The First Three Quarters Of 83 Textile And Garment Companies Net Profit Of Only 11 Billion 800 Million, Inventories Soared To 85 Billion 400 Million!

Along with the end of the three quarterly report in 2019, the textile and apparel listed business income and profit side had a slight pressure on the year-on-year growth rate under the influence of the cold winter high base. The first textile network monitoring data showed that as of the first three quarters of 2019, 83 textile and garment companies of A shares achieved a business income of 191 billion 600 million yuan, a decrease of nearly 500 million from that of the same period last year, and the net profit attributable to the parent company totaled 11 billion 868 million yuan, which was reduced by 2 billion 800 million yuan compared with 14 billion 681 million yuan in the same period last year. The inventory data increased from 821.02 three in 2018 to 821.02 yuan in 2019.


Pacific Securities analyst Guo Bin said that in the three quarter of 2019, due to the loss of some parts of the leisure wear sector and some of the leading companies' performance was lower than expected, they were greatly dragged down in terms of revenue and net profit. Due to the cold winter effect of the fourth quarter of 2017, the overall base level of 18H1 is relatively high. Based on the current time outlook, the basic data of the garment industry in the second half of the year is expected to be relatively optimistic. From the seasonal factors, the base of winter in the fourth quarter of 2018 is relatively low. With the decline of the cardinal effect in the future, the industry will have marginal improvement in the year-on-year data. In the future, with the weakening of the high cardinal effect and the stability of the consumption environment, some sub sectors and companies will improve.


Observation, the industry revenue side recovery, the profit margin narrowed narrowing, but profitability has pressure, the overall unspeakable warmer, the good thing is that in the fourth quarter of 2018, the net profit growth base -11.4%, base pressure significantly reduced, compared to the angle of recovery certainty.


Societe Generale Securities researcher Zhao Shuli analysis, early clothing enterprises in the purchase and inventory management are lack of reasonable planning and layout, most enterprises blindly large quantities of goods. Huge inventories also pose a hidden danger for the late development of the industry: once the sales rate is not as high as expected, the high inventory will not only cause a lot of impairment losses, but also drag down the turnover rate of the core business index of the enterprise. The industry has experienced a long downturn since 2011. In 2011, the channel expansion space was gradually reduced. It was difficult to sustain the business model of supporting revenue growth through simple shop expansion. Since 2011, the growth rate of retail sales of garment industry has dropped sharply. In recent years, the growth rate has slowed down to single digit. In the past five years, 2014-2018CAGR has been only 2%, a sharp decline. In 2019 1-9, the total retail sales of clothing industry above the limit reached 682 billion 800 million yuan, up 3% from the same period last year, and the total profit was 62 billion 600 million yuan, down 1.60% from the same period last year.


From the perspective of the enterprise, Zhao Shuli believes that the blind sale of goods in the early stage resulted in a lot of impairment losses on the accounts, and the operating costs of the shops were rising. The operating profits of the garment enterprises had declined significantly. From the outside of the enterprises, the traditional clothing retail industry in China was further impacted by the new retail formats such as the domestic market and the electricity supplier by the foreign brands. Overall, the clothing industry "inside and outside the enemy" has since been in the doldrums: the retail sales and profit growth of the garment industry over the scale has been decreasing year by year.


However, data from the National Bureau of statistics show that the year-on-year growth rate of clothing industry has been declining since 2013, and reached the lowest -0.30% in many years in the first three quarters of 2019. The proportion of stocks in current assets decreased from 28.12% in 2013 to 26.9% in August 2019, a decrease of 1.2 percentage points. On the other hand, the industry downturn and the increasingly stringent requirements for production and environmental protection have forced small businesses and small workshops operating poorly in the industry to withdraw from the market, and the industry's survival of the fittest has been accelerated.


After the adjustment, the proportion of the major listed companies' stock accounts for 2015 has been decreasing, and it has reached 34% at the end of 2017, a 2 percentage point lower than that in 2015. In 2018, it was callback due to the macroeconomic situation. In the first three quarters of 2019, the stock accounted for 3.5 percentage points to 38.5% of the current assets ratio.


Insiders here also believe that the continued downturn in the economy will affect terminal consumption. If terminal consumption continues to slump, it will have a great impact on the entire clothing consumption. Once the downstream sales channels are sluggish, the whole industry will be affected.