Guoxin Securities -- Mid Term Strategy For Textile And Garment Industry In The 2020

[Abstract]

Market review: sports leaders recapture early decline

In the first half of this year, the overall performance of A shares was better than that of Hong Kong stocks (Shanghai and Shenzhen 300+2%, Hang Seng Index -13%), but the leading shares of Hong Kong stocks promoted the relative profits of the spinning and weaving sector. Looking ahead to the international market, US non essential consumer goods have made positive gains, and the textile manufacturing export index of Taiwan is also close to recapture this year's decline. Focus on the company, A shares of a few companies to win the market, the Hong Kong stock movement leader recaptured the lost territory.

Brand channel: the basic level restored last year's standard, the movement continues to dominate.

In the 5-6 months, the industry basically reached the same level in the same period last year. The clothing industry zero data in May was basically the same as the same month in the previous month, the cumulative year-on-year -23.5%, while the electricity supplier performance was better than the offline year, the cumulative year-on-year -6.8%; the sports sector was generally growing in 5-6 months, and the electricity supplier data also showed the leading industry. Under the crisis, we believe that the strong brands with high prosperity, strong brands and efficient turnover will usher in investment opportunities.

Manufacturing exports: slow recovery of industrial chain, focusing on core capacity

In 5-6, the resumption of production in Europe and America started gradually, and the global supply chain slowly recovered from heavy losses. Textile and garment manufacturing industry chain PMI rebounded slightly in major countries, of which Vietnam improved more obviously, but overall remained below 50, and new orders for China's exports were still low. Under the general trend of supply chain integration, we believe that the leading suppliers of financial stability, vertical production and decentralization will turn crises into opportunities.

Quarterly summary and China Daily Outlook: optimistic about leading performance toughness

Domestic demand was frustrated in the first quarter, the performance of brand clothing fell, and the mass leisure sector declined significantly. Domestic demand in the two quarter was warmer, and manufacturing exports faced external pressure. International sports brand Greater China region and Hong Kong stock movement industry chain leader performance is obviously better than the industry, inventory discount controllable, it is expected that the decline in performance is controllable, better than the industry average.

Risk warning

1., the epidemic has been repeatedly impacted; 2., the vicious competition has intensified; and 3., the global economic recovery is slower than expected.

Investment recommendations: leading performance certainty valuation still needs to show that the dominant enterprises have little chance of underestimating. The current valuation has not yet responded to the certainty of future performance, maintaining the "super matching" rating of the sector. There are three main lines to be recommended: 1) to benefit from domestic demand and to work hard, Anta sports, Lining and Tao Po; 2) three quarter performance is expected to bottom up; Shenzhou International, the leading supplier of supply chain integration, 3, is temporarily damaged, but next year it is expected to record a larger resilience advantage, Bosideng, Baosheng international, open run shares (300577), Semir apparel (002563). At the same time, it is recommended to focus on the opportunity to improve the quality of undervalued second-line leading quality companies, and recommend XTEP international, China's real estate, Be Meleven (002832), and Baron East (601339).