Taiwan: Capital Fleeing Textile And Shoemaking? Deutsche Yum Tong

Sino US trade war is in the ascendant. In particular, HUAWEI storm is affecting electronic stocks, and a lot of funds are moving to various ethnic groups. But Deutsche Securities pointed out that the textile shoes factory OEM has weak momentum in the second half of the year, and has negative effects on gross profit margins. It gives Confucianism (1476) "sell" and Feng Tai (9910) "neutral" investment rating, and speculates that reasonable stock price estimates are 310 and 212 yuan respectively.

Under the influence of the continued proliferation of HUAWEI's prohibition storm, long capital fled everywhere, away from financial stocks, including financial stocks, and cement, textile and shoemaking sub groups such as production stocks. They were regarded as safe haven and attracted funds to enter.

However, Deutsche securities has two major risks of placing orders and moving factory costs. It also allows the market to re examine what is a safe haven.

Deutsche explains that taking textile and footwear groups as an example, terminal demand has always been the most effective leading indicator of OEM plant revenue. Considering the slowdown of us terminal consumption, the second quarter began to affect the performance of OEM plant. The revenue of Taiwan's factory has been under pressure, and the Shenzhou International capacity utilization rate of Hong Kong stock has returned to normal, which is a distinct case.

In the second half of the year, Germany expects weaker orders.

In view of Confucianism, Germany believed that its revenue began to suffer from the first quarter clothing consumption recession in the United States since January, and hit the worst result in 2009, but the stock price has not been reasonably reflected.

According to the estimate of foreign capital, the total profit of this year is 15.7 yuan, compared with 15.37 yuan in 2018.

In the production efficiency of OEM plant, relocation of factories has also begun to bring negative effects.

Deutsche explained that Hong Kong stock Yuyuan group and Taiwan stock Fung Tai's major customers, based on cost reduction considerations, is continuing to require two major OEM plants to reconfigure production lines.

As a result, there will be three major impacts: first, the cost of migration will lead to a decrease in gross margin and a significant decline in operational efficiency.

Two, capacity utilization rate is reduced.

Three, the quality of products will deteriorate first and face the shortage of supply, especially the basketball shoes of Nike.

Deutsche said, Nike requires that the production base of high-class shoes (such as LeBron James signature shoes) be moved from the mainland to Vietnam. The mainstream shoes Airforce One will be pferred from Vietnam to India and Indonesia. Nike can receive the cost reduction effect, but it will certainly reduce the initial production efficiency of the OEM plant. Germany is bold in anticipating that Fengtai will face the impact of the relocation of the production base, and the shipment products may face obvious yield problems in May.