Soochow Textile Service: Focus On Half Year High Growth Stocks

One

Consumption now toughness, underestimate the value of locking down brand clothing downside risks, concerned about half year high growth stocks

This week's social zero data released in June, total social zero total growth of 9.8%, even excluding the abnormal growth of automobile industry policy, other consumer categories increased year-on-year growth rate.

After 18 years of Q3, the black swans are frequent, and the economic environment is heavy. But the consumption data show the strongest resilience in many economic data. In the Q1 with the highest base, the overall consumption remained stable. Q2, especially in June, was obviously stable. Even if the economy is still in the bottom up process, we believe that the toughness of the plate is the most difficult asset in the current investment environment after spending the highest number of consumption.

From the bottom up perspective of the industry, retail sales of many domestic brands in the first half of the year have achieved positive growth. Consistent with the macro data, June also showed a better growth trend than before. Especially in the background of the 618 momentum larger than before this year and showing a clear trend of head concentration, the electricity supplier will effectively boost the sales growth of the head brand. Whether it is public or luxury, overseas competitive brands are also showing a bright eye in China.

The above situation shows that brand clothing has a certain toughness at the macro level (though slightly weaker than other selected categories), and the industry competition structure presents a trend of market share concentrating on the leading parts. Under such a background, the underestimation of the industry leader will constitute an effective guarantee for absolute income. For details, refer to the valuation table in section second.

From the target allocation, there are still two directions. In the context of stable consumption figures and external environment, the semi annual report should pay more attention to the high growth stocks. The core concern is more than that of sound, Antarctica and Kai Run. In the current industry structure, the leading industry with alpha is still the focus of long-term allocation, and has a significant absolute profit space. The core concerns Anta sports, Be Meleven, Semir apparel, Bosideng, di Su fashion and Song Li Si. The manufacturing industry still expects to wait for half a year to digest the bad news. The core concerns are Shenzhou International, Tianhong textile, Huafu fashion, and Baron East.

In addition, from the perspective of global allocation of consumer goods, the leading consumer goods in China still have room for improvement from the perspective of relative valuations and absolute valuations. For more details, please refer to our in-depth report, "is China's consumer goods leading trend investment or value investment"?

Two

Related target valuation level

Three

In June, the retail sales of clothing, shoes and hats and needle textiles increased by 5.2% over the same period, which was stronger than that in May.

3.1. review of plate performance this week

This week, Shanghai and Shenzhen 300 fell 0.02%, the Shanghai Composite Index fell 0.22%, Shenzhen Composite Index rose 0.16%, of which textile and garment blocks fell 1.24%, or higher than the Shanghai Composite Index.

3.2. retail end: June above clothing, shoes and hats, needle and textile retail sales increased by 5.2% over the same period last year.

In June 2019, the total retail sales of consumer goods increased by 9.8% over the same month, a rise in the chain (an increase of 8.6% in May). In June, the size of clothing and shoes and knitted textiles increased by 5.2% compared with the same month in June, and the chain rose (4.1% in May).

3.3. exports: in 19 June, exports of various categories were still flat.

In June, the export growth of textiles, clothing and footwear reached -3.4%, -3.0% and -2.4% respectively. The growth of export volume in 1-6 months was 0.7%, -4.9% and -0.2% respectively.

3.4. upstream main raw materials: cotton prices fell sharply, the RMB exchange rate stabilized.

328 spot spot weekly average price: 14100.60 yuan / ton (-0.89%) (weekly variation -126.60 yuan / ton, monthly change -44.00 yuan / ton, change in the past year -2156.00 yuan / ton)

Cotlook A weekly average price: 74.11 cents / pound (-2.98%) (weekly variation of -2.28 cents / pound, month change -3.30 cents / pound, change of -24.50 cents / pound in the past year)

Long staple cotton (grade 137):24000.00 yuan / ton (-1.03%) (weekly variation -250.00 yuan / ton, month change -100.00 yuan / ton, in the past year change -1200.00 yuan / ton)

Imports of long staple cotton (US PIMA 2 level):22213.00 yuan / ton (-0.67%) (weekly variation of -150.40 yuan / ton, monthly price change -672.00 yuan / ton, in the past year change -3432.00 yuan / ton)

The US dollar to RMB exchange rate: 6.8765 (this week changes -0.03%, month change -0.40%, annual change 1.52%)

Chemical fiber:

Sticky short: 12000 yuan / ton (0%) (this week changes 0 yuan / ton, this month changes 700 yuan / ton, in the past year change -2700.00 yuan / ton)

Polyester and short: 8350 yuan / ton (-2.91%) (this week changes -250 yuan / ton, this month changes 400 yuan / ton, change -500.00 yuan / ton in the past year)

Spandex 20D:36500.00 yuan / ton (-1.35%) (this week changes -500.00 yuan / ton, this month changes -1500.00 yuan / ton, in the past year change -5000.00 yuan / ton)

Spandex 40D:30000.00 yuan / ton (0%) (this week changes 0 yuan / ton, this month changes -1000.00 yuan / ton in the past year change -5000.00 yuan / ton)

Cotton yarn: 32 pure cotton combed yarn 21010 yuan / ton (-0.51%) (changed -108.00 yuan / ton this week, changed -980.00 yuan / ton this month, changed -2930.00 yuan / ton in the past year)

Grey cloth: 32 pure cotton twill 5.26 yuan / M (-0.11%) (this week changes -0.01 yuan / m, this month changes -0.13 yuan / m, in the past year change -0.49 yuan / M)

Cowhide: weight free brand eye leather Chicago FOB 33 cents / pound (changed 0 cents / pound this week, changing 0 cents / pound this month, changing -22.25 cents / pound in the past year)

Gold: Au100g316.42 yuan /g (0.87%), which changed 2.73 yuan /g this week, changed 18.48 yuan /g this month, and changed 53.84 yuan /g over the past year.

London spot $1417.95 / ounce (0.97%) (changed 13.69 US dollars / ounce this week, this month changed 96.65 U.S. dollars / ounce, over the past year changed 222.15 U.S. dollars / ounce)

Four

Important announcement of listed companies

4.1. 0 2 textile manufacturing

The company expects half yearly performance loss of 6 million yuan to 9 million yuan in 2019, a loss of 64.06%-76.04% over the same period last year, and a loss of 0.0111 yuan to 0.0167 yuan in basic earnings per share.

[Jiaxin silk first repurchase shares] the company bought shares for the first time through the special stock account of the stock repurchase, and the number of shares repurchased was 1000000 shares, accounting for 0.17% of the total share capital of the company. The highest transaction price was 5.80 yuan / share, the lowest transaction price was 5.73 yuan / share, and the total transaction amount was 5771578 yuan (excluding transaction costs).

[Shanghai San Mao listed transfer subsidiaries] the company has a nominal price of RMB 18 million 504 thousand and 700 yuan, and is transferred by the Shanghai joint stock exchange to the 90% equity interest of Shanghai maomai Property Management Company Limited. After publicly listing, Shanghai Gao long Enterprise Management Co., Ltd. confirmed the delisting. Follow up, the company signed the "Shanghai property rights trading contract" with Gao long company, and received a full transaction price of 18 million 504 thousand and 700 yuan. As of the announcement date, the target company has completed the industrial and commercial change work, and the relevant equity has been registered to Shanghai Gao long Enterprise Management Co., Ltd.

[Shanghai San Mao uses idle funds to buy financial products] in March 28, 2019, the board of directors of the company considered and approved the company's own funds not exceeding RMB 150 million yuan, which was used to invest in short-term financial products of low-risk banks. As of the announcement date, the company and Bank of communications, Bank of Shanghai, Minsheng Bank signed the purchase of short-term financial products related agreements.

The profit distribution is based on the total share capital of 240000000 shares before the implementation of the scheme, and the cash dividend is 0.08 yuan (including tax) per share. The total cash dividend is 19200000 yuan.

In July 12, 2019, the company redeemed the short term bank financial products purchased from idle funds raised by RMB 50 million yuan, earning a profit of RMB 448767.12 yuan, and there was no significant difference from the expected revenue. The principal and proceeds have been returned to the raised capital account.

4.2. brand clothing

[Zhou Dasheng added new self store] the company added 3 self operated stores in June, namely, the New World Youth Museum of Zhou Dasheng, Beijing, Zhou Dasheng, Ji'nan through four road Wanda Plaza store, and Zhou Dasheng Tianjin poly Shopping Center store.

[Zhou Dasheng restriction stock incentive plan repurchase price and total grant adjustment] the company's profit distribution and capital surplus conversion plan in 2018 is: the company takes the total share capital of 487303000 shares as the base, sends 6.50 yuan (including tax) to all shareholders every 10 shares, and increases 5 shares to all shareholders every 10 shares at the same time. According to the relevant provisions of the incentive plan (Draft), if restricted stock is granted, the company's capital reserve fund will be converted into capital stock, dividends paid, share dismantling, stock reduction, dividend payment, rights issue or issuance and so on, which will affect the stock price of the company. The company's first restricted stock repurchase price was adjusted to 8.68 yuan / share, and the number of restricted stocks granted for the first time was adjusted to 11294250 shares. Therefore, the number of repurchases granted to restricted stocks for the first time was adjusted to 49312 shares, and the first restricted stock granted for the first time was adjusted to 2791125 shares.

Chen Qiuming and Chen Changxiong reduced their holdings and held 18086339 shares and 53000 shares respectively, accounting for 3.35% and 0.001% of the total share capital of the company.

The company expects half year results in 2019 to decline. Net profit attributable to shareholders of listed companies has declined by 10%-30% compared with the same period last year, with a profit of 24 million 697 thousand and 600 yuan to 31 million 754 thousand and 100 yuan.

A wholly owned subsidiary of the blonde Rabbi withdrew from partnership. Guangdong's golden hair Rabbi investment company, a wholly owned subsidiary of the company, withdrew and disbanded the Guangdong Kahn Medical Investment Center (limited partnership). The matter does not involve connected transactions, nor does it constitute a major asset reorganization.

In the half year report period, the net profit attributable to shareholders of listed companies is 0% - 50% higher than the same period last year, with a profit range of 40 million 366 thousand and 900 yuan - 60 million 550 thousand and 400 yuan.

The company expects half year results to rise in 2019, and net profit attributable to shareholders of listed companies increased by 146.67% -393.34% compared with the same period last year, with a profit of 4 million yuan to 8 million yuan.

The company's rights and interests distribution in 2018 is: the company's annual rights and interests allocation scheme is based on the total stock capital of the company, excluding 762680045 shares of the repurchased shares, and sending 1.500000 yuan (including tax) to all shareholders for every 10 shares.

[Hasen stock restricted stock repurchase cancellation] the company terminated the implementation of the restricted stock incentive plan in 2018. The repurchase cancellation was granted to all the restricted stocks that were not unlocked, and the number of shares repurchased and cancelled was 2536600 shares.

[start share control shareholder pledge] the controlling shareholder of the company, Hongkong start International Group Co., limited to the Shanghai Hua Fu Li Asset Management Co., Ltd., holding 27000000 shares of the company's limited tradable shares, the number of pledge shares accounted for 5.69% of the total share capital of the company. At present, Hongkong starts with 251077200 shares of the company, accounting for 52.94% of the total share capital of the company. After this pledge, the total number of Pledged Shares is 151990000 shares, accounting for 60.54% of its total shareholding and 32.05% of the total share capital of the company.

Wanlima's public offering of convertible bonds has been approved. The application for public issuance of Switching Company bonds has been approved by the China Securities Regulatory Commission's issuance examination committee.

A wholly owned subsidiary of La Xia bell completed the transfer fund share. The wholly owned subsidiary of Shanghai, La Xia Business Management Co., Ltd. transferred its 98.04% share of the Tianjin star wide enterprise management consulting partnership (corresponding to the target fund's contribution of 150 million yuan). As of July 18, 2019, the registration of the transfer of the underlying fund shares has been completed. The transaction cost of the transaction reached 275 million yuan, accounting for 100% of the transfer transaction consideration.

In July 19, 2019, Mr. Huang Jianping reduced his holdings of 22000000 shares of tradable shares through special trading on the Shenzhen stock exchange, accounting for 0.7114% of total capital stock. After the change of interest, Mr. Huang Jianping held 132625300 shares of tradable shares, which accounted for 4.2886% of total capital stock.

The company intends to increase its capital to $25 million by its wholly-owned subsidiary, the company funded by the company itself. After the completion of the capital increase, the international registered capital of Kang Longda increased from 10 million US dollars to US $35 million.

[red bean shareholding shareholders continued to make stock pledge repurchase transactions] the controlling shareholder, the red bean group, pledged its 290000000 shares of tradable shares (11.45% of the total share capital) of the company to Wan Hongyuan Securities Co., Ltd. in July 19, 2018 for stock pledge repo business. In July 18, 2019, Hongdun Group continued to do the share pledge repurchase business in Shen Wan Hongyuan Securities Co., Ltd., and the renewal date was February 18, 2020.

[Hong Dun shares gave up the right to raise capital in the company's share of subscription] the share company red bean group financial limited company plans to increase its capital by 300 million yuan, and the company intends to give priority to the right to increase capital by concentrating resources to develop its main garment industry. After the capital increase is completed, the registered capital of the finance company will be increased from 700 million yuan to 1 billion yuan, and the shareholding ratio of the company to the financial company will be reduced from 49% to 34.3%.

[Changzhou Black Peony wholly owned subsidiaries compete for land use rights] the two grade wholly owned subsidiary of the company, the peony and Hong Kong Real Estate Co., Ltd. of Changzhou, has won the right to use state-owned construction land in the JZX20191401 plot of Changzhou city in the total price of 1 billion 28 million yuan, located in Xinqiao Town, Xinbei District, Changzhou City, Jiangsu Province, with an area of about 85024 square meters.

[Saturday industrial and commercial registration changed] the company issued shares and paid cash to purchase 259891441 new shares of assets. After the change, the registered capital of the company was RMB 658813336 yuan. The company amended the relevant provisions of the articles of Association concerning registered capital.

According to the actual operation needs of the company, approved by the competent registration authority, the company's increased business scope is: "trade intermediary agents; product sales agents; trade brokers and agency services." Recently, the company has completed the registration of business scope changes and the formalities of the articles of association.

[Jihua Group listed on the transfer of part of equity and bond development of Sun company] through the joint property rights transaction in Shanghai, the company transferred the wholly owned subsidiary of Ji Hua (Xingtai) Investment Co., Ltd., the 88% equity interest of Xingtai Chengda Real Estate Development Co., Ltd. and the company's Xingtai Chengda claims by 282 million 298 thousand and 554 yuan. As of the expiration of the listing notice, 1 intention transferee has been collected, namely Shanghai stream Asset Management Co., Ltd. Up to now, Shanghai stream Asset Management Co., Ltd. has paid all the transfer of the underlying assets, totaling 352 million yuan.

Risk warning

1, the slowdown in macroeconomic growth has led to slower growth in disposable income and reduced consumption enthusiasm. Clothing as an alternative consumption will be more seriously affected.

2, accidental weather will affect clothing consumption: in case of unexpected warm winter, the sales of winter clothing will be affected. Due to the high unit price and high gross profit of winter clothing, warm winter will have a negative impact on garment enterprises.

3, unexpected fluctuations in raw material prices: for manufacturing enterprises, raw material costs occupy a larger proportion of production costs, and unexpected fluctuations in raw material prices (especially accidental falls) will have a greater impact on gross margins of production enterprises.

Disclaimer

Soochow securities Limited by Share Ltd has been approved by the China Securities Regulatory Commission and has the qualification of securities investment consulting business.

This research report is only for customers of Soochow securities Limited by Share Ltd (hereinafter referred to as the "company"). The company will not be regarded as a client because of the receipt of this report. In any case, the information or opinions expressed in this report do not constitute investment advice to anyone, and we are not responsible for any loss caused by the use of the contents of this report. Under the circumstances of the law, Soochow securities and its affiliates may hold the securities issued by the companies mentioned in the report and conduct transactions, and may also provide investment banking services or other services for these companies.

The market is risky and investment needs to be cautious. This report is based on the information that our analysts believe is reliable and open. The company strives to ensure that it does not guarantee the accuracy and completeness of the information, nor does it guarantee that the views or statements in the article will not change. At different times, the company may issue a report inconsistent with the information, opinions and speculation contained in the report.

The copyright of this report is owned by the company. No organization or individual can reproduce, reproduce and distribute it in any form without written permission. If it is quoted, published or reprinted, it must be approved by the Soochow Securities Institute, and the source is the Soochow Securities Institute, and it is not allowed to quote, delete and modify the original intention.

Soochow securities investment rating standard:

Company investment rating:

Buy: the stock market is expected to rise or fall over 15% in the next 6 months.

Holdings: it is expected that in the next 6 months, stocks will rise or fall between 5% and 15%.

Neuter: in the next 6 months, stocks are expected to rise or fall between -5% and 5%.

Reduction: the stock market is expected to rise and fall between the -15% and -5% in the next 6 months.

Selling: the stock market is expected to rise or fall below -15% in the next 6 months.

Industry investment rating:

Overweight: it is expected that in the next 6 months, the industry index will be stronger than the market value of more than 5%.

Neuter: the industry index is expected to be -5% and 5% in the next 6 months.

Reduction: it is expected that in the next 6 months, the industry index will be less than 5% of the market.