Textile And Apparel: Three Quarterly Summary In 2019

We reviewed the three quarterly reports of the 31 key companies in 2019: 1) revenue side: under the background of weak terminal demand, the growth of sportswear was strong; although the growth rate of children's clothing decreased slightly in the first three quarters, but the overall performance continued to be higher; the high-end performance differentiation; some of the cards were promoted by store efficiency to maintain steady growth; the home textile line maintained a high growth rate, while the line sales slowed down; the sales of public clothing remained under pressure, but the growth rate was better than that of 19H1; textile manufacturing slowed down quarterly. 2) profit margins: all sectors of the net profit growth rate has slowed down. In addition to increasing terminal discounts and activities, continuous optimization of channel structure and upgrading of store image has made sales costs rise faster. 3) operation side: exclude some new brands of the company and list the factors. The increase of the inventory is in line with the terminal sales situation, accounts receivable turnover is steady, and the operating cash flow has increased significantly. Specifically,

Sports: plate boom is high, leading companies show bright eyes. During the period, retail sales of all brands achieved rapid growth. The double digit growth of Anta's main brand stream has benefited from the growth of the electricity supplier business (-15PCTs), while Fila maintained a high growth rate of 50~55% in the same period of last year's high base. Lining, a joint effort of all channels, grew by +15~20PCTs year-on-year, of which the electricity supplier +20PCTs, wholesale business, and the extension of life extension driven by +20~25PCTs compared to the same year.

Middle and high end: Q3 revenue is slowing down, and the plate is showing differentiation. 2019 revenue in the first three quarters of the year was +5.83%, slowing 0.91PCTs. In terms of channel, most brands Q3 returned to the net shop (Song Li Si, nine Mu Wang, Jin Hong group, etc.). In the same store, the overall chain slowed down, but the trend of vogue / birefin has benefited from its strong growth in the same store, and its revenue reached +15.90%/+24.95% year-on-year respectively.

Volkswagen: Q3 revenue is improving, leading edge is obvious. 2019 the first three quarters of the year's income was +0.11% (-9.38PCTs) over the same period. Under the background of weak terminal demand, the growth rate of Q3 single quarter income was improved, and the 19Q1/19Q2/19Q3 growth rate was -0.74%/-5.53%/7.14% respectively. Profit margins, the overall growth rate of the plate showed a negative growth trend (19Q3:-27.54%), which was mainly dragged down by the US bond clothing and La Natsu Bell during the period, but the leading companies performed brightest, and the net profit of Semir clothing (excluding tables) / Harean's home was +15%/-0.45% compared to the same period.

Home textiles: the Q3 revenue line is slowing down: online high growth slows down, and stocks keep going. 2019 the first three quarters of the year were +3.71% year-on-year, and the year-on-year / annulus slowed down 9.18/0.06PCTs respectively, mainly from the slowing down of the growth rate under the line. However, the online growth is still high (+38%, fuanna +20%) of the home textile Q3 online. In terms of profitability, net interest rates are slightly lower than those affected by reduced inventory and reduced investment returns. In terms of operation, inventory and accounts receivable turnover accelerated, and operating net cash flow improved significantly (+245.81%).

Children's wear: Q3 performance slowdown, head advantage is still obvious. 2019 the first three quarters of the year's income was +20.38% (-1.49PCTs) over the same period, of which the single quarter growth of 2019Q1/Q2/Q3 was +27.85%/+27.34%/+10.74%, and the growth rate of Q3 under the influence of the weakening sales under the line has declined. Compared with the three main companies, Semir's children's business revenue growth (+20%+), which is the first in the market share, is far higher than that of the other 2.

Textile manufacturing: internal and external orders are weak and product prices are under pressure. 2019 revenue in the first three quarters of the year was -2.21% (-15.91PCTs) over the same period. The uncertainty of foreign trade environment led to a slowdown in orders for overseas customers, while domestic demand growth slowed down and internal and external orders were under pressure. The decline in profitability is due to the shortage of orders, which leads to a reduction in capacity utilization and a rise in unit costs. In terms of operation, inventory backlog and inventory turnover slowed down, but the company was more cautious in stock preparation and reduced in expenditure and increased in cash flow.

Industry perspective and investment advice: in the context of the weak demand of the industry as a whole, the leading industry with better growth will be selected. Judging from the valuation point of view, the leading brands of clothing brands are less than 20 times valuations at a relatively low historical level. It is suggested that Semir's clothing, industry and company are expected to usher in the turning point of the faucet head, Q3, which is the leading point of the business, and the leading sport of Anta sports.

Risk warning: the risk of macro-economic growth is slowing; terminal consumer demand is slowing down, or the sales of brand clothing are lower than expected; the risk of cotton price changes.