leading factor of cotton price is supply and demand in the market. The other factors that affect cotton price include industrial policy (reform of agricultural supply side), import quota management and state reserve.

Judging from the trend of domestic cotton prices, before 2010, it fluctuated at around 15000 yuan / ton, and there was a sharp rise in 2010 (the expected reduction in production at that time led to rising domestic and foreign cotton prices). Subsequently, the state issued a policy of purchasing and storage to stabilize cotton prices. After that, domestic cotton prices stabilized at about 20 thousand yuan / ton; in 2014, the state introduced direct subsidy policy, and the market price of cotton increased, continued to fall, and gradually integrated with international cotton prices. In the first half of 16, the impact of dumping and storage lagged behind, and now it is maintained at around 16000 yuan / ton.

2.4, summary

To sum up, the textile and garment industry is a completely competitive market, and the barriers to entry are low. However, China's textile and garment industry has low concentration and low added value of products, especially in the industry.

In 2017, the demand industry in textile industry continued to be better and exports were warmer. However, in 2018, it was restrained by the impact of Sino US trade friction. The industry's warming trend will be suppressed. The domestic cotton production and demand gap will promote cotton prices to rise steadily in the long run; the overall profitability of textile and garment industry is relatively stable, and the concentration of industries will further improve;

3, risk warning

In the process of industry pformation and upgrading, or involving a lot of high-risk business areas, we should be alert to the business instability caused by diversified businesses.

In addition, the textile and garment industry is mostly private enterprises. We need to guard against the impact of the actual controller risk of private enterprises on the operation and financing of the company.