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The Cost And Inflation Pressure Is &Nbsp; The Growth Rate Of The Spinning And Weaving Industry Will Slow Down In The Second Half Of The Year.

2011/6/22 9:07:00 48

In the first half of 2011, the growth rate of export and domestic retail sales of textile and garment industry has maintained a relatively high growth rate. However, we expect that in the second half of this year, there will be uncertainties in the industry environment, that is, high cost volatility and high inflation pressure.

industry

Growth will slow down.

China's textile and clothing exports increased by 26.6% in the 1-5 months of 2011, while China's textile and apparel retail sales increased by 23.5%.

But in May

Exit

and

For the domestic market

The growth rate has slowed down.

In May, the growth rate of textile and clothing exports was 23.8%, and the annual export growth rate was expected to fall to the 15-20% interval. In May, the retail sales of domestic textiles and clothing increased by 21.8%, and the growth rate of domestic retail sales was expected to drop to 20% within the whole year.

This year's industry environment is full of uncertainty, which is reflected in high cost volatility and high inflation pressure.

The market is worried that the steep rise and fall of cotton prices may have a squeeze on gross profit margins of textile manufacturers with high price of cotton stocks, and the long duration of inflation may have a certain inhibitory effect on sales volume of clothing retail terminals.

Investment

Train of thought: optimistic about the leading industry with pricing power and strong ability to resist risks.

A company with pricing power can resist the risks brought about by the uncertainty of external environment.

We believe that in 2010, the market was concerned about the growth of enterprises and the market space. In 2011, the market was more concerned about the robustness of enterprises and the quality of earnings.

In an industry environment full of uncertainties, companies that have pricing power can survive.

Buffett said: "the most important factor in evaluating commercial enterprises is pricing power."

The so-called pricing power means having the initiative to make the price of the product. If changing the pricing of products will not have a negative impact on demand.

In the textile manufacturing sector, enterprises with pricing power can keep the gross margin stable, and the apparel retail sector can resist inflation pressure with the pricing power.

Textile manufacturing sector seeks to grasp the "desert flowers" at both ends of the "Smiling Curve".

Brand retail sector considers business competition and consumer demand, and looks good at business men's wear and home textiles.

We believe that the pricing power of textile manufacturing enterprises comes from the two sides of the "smile curve", and the enterprises that have the resources and information, master the customers and the market, and have their own core technology and rich experience.

For example, Lu Tai A and Huafu color spinning are the "desert flowers" with strong vitality in the textile industry. For many years, the gross margins have been stable and the scale of enterprises has been expanding.

In the brand retail sector, we are worried that the "crowding out effect" caused by inflation will have a negative effect on the sales of consumer goods.

We believe that the brand strength determines whether the brand has the pricing power. The high-end menswear and home textile brands have a high reputation in China, and the competition pattern is in the blue ocean area.

From the analysis of profit driving factors, the growth of performance comes from raising prices or running volume.

Medium and high end men's wear and home textile unit price is higher, and the result of enterprise profit is more sensitive to the increase of gross profit rate brought by the price increase.

From the perspective of the structure of consumers, the post-80s armies have brought new demands and new requirements for Western-style clothes to enter the workplace. The population structure has made the demand for Western-style clothes maintain a relatively fast growth in the next 5-10 years.

After a simple channel expansion, Chinese men's wear brand is expanding its brand. The representative of "new buds of old trees": seven wolves buy Kenna clothing and go into the luxury goods agent.

In the second half of this year, our stock selection logic: growth certainty + anti risk ability + low valuation level.

We believe that performance growth is still our preferred condition. The uncertainty of external environmental pressure makes the risk resisting ability particularly important, which is directly related to the reliability and continuity of performance, and is still good at underestimating the value advantage under the condition of insufficient liquidity.

In terms of growth, we are concerned about the growth of orders and store expansion in autumn and winter in 2011. We are concerned about the inventory and receivables turnover and operating cash flow in terms of risk tolerance. From the valuation point of view, the average Industry Valuation in 2011 is about 23 times that of the dynamic market price, and the value of outdoor and home textiles is higher than 30 times. The value of casual wear and men's clothing is about 20-25 times, and the fabric accessories value is 11-15 times.

Based on the above stock selection logic, we choose the target: good luck bird (002154), seven wolf (002029), Lu Tai A (000726) three, and Luo Lai home textile [74.48 -1.77%] (002293) can be held for a long time after the valuation level falls.