Textile And Garment Industry: The Demand Inside And Outside Clothing Keeps Fast Growth, And The Gap Between Supply And Demand Of Cotton Expands

Industry data & Information:

Brand clothing: in April 2021, the total retail sales of consumer goods increased by 17.7% year-on-year (month on month growth rate was - 20.1 PCTs), compared with + 8.8% in the same period of 2019. Among them, the textile and clothing category was + 31.1% year-on-year (qol-37.9pcts) at a low base, compared with + 3% in March 2019. From the perspective of accumulated retail sales from January to April, the textile and clothing company has zero year-on-year + 48.1%, which is higher than the level of the same period in 2019 (+ 0.5%).

On the online side, from January to April 2021, the sales volume of online wearing goods in China was + 33.8% year-on-year.

Ali platform (tmall & Taobao) women's / men's wear / children's wear / home textile / sports footwear sales increased by - 11% / + 1% / - 8% / - 15% / - 11% respectively. Domestic brands benefited from the cotton event in Xinjiang, and Anta and Li Ning surpassed overseas brands to become top 2 in the industry for the first time.

Export: from January to April of 2021, the cumulative export amount of textile and clothing is + 32.7% year-on-year, and + 16.6% compared with the same period in 2019. In terms of categories, the total export amount of textile / clothing products was + 17.8% / + 51.5% on a year-on-year basis, and the export amount in a single month was - 16.8% / + 65% on a year-on-year basis.

Textile manufacturing: domestic cotton supply is expected to decrease, and the gap between supply and demand will expand. Price situation: as of May 23, 2021, the cotton 328 price index will close at 15871 yuan / ton, and the unit price will change by + 302 / + 4070 yuan on a month-on-year basis; The cotbook a price index closed at 87.7 cents / pound, with a month on month / year-on-year change of - 3.5 / + 21.4 cents.

Supply and demand situation: in May, USDA expected that the domestic cotton supply and demand gap will be 447000 tons in 2020 / 21, 653000 tons larger than that in March, mainly because the output and import volume are expected to decline by 32.7/272000 tons, and the warehouse sales ratio will be - 20pcts to 91.3%. From the global market point of view, the expected value of supply and demand gap in 2020 / 21 will be reduced by 603 to 445000 tons on a month on month basis, and the warehouse to sales ratio will drop to 54.5%. This is mainly due to the increase of production in the United States, Brazil, Australia and other countries, as well as the recovery of demand in India, Turkey and Vietnam.

Industry views and investment suggestions: Anta sports, the first sports brand in China (44x in 2021), with high industry prosperity, precise differentiation positioning and perfect multi brand matrix; The terminal recovery is better than that of the industry, and the management efficiency continues to improve, and there is still room for improvement in valuation (14x in 2021); The dividend of supply chain and organizational structure reform is expected to continue to show, with high incentive policies and digital layout, and the profitability is expected to enter a period of rapid improvement (25X in 2021); The children's clothing has obvious advantages, and the reform of adult clothing has gradually shown its effect, and the Mori clothing (20x in 2021) is expected to recover; And Huali group (41x, 2021), a leading sports shoe manufacturing company with high prosperity and high quality customers and strong willingness to expand production capacity.

Risk tips: the risk of slowing down macroeconomic growth; The terminal consumption demand slows down; Cotton price change risk.