Textile And Clothing: Clothing Consumption Improves Month By Month, Focusing On Traditional Sales Season.

I. important livelihood industries

Although the category of everyday consumer goods has been greatly enriched, the expenditure on clothing and other textiles is still an important part of the consumption expenditure structure of our country, and the textile and garment industry plays a decisive role in the life of residents. From the perspective of the historical development of China's textile and garment industry, the apparel industry provides clothing demand for domestic consumers, and creates a large amount of foreign exchange for the country, supporting China's economic construction. After decades of development, China has become a large garment country, but not a strong garment country. The clothing industry has many problems, causing the apparel industry to stagnate and decline. At this time, our government put forward a series of policy measures, such as supply side reform and three products strategy, to promote the development of consumer goods industry from the national level. In addition, the textile and garment industry, as a traditional labor intensive industry, has a stimulating effect on the employment of the country and the region. It can be seen that clothing plays an important role in economic construction.

So far, there are 83 A share listed companies, including 30 textile manufacturing sub sectors and 53 home textile home products. The proportion of China's textile and garment enterprises has improved in recent years, but overall is relatively low, about 0.2% in 2018. The domestic textile and clothing listed companies are basically consistent with the United States and Japan, with a small number of companies and a relatively low market value. A shares accelerate the process of internationalization, and consumption leaders are the important direction of allocation. At present, there are 2 companies in the textile and garment industry (Semir apparel and Hai Lan home) become MSCI constituent stocks, all of which are large cap stocks. The inclusion of the full time Russell index was added to the ratio. As of October 25th, north capital allocated 31.

Two, the profitability of textile manufacturing sector varies significantly with the exchange rate.

The textile and garment industry grew slowly in 2013, and the net profit growth rate decreased year by year. Due to the weakness of terminal demand, the performance of garment home textile sector is divided. In 2018, the RMB exchange rate depreciated sharply and the profitability of textile manufacturing sector was better. Although export recovery and overseas and Xinjiang's new low cost production capacity have been gradually released, favorable factors such as the Sino US trade frictions are increasing, and export tariffs continue to increase, textile manufacturing companies' performance is short term pressure. The superposition of RMB exchange rate has appreciated slightly over the past 18 years since 19 years. The textile manufacturing sub sectors' income, net profit and net non profits in the first 19 years of the textile industry were 237.85, 17.10 and 849 million yuan respectively, up 13.49%, 48.35% and 9.99% year-on-year.

Three, the company's confidence in the three quarter is still strong.

Under the background of the slow growth of retail sales of consumer goods, the prosperity of textile and clothing is stable. High end consumption recovery and public consumption stabilization. Textile industry boom declined in the two quarter, and business confidence in the three quarter is still strong. In order to track the prosperity and change of China's textile enterprises and understand the confidence of the managers in the development of the industry and the enterprises, the China Textile Industry Federation has launched a questionnaire survey of the managers of textile enterprises. According to the data from the thirty-seventh phase of the questionnaire survey, the overall prosperity index of textile industry has declined, and enterprises' confidence in the three quarter is still strong. In the two quarter of 2019, the textile industry boom index was 52. Compared with the first quarter of 2019, the industry climate index dropped by 3 points. The textile industry boom index is expected to be 57.5 in the three quarter of 2019, which is higher than the current prosperity index, indicating that the industry has stronger confidence in the industry in the next three quarters.

Four, sub industry development cycle process is different

The overall scale of the industry continues to grow, and the sub industry development cycle is different. The outdoor footwear industry is in the introduction stage. When the demand continues to grow or explosion critical point, and the initial operation and management of the enterprise is reasonable and sustainable, there may be a rapid growth. Underwear and children's wear industry is in the growth stage, with less domestic brands, higher dispersion and fierce competition. The high-end women's clothing industry and home textile industry are in the transition stage to maturity. Brand positioning, layout and segmentation of the market will achieve synergy, which may be a new opportunity for industry growth. Sports outdoor industry, footwear industry, men's wear industry and brand casual wear industry are now in a mature stage. The sales volume of products is growing slowly, the profits of products are continuously compressed, the market competition is fierce, and there are many brands in the industry. When the enterprise adjusts its market strategy, industry integration and industrial structure will extend the maturity of the enterprise, or make the new cycle of the product life cycle of the sub brand.

Five, investment proposals

As of October 25th, the textile and garment industry has a rolling price earnings ratio of 23.38 times a year, less than the historical average since 2005 (31.32). Since the beginning of the year, the investment sentiment of the A share market has gone up, but the spinning and weaving board has limited growth. It is twenty-fourth in the 28 sub sectors of Shen Wan. Focus on three types of stocks: 1, undervalued, high dividend yield, and performance supporting stocks. From the perspective of stocks, the ratio of cash dividends received over the past 3 years is higher than 20%. In the past 3 years, the income and net profit CAGR is positive, the market value is greater than 50, and the valuation is less than 50 times. We believe that Hai Lan home, Semir dress, Baron East, Luo Lai life, Taiping bird, Huafu fashion, Song Li Si, Fu Anna, Bi Yin Fen Fen, and Kai Run share have high investment value and strong defense capability. 2, high boom racetrack, there are certain industry dividends, the scale of China's various sub sectors is in the process of continuous growth, but the growth rate has slowed down. In the future, children's clothing and sports apparel industry is in the high boom track, such as Semir costumes and 3, the industry's growth rate is slowing down, the leading industry barriers are strengthened, and the competitive advantages are enhanced, such as the public leisure sea Lan's home and the new model's open run shares.

We continue to recommend Semir clothing, Hai Lan's home, Be Meleven, and Kai Run shares.

Six, stock analysis

Hai Lan's home

Multi brand matrix development

In the 14-18 years of the main brand, Hai Lan home, CAGR grew at 10.59%, and at the same time, it actively nurture many brands including black whale HLA Jeans, AEX, OVV and so on, covering women's clothing, business clothes, children's clothing, light extravagant products, home furnishing, etc. Besides men's men's wear. At present, nearly 3500 stores have launched a full channel retail system to achieve online ordering and distribution mode, and deepen the O2O mode of online and offline interaction. At present, the company's overseas stores cover Malaysia, Thailand, Singapore, Vietnam and other countries, and the future is expected to further extend to Indonesia, Philippines and other markets. Store addresses are mostly distributed near UNIQLO, H&M and other brands. The expansion of overseas markets has increased the brand awareness while expanding the company's profit direction.

Bio

Maintaining endogenous high growth

The company adheres to high-end brand positioning and high-end retail channels. The company has two brands, the brand of bryin is positioned in the golf apparel market, and the target consumers are golf enthusiasts and middle and high-end income consumers who identify with golf culture. The new brand Venice is the only brand to locate holiday tourism apparel, and it solves the demand of outbound clothing for our middle class people one stop. Through clear product positioning, unique product style, and double brand multi level product coverage strategy, the company has a high user stickiness and high loyalty consumer group. In terms of channel, the company pays attention to the construction of high-end channels such as boutiques and large experience stores, and continuously optimizes the layout of the channel and store network, and effectively improves the sales performance of single stores.