Textile And Garment Industry: Performance Expected To Improve In The Second Half Of The Year

Key points:

In the first half of 2020, the revenue growth rate of textile and garment industry is negative, and the growth rate of net profit shows a sharp decline. In 2018-2020h1, the revenue of textile and garment industry increased by 7.4% / 0.8% / - 20.4% respectively. Among them, the revenue of textile manufacturing sector increased by 9.4% / 2.0% / - 17.9%. The revenue of clothing and home textile sector increased by 6.4% / 0.3% / - 21.7% respectively. Affected by the outbreak of Xinguan epidemic, the postponement or cancellation of some orders, and the setback of export, the revenue growth of textile manufacturing sector and clothing and home textile sector was negative. From 2018 to 2020h1, the net profit of the textile and clothing industry after deduction of non-profit increased by 5.8% / - 19.8% / - 63.4%. Among them, textile manufacturing sector increased by 6.4% / - 20.6% / - 60.0%. Clothing and home textiles increased by 5.5% / - 19.4% / - 65.1% respectively. The textile manufacturing sector was affected by the epidemic situation / cotton prices continued to decline, and the clothing and home textile sector was affected by the slowdown in revenue growth. In addition, the expenses were relatively rigid, and the net profit after deducting non attributable assets fluctuated greatly.

In the first half of 2020, the gross profit rate of textile and garment industry will decrease, and the management expense rate and sales expense rate will increase. In 2018-2020h1, the gross profit rate of the textile and garment industry is 32.4% / 31.1% / 30.3%. The gross profit rate of textile manufacturing sector is 19.6% / 19.2% / 18.3%. The gross profit rate of clothing and home textile is 40.6% / 38.8% / 38.8%. In 2018-2020h1, the sales expense rate of textile and garment industry is 13.9% / 15.0% / 16.2%. Among them, the sales expense rate of textile manufacturing sector was 3.4% / 3.4% / 3.6%. The sales expense rate of clothing and home textile was 20.8% / 22.5% / 25.1%. The management expense rate of textile and garment industry is 3.0% / 5.3% / 6.1%, of which the management expense rate of textile manufacturing sector is 1.6% / 4.3% / 4.6%, and that of clothing and home textile industry is 4.0% / 6.0% / 7.2%.

In the first half of 2020, the industry's operating indicators declined slightly, and the company's inventory and credit were affected by the epidemic. From 2018 to 2020h1, the inventory turnover rate of textile and garment industry is 2.3 / 2.1 / 2.0 times. The inventory turnover rate of textile manufacturing sector was 2.6 / 2.4 / 2.2 times. The turnover rate of clothing and home textile inventory was 2.1 / 2.0 / 1.8 times respectively. Mainly due to poor terminal sales, textile manufacturing and clothing home textile plate inventory pressure has increased. The inventory turnover rate in the first half of 2020 is the annualized index.

Investment advice. Textile manufacturing sector: the epidemic situation has accelerated the industry reshuffle. It is suggested that we should pay attention to the dominant supply chain leaders in the industry, and the market share is expected to further increase after the epidemic. A shares recommended target: kairun shares, Jiansheng group. Recommended target of Hong Kong Stock: Shenzhou International. Clothing and home textile sector: (1) the rebound difference of each sub industry is narrowed. It is suggested that attention should be paid to the opportunities for the leading companies in the clothing and home textile sub industry with low stock prices. (2) It is suggested that attention should be paid to the companies that have experienced the test of epidemic situation and performed far better in the single quarter of the second quarter. (3) Thanks to the change of consumption habits and the approaching of large-scale sports events, the sports shoes and clothing industry is expected to continue its prosperity. It is suggested to pay attention to the leading companies. A-share recommended target: Taiping bird, Bien lefin, Hailan house, SEMA clothing, Desu fashion, lolai life, fuana. Recommended targets of Hong Kong stocks: Anta sports and taobo.