Brokerage Report: Monthly Report Of Textile And Apparel Industry

Monthly market review: textile and clothing plate rose, the overall underperforming market. In June 2022, the Shanghai Composite Index, Shenzhen Composite Index and Hushen 300 rose by 6.66%, 11.87% and 9.62% respectively, while the textile and clothing sector rose by 3.04%, ranking 24th among the 30 Shenyi class industries. Among the textile service stocks, red bean shares (+ 33.50%), Societe Generale (+ 33.48%) and Mengjie (+ 23.10%) were the top gainers, mainly benefiting from the new energy layout, * ST global (- 81.51%), Zhongqian shares (- 18.98%) and Intertextile (- 13.02%) declined most.

Tracking of retail sales and export data: 1) in June, clothing retail sales turned positive year on year, weaker than the overall consumption. Affected by the domestic epidemic situation, the retail sales of clothing, shoes, hats, needles and textiles turned negative year on year from March to may, and turned positive to 1.2% in June, but the performance was still weak compared with the overall social zero. 2) Textile and garment exports continued to improve in June and may face pressure in the second half of the year. 22q1 clothing / textile products export continued the previous boom, respectively + 7.1% / 15%. In April, the impact of the domestic epidemic situation slowed down to 1.9% / 0.9%. In May, the impact of the epidemic weakened, and some goods were transported to Hong Kong, rebounded to 24.6% / 15.7% year-on-year. In June, it was 17.9% / 7.9%, maintaining a high level. In the second half of the year, with the European and American economies facing the pressure of interest rate hikes and high inflation, exports may slow down marginally. 3) Cotton price high callback, raw material inventory fell slightly month on month. As of 2022 / 7 / 18, domestic 328 grade cotton spot 16480 yuan / ton (monthly rise and fall, - 22.1%), American cotton 121.75 cents / pound (- 24.5%), domestic and foreign cotton price difference - 904 yuan / ton (- 83.1%).

Industry & key companies dynamic tracking: 1) industry trends: Nike's sales in fiscal year 22 increased by 6% to $46.7 billion, and the Greater China region decreased by 9%; Three brands, Bershka, pull & Bear and Stradivarius, owned by INDITEX, Zara's parent company, have completely withdrawn from the Chinese market; In the first three quarters of fiscal year 22, the sales volume increased by 3.9% to 1.76 trillion yen, and the net profit increased by 57.1% to 237.84 billion yen. The Greater China market was the second largest market, accounting for 23.3%. 2) Announcement of key companies: resignation of chief financial officer of Li Ning; Jinhong group received a government subsidy of 24.407 million yuan; The share repurchase price (excluding the upper limit of RMB 15.75 per share) is subject to adjustment.

The interim report forecasts performance differentiation and focuses on the sustainability of performance growth of key stocks. 1) Performance differentiation of China Daily News forecast:

In the first half of 22 years, the domestic local epidemic situation was repeated and the foreign demand continued to be relatively high. According to the performance forecast of the current disclosure, the performance of the upstream export manufacturing leaders was better, and some of the downstream brand clothing (such as Senma clothing, taipingniao, gelisi, jiumuwang, etc.) showed a significant decline or loss, among which the sports apparel leader performed relatively well. In addition, the performance of "racetrack type players" also showed good performance, such as camping equipment leader mugaodi, and kanglongda, a protective glove manufacturer cutting into the new energy track. 2) Opinion update:

In June, the marginal improvement trend of brand clothing terminal sales appeared after Shanghai was unsealed, but the situation of the epidemic situation was uncertain, and the residents' consumption intention was relatively low under the weak macro-economy, which led to the slow progress of improvement; In terms of foreign demand, the U.S. economy is facing high inflation + interest rate hike pressure, and the marginal slowdown of exports is likely. In this context, it is suggested to pay attention to the key stocks with clear performance improvement trend or high growth from bottom to top, including: (1) the follow-up performance of key stocks with high performance growth of 22hi, such as Lutai a, Jiansheng group, mugaodi, Tebu international, etc. ② Key companies with performance exceeding expectations.

Pay attention to the industry transformation dynamics: lay out the performance release rhythm and related investment opportunities of new energy track target.

In recent years, some textile and clothing companies have successively laid out new energy track. We have summarized and sorted out the situation of Companies in the industry that have cut into new energy (see the table in the text for details). Some companies, such as kanglongda, have begun to release their performance, and most of them have not yet started to realize their performance. It is suggested to pay attention to the new energy business layout process, performance release rhythm and related investment opportunities. From the perspective of subdivisions, it includes: 1) lithium ore and lithium iron phosphate (vosge, kanglongda, yinrong, Jinying, etc.); 2) Interior materials for new energy vehicles (Xingye technology, Hongda high tech, etc.); 3) New energy power generation projects, including photovoltaic, thermal and wind energy (Meierya, Jiangsu Sunshine, Mengjie, Hongdou, Jinlun, etc.); 4) Other fields, such as Xinlong holding company's cutting into Hainan new energy vehicle power exchange network operation.

Risk tips: terminal weakness caused by repeated epidemic situation, large fluctuation of cotton price, lifting of the company's restricted shares, new energy distribution and performance release were not as expected.