Good Prospects For Brand Clothing Enterprises

　　09年一季度是本轮经济危机对国内纺织服装行业冲击最大的时刻，由于09年的低基数，2010年第一季度的行业各方面的经济运行数据均出现较大幅度的回升。

Before 2010, the total income and profit of textile industry in the above scale increased by 27.5% and 83.14% respectively in February, and the total income and profit of clothing and footwear industry increased by 19.6% and 20.96% respectively over the same period last year.

We believe that the growth of revenue comes from the number of export orders, the year-on-year recovery of prices and the continuous improvement of domestic sales. The main reason for the obvious growth of earnings beyond the growth rate of revenue is the year-on-year rise in gross profit margin and good control over the cost of the period (especially the decrease in financial costs).

According to customs statistics, domestic textile and clothing exports increased by 78.34% and 96.56% respectively over the same period in February 2010, a total increase of 89.56%.

Before February, the total export of domestic textile and clothing increased by 29.02%.

With the gradual weakening of the low cardinal effect, we expect that the export growth rate will be significantly reduced in March.

We judge that the export growth rate of the whole industry will show a trend of high before and after low, and the annual export is cautiously optimistic, with an estimated increase of 5% - 10%.

Before 2010, the total retail sales of consumer goods increased by 17.9% over the same period in February, while the total retail sales of clothing, footwear and consumer goods increased by 23.3%, exceeding the social average of 5.4 percentage points.

Sales figures of the 100 key shopping malls in recent days show that sales of clothing products increased by 30.1% in February compared with the previous 2010.

Despite the fact that there were certain holiday discount promotions in the fast growth of clothing sales in the first half of February, the growth rate of retail sales of clothing consumer goods over the years has surpassed the average growth rate of the society.

We maintain the annual investment strategy for the future development of the industry. We believe that the industry is at the bottom of the boom and recovery stage, and we are cautiously optimistic about the industry situation in 2010.

We believe that in 2010, the industry is faced with potential pressures such as rising costs, appreciation of the renminbi and intensified trade frictions.

In the long run, we believe that the golden age of industry exports has passed. The domestic demand in the future is a greater driving force for the growth of the industry. The development of late industry focuses on structural adjustment and upgrading, from processing and manufacturing to technological innovation and brand channel.

Taking into account the huge population base in China and the cumulative effect of the sustained growth of the national economy and the advancement of urbanization, we expect that domestic clothing consumption, especially the consumption of brand clothing, will continue to grow in the future.

From the perspective of investment strategy, we prefer domestic clothing brand clothing enterprises (including home textiles).

We believe that the clothing consumption in China is at the stage of developing brand, quality and personalization. The consumption of luxury goods is at the stage of budding growth. It is suggested that we should focus on the high-end brand clothing enterprises, shoes, home textile enterprises and fashion consumer enterprises under the background of the upgrading of consumption and the updating of consumption concept.

We maintain a "neutral" rating on the industry as a whole. We expect that the main business profits in the first quarter will increase by 30% or more.