The Three Major Industries, Such As Textile And Clothing, And Other Industries, Have Entered The Stage Of Stage Performance Resilience

In recent years, the central parity of RMB against the US dollar has continued to decline, and the exchange rate of RMB against the US dollar is close to 6.9, a record low.

In the industry's view, the depreciation of the renminbi is a double-edged sword. From the perspective of opportunity, the depreciation of the RMB is conducive to the recovery of the profitability of export enterprises.

From the perspective of industry, textile and garment, international engineering, household appliances and other industries will benefit.

A

Textile and clothing

Concerned about the high proportion of export companies

At present, the average value of textile and apparel industry is about 22 times, basically in a reasonable range.

However, due to the expansion of the strong and strong effect of leading enterprises, the performance growth and certainty will be higher, and the valuation will be raised.

In the first quarter of 2019, the overall performance of textile and garment enterprises was still under pressure. High quality enterprises still ran out. The boom of high-end clothing, children's wear and sports shoes and clothing in the sub industry was relatively high.

It is worth mentioning that the low RMB is conducive to the export of textile and garment industry in the short run.

Textile and garment export enterprises benefit from three aspects: hand orders, US dollar assets and future orders return.

Some people pointed out that many of the A share listed companies in textile and garment sectors accounted for more than 50% of business revenue.

The US dollar is the main settlement currency of most export enterprises. The United States is still the largest export destination for China's textiles. Therefore, the depreciation of the RMB against the US dollar has made the domestic export oriented enterprises benefit from various aspects.

Industry insiders say that from the perspective of RMB exchange rate, textile and garment companies with a larger share of overseas business will benefit more.

Under ideal conditions, the profit elasticity brought by the low RMB to textile and garment enterprises is determined by the proportion of exports and the net sales rate of enterprises.

It is estimated that the sales profit margin of the textile and garment industry will increase by 2% to 6% when the RMB falls by 1%.

If the RMB exchange rate continues to fall, it will bring short-term improvement in elasticity to our textile and garment export enterprises. For this purpose, we should focus on measuring the benefit elasticity of earnings, and we should pay attention to the high proportion of overseas income, the larger improvement rate, and the leading underestimation of the undervalued value. For example, the shares of A (market 002083, diagnostic shares), the joint stock market (market 002394, the diagnosis shares), the Lutai A (market 000726, the diagnosis shares), the cross border pass (market 002640, the diagnosis stock), and the Jonsson group (market 603558, diagnostic stocks).

Potential stock selection

Joint venture shares (002394) grew rapidly

As the leader of the yarn dyed fabric industry, the company has a clear leading edge. In 2018, the company's performance showed a recovery growth, and the first quarter of 2019 showed a rapid growth.

Everbright Securities (quotes 601788, shares) pointed out that the company's capacity is mainly in the domestic and Kampuchea, the main products are full of color and fabric production capacity, is expected to grow steadily, printing and dyeing cloth, printed cloth, clothing and other productive capacity, there is still room for development and improvement, and bring growth.

In terms of capacity increment, the company plans to build new capacity in Ethiopia and Xinjiang. In November 2016, the company signed a cooperation intention agreement with China earth group, and built dyed fabrics, yarn dyed fabrics, garments and spinning factories in Ethiopia. In addition, the company announced in May 2018 that it was planning to build an annual output of 28 million meters of home textile grey cloth and supporting yarn production in Xinjiang.

The company has prominent leading position and low valuation.

Lu Tai A (000726) is highly competitive.

The company is the leader of China's yarn dyed industry chain, and its products have strong competitiveness.

GF Securities (quotes 000776, diagnostic stocks) pointed out that the garments production capacity of the company in China, Vietnam, Kampuchea and Burma was 1500, 300, 600 and 3 million respectively, while the 3500-4000 phase of the two phase project in Vietnam and the production of 3 million garments were under construction, and is expected to be put into operation in 2019-2020 years.

The expansion of production base in Southeast Asia will effectively utilize the advantages of local raw materials, labor, income tax and customer import tariffs to promote the company's future growth.

The company's revenue from export business accounts for more than 60%. Under the uncertainty of Sino US trade frictions, the layout of Southeast Asian capacity enables products to be exported directly from Southeast Asia and reduce the risks caused by trade friction.

Kin Sheng group (603558) order growth driven growth

The company is the largest cotton stocking manufacturer in China. It mainly produces all kinds of high-end high-end cotton socks, layout dyeing, accessories production, weaving and so on. It adopts the production mode of ODM and OEM, and has become a long-term supplier of famous Brand Company such as PUMA, UNIQLO, UA, Decathlon, HM and so on. The export proportion is over 80%.

Guosheng Securities pointed out that the company's Vietnam capacity release, orders growth driven growth.

Vietnam is more attractive in terms of tax policy and production cost than Vietnam, and Vietnam's capacity is released to attract more customers and orders. It is expected that in 2019, the South cotton socks will achieve 150 million double production capacity, an increase of 36%.

In addition, the company entered the seamless underwear market and made remarkable achievements.

With its leading technology, quality customers and capacity release, Qiao Ting Ting is complementary to the company's main business, and its growth rate can be expected.

Kang Longda (quotes 603665, diagnosis shares) has huge market opening space.

The company focuses on the independent research of the production technology and technology of new materials and products of polymer fiber. From the input point of view, the R & D rate of the company in 2017 is 3.46%, higher than that of the domestic average and international leader.

Materials research and development, the introduction of new products ultra high molecular polyethylene fiber, breaking the Holland international new material giant Royal DSM technology monopoly, the future of new materials application space is huge.

CITIC construction investment (market 601066, diagnostic stocks) Securities pointed out that the company is the leader of domestic labor protection gloves, and the future is expected to be based on the US company GGS and Shanghai Kanthman.

Referring to the industry leader ansee's experience, we think that the extension of the industry chain to the vertical chain and the extension of the horizontal category are huge. With the advantage of the platform, we hope to achieve the double drive development of both internal and external industries.

B

International Engineering

Substantial increase in gross margin

Along the "one belt and one road", the economic and trade links between the two countries are close, the economy is active and the potential for development is huge. China's investment in the "one belt and one way" country is significantly higher than that in other regions.

The large-scale production capacity has led to the prosperity of foreign contracted projects. The proportion of Chinese enterprises in the "one belt and one road" project in the total amount of foreign contracted projects has increased year by year, and now it has exceeded 50%.

The second "one belt and one way" forum is expected to bring new investment opportunities for international engineering enterprises.

The renminbi has depreciated rapidly against the US dollar in the near future, and in the context of Sino US trade reversion, the RMB devaluation is expected to continue to grow.

Some industry pointed out that because the international engineering companies generally hold the US dollar net position or will recover the US dollar project in the future, the depreciation of the RMB against the US dollar will generate more exchange earnings, and we can pay close attention to the trading opportunities of related targets.

According to the theory of interest rate parity, spreads determine the change of exchange rate.

Guo Jin securities (quotes 600109, medical shares) analyst Huang Junwei said that the RMB's decline from the three major path is favorable for the international engineering sector.

The first is to raise gross margin, followed by lower RMB quotations, lower quoted prices, more attractive international projects, and finally exchange earnings.

With the convening of the "one belt and one way" Summit Forum, the policy is expected to gradually increase, and the international engineering sector will usher in a new round of investment opportunities.

Zhou Song, an analyst with Guoxin Securities (quotes 002736, shares), suggested that investors pay close attention to the construction of China's leading enterprises in the "one belt and one way" leading central capital construction enterprise (market share 601800, shares), the accelerated expansion of overseas expansion, and the accelerated growth of China's Chemistry (quotas 601117, diagnostic stocks), the international engineering market for deep cultivation, and the integration of the central enterprises in the China Industrial International (market 002051, diagnostic stocks), vigorously developing new energy investment and operation business, overseas orders abundant Northern International (market 000065, diagnostic stocks), strong profitability, and nearly five years of high growth in Sinoma International (market 600970, diagnostic stocks).

Potential stock selection

China Construction (601800) to strengthen overseas market development

The company is the world's leading super infrastructure comprehensive service provider, the world's largest port design and construction company, and the world's largest highway and bridge design and construction company.

Guosheng Securities pointed out that the company has strong comprehensive strength in water and land pportation infrastructure, especially in wading projects, and has the core technical advantage. It is the main design and construction unit of the Hong Kong Zhuhai Macao Bridge.

The overseas business of the company has inherited the advantages of China's port and Luqiao, China, and is in the leading position in the construction of central enterprises, and has the pioneering ability and risk control ability in overseas business.

The company further strengthens overseas market development and steadily promotes the sustained growth of overseas performance, which is one of the main driving factors of Future Ltd growth.

In addition, the company takes full advantage of changes in domestic infrastructure investment and financing mechanism and changes in supervision and competition environment, giving full play to the advantages of central enterprises and continuing to increase market share.

Chinese Chemistry (601117) new order recovery

There are two aspects of the company's impact on the industry boom. On the one hand, it is the quantity of new orders; on the other hand, it is the implementation of the project.

Because the company's order cycle is long, the project construction period is generally 2-4 years. In the process of implementation, if the product price drops and the economic benefit of the project decreases substantially, the phenomenon of stagnation of project construction will occur. As the price of the product rises, the profit of the downstream will be improved, and the probability of the resumption of work stoppage or the acceleration of construction will be increased.

Haitong Securities (quotes 600837, diagnostic stocks) pointed out that, benefiting from the industry's warmer recovery, the company's new order was revival, the new project began to implement, and the previous stagnation project was restarted, and revenue recognition was accelerated.

The company's new orders began to grow rapidly in the past 2016-2018 years.

From the execution of orders, the company's revenue and net profit growth has improved since 2017, and the turning point of performance has already appeared.

China Industrial International (002051) reform of state-owned enterprises continues to advance

The company is a leading international window contractor in the world. It has a high degree of marketization, outstanding execution and wind control capabilities, and can provide a full cycle solution for the project.

The company's core competitiveness lies in its extensive overseas market coverage, as well as its subcontracting management, financing and risk control capabilities for international projects.

Guosheng Securities pointed out that the company intends to issue shares to acquire the 100% stake in the Central International Group, which is the key design company of the major shareholder.

After the acquisition of China's yuan, the company will improve the layout of its industrial chain and enhance its competitiveness at home and abroad.

At the same time, the company announcement and Zhongyuan International have been listed in the "100 hundred actions" of the SASAC state-owned enterprise reform, and the follow up reform of state-owned enterprises is expected to continue to advance.

Northern International (000065) overseas project resources

The company is a platform based international engineering contractor and civilian product integration platform of Northern Industrial Corporation. It has rich experience in engineering contracting in many fields such as rail pportation, energy, oil and mineral resources, and has country market advantages in many countries such as Iran and Pakistan.

Overseas investment has great potential and is expected to become a new growth point for the company.

Guosheng Securities pointed out that the company is the actual controller of the northern industry's only A share listed company platform and external engineering contracting window. It has the characteristics of "big group, small company and only platform", and is expected to become a new growth level of the group in the future.

Relying on the overall brand advantage of NORINCO, the political and business customers and channels of the group's military trade business are expected to bring a lot of overseas project resources to the company, and it is expected to accelerate development in the future.

C

Household Electric Appliances

Long term growth momentum is sufficient

Recently, the office of the State Council's development and Reform Commission issued a letter to promote the development of circular economy (2019-2020 years) (Draft).

Lin Huanyu, an analyst with Huatai Securities (quotes 601688, shares), believes that the promotion policy of household appliances renewal and consumption is further clarified, which is conducive to stabilizing the demand for home appliances under the influence of the real estate post cycle.

For leading enterprises with premium brands in high-definition smart color TV and energy efficient products, the impact is more positive.

The low exchange rate of RMB makes China's export of household electrical appliances more cost-effective in overseas markets, and is conducive to the expansion of Chinese enterprises. At the same time, because most companies use foreign exchange settlement when they sell products, the lower exchange rate of RMB can also increase exchange earnings.

Dong Guangyang, an analyst with Huachang securities, pointed out that in the first quarter of 2019, the production and marketing situation of the household appliance enterprises was basically stable, and the operation was in good condition.

With the lowering of the value added tax policy, the appliance leading enterprises with strong bargaining power are expected to enjoy the performance thickening effect of tax reduction, which is expected to drive the growth of the 2019 annual performance and continue to be optimistic about the development of the industry.

On the whole, with the reduction of tax revenue, the expected warmer follow-up, and the implementation of the consumption policy, the appliance industry is expected to benefit from the warmer growth. In addition, the MSCI will gradually increase in the factor, and the capital in the north will continue to flow into the industry, and it will be optimistic about the long-term value of the industry.

It is recommended to pay attention to high barriers, undervalued and future development of the leading companies, the United States Group (market 000333, diagnostic shares), GREE electric (quotes 000651, diagnostic shares), Qingdao Haier (quotes 600690, diagnostic shares), boss electrical appliances (market 002508, diagnosis shares) and Vatti shares (quotes 002035, diagnostic stocks); and anti cyclical small household appliances leading companies, Joyoung shares (market 002242, diagnosis shares) and SUPOR (market 002032, diagnosis shares).

Potential stock selection

Midea Group (000333) growth path clear

The company's performance has maintained a steady growth trend. The first quarter growth in 2019 exceeded expectations, which once again proved that the enterprises had strong stability and profitability improved. They should enjoy the "deterministic premium".

The company is ahead of peers in terms of mechanism, management and execution.

We believe that 20-25 times earnings to earnings ratio may be the long-term valuation center of the company, and the market value is 500 billion.

China Merchants Securities (quotes 600999, medical shares) pointed out that the company's business orientation last year was "pushing up and selling expensive". SKU streamlined and pushed high-end brand Colmo, and this year launched the "integrated marketing" strategy and the Internet brand cuckoo.

The brand matrix of the United States has been improved, facing consumers at all levels. With the deepening of retail pformation, efficiency has further improved, and the growth path of future appliance giant is still clear.

GREE electric (000651) valuation is expected to improve

The company has strong brand strength, leading position is stable, and equity changes will help corporate governance, or will enhance valuation.

Southwest Securities (quotes 600369, diagnostic shares) pointed out that in April 9th, the company announced that the controlling shareholder GREE Group intends to pfer the stock of GREE's total stock capital of 15% by the way of the public solicitation of the pferee. After the pfer is completed, the controlling shareholder and the actual controller of the company may change.

We believe that this change, the company's long-term existence of the group level and the company management level of disagreement between the business philosophy of the problem is probably solved, business philosophy and plan more continuity and long-term, equity incentive mode is more flexible, greatly improving the core management and technical personnel sticky, long-term valuation of the company to suppress or solve factors.

Qingdao Haier (600690) has not changed its steady growth momentum.

The company's annual revenue grew by 12.2% in 2018. In the unfavorable environment of the industry downturn in the second half of 2018, the company's income in the fourth quarter increased by 10.37%, compared with the same period last year. In the first quarter of 2019, the revenue continued to grow at a steady rate of 10.17%.

Huachang Securities pointed out that in the domestic market, the company's effect in deepening the retail pformation is remarkable, leading position is stable, and the market share continues to improve.

In the overseas market, the company deepened the "three in one" global layout and continuously enhanced global influence. According to Euro data, Haier reclaimed the largest retail sales of large household appliances in 2018.

In 2018, overseas income accounted for 42%, and nearly 100% was private brand income.

Joyoung shares (002242) product structure adjustment opens

The company's income structure tends to be rational, and the dependence of single products is weakened.

The effect of soybean milk machine in the strategic pition to quality life small household appliances slowly appeared, the soya bean milk machine accounted for less than 20%, and the proportion of cooking machine and nutrition cooker increased.

State gold Securities pointed out that in the Chinese market through the way of overseas brand cooperation to open the living room home area, at the same time there is order pfer thickening company performance.

Join hands with internationally renowned brand name Shark to enter the Chinese market. In 2018, the amount of merchandise sold to SharkNinja reached 188 million yuan. The company expects that the pfer of orders in 2019 can generate sales of 450 million, an increase over 2018.

In 2018, the revenue performance returned to normal, and the cooking machine and rice cooker on the main track were still keeping up the trend of volume and price rising.