Textile and garment industry terminals are relatively mediocre and looking forward to transformation and innovation

【HC silk screen printing netReport] Affected by the warm winter in the fourth quarter, domestic demand in the textile and apparel industry remained weak, and retail terminals were sluggish. Restrict the improvement of operations of consumer companies. Judging from the sales of 50 large retail companies announced by the China Commercial Information Center, clothing retail sales in 2013 increased by 4.1% year-on-year, and the growth rate dropped by 5.9 percentage points from the previous year. Among them, the decline in sales of men’s clothing was obvious, with full-year retail sales falling by 0.6% year-on-year. The overall price center of clothing dropped by 2% compared with 2012, which was in sharp contrast to the growth of about 10% in previous years. Discounts and promotions drove positive growth in sales. We believe that exchanging price for quantity and rational consumption are the major trends in clothing consumption in the future.

Based on the 2013 annual report, it is expected that the performance growth rate of clothing and home textiles will still be lower than expected and cost pressure will still exist. However, it is expected that the situation in 2014 will be better than that in 2013. The textile category will continue the trend of the first three quarters and maintain rapid performance. increase. From the perspective of sub-sectors, the men’s clothing terminal sales pressure is still high, franchisees are less enthusiastic about ordering, and the overall channel is in the adjustment stage. It is expected that there are more companies with negative growth in annual report performance; the inventory of the casual wear channel is relatively thorough, and the decline in order fairs has narrowed. The overall number of channels has declined, and industry adjustment is coming to an end. Meibang Apparel (002269) expects revenue to turn positive in the second half of the year, and Semir Apparel (002563) has achieved positive revenue growth; although the home textile industry’s revenue in the fourth quarter of 2013 was lower than expected, overall sales The number of channels is still growing steadily. In the first quarter of 2014, the industry’s leading order fair has become regular. It is expected that Luolai Home Textiles (002293) will usher in a performance turning point in 2014. In terms of textile manufacturing, the revenue growth rate of cotton spinning enterprises in 2013 has rebounded year-on-year. Net profits have increased significantly on a low base. The rebound in external demand has promoted revenue growth. The completion of high-priced cotton and the convergence of domestic and foreign cotton price differences are the main reasons for the recovery of corporate gross profit margins.

Investment advice. Clothing consumption was overall flat in 2013. It is expected that the industry will be differentiated in 2014. The rebound in consumption will lead to the release of performance flexibility of some companies whose performance has been fully adjusted, and a cost-effective mass affordable clothing model will be recommended. After more than a year of in-depth adjustments in the textile and apparel industry, some companies are close to 1 times PB. The channel destocking of casual wear and home textile industries is coming to an end, and it is expected that they will bottom out in the second half of 2014. We believe that market segmentation and channel diversification are the keys to the future development of the textile and apparel industry. Internet thinking drives channel diversification, and market segmentation promotes product innovation and multi-brand development. Highly recommended is Heilan Home, affordable men’s clothing for mass consumption. The company has bucked the trend with its unique quasi-direct franchise model and products with outstanding cost performance. You can pay attention to the recovery process of Luolai Home Textiles, the leading home textile company. The company’s e-commerce layout is in place and we look forward to a recovery in performance in the first half of the year. In terms of innovation and transformation,

Meibang Apparel is actively exploring the apparel O2O model. As a leading leisure brand, it has outstanding strength and its inventory problem has been solved. It is expected that its performance will pick up in the second half of the year; Pathfinder (300005) 300005) actively explores the development of e-commerce You can also pay attention to the acquisition of Greenfield Platform, aiming to create a national leading outdoor portal. In terms of textile manufacturing, orders from external demand are picking up and we recommend leading companies Lutai A and Huafang Co., Ltd. (600448).

Pathfinder: The company has announced the “Great Outdoors” innovation strategy, and the company has announced the construction of an “outdoor tourism comprehensive service platform”: the strategic investment in Tianjin New Starting Point, a wholly-owned subsidiary of Pathfinder, has been realized After acquiring control of Luye.com, it indirectly held 55.67% of the equity of Luye.com. After Pathfinder completed its strategic investment and controlling stake in Luye.com, the two parties will complement each other’s strengths and cooperate in depth to create a one-stop solution for information acquisition, route planning, product purchasing, transportation planning, accommodation and catering, information sharing, entertainment and shopping, etc. A comprehensive outdoor travel service platform. The strategy has been clarified, and the company is gradually promoting the “goods + services” business model. We are optimistic about the prospects of cooperation. We still need to wait for the two parties to find a clear profit model after cooperation. We are currently in a VC-like investment period, and the process is still in progress. Needs nurturing. From a long-term perspective, we are optimistic about the company’s strategic transformation. The company is the first in the apparel industry to use Internet thinking to lay out future development. In the short term, it may be affected by the slowdown in the growth rate of the outdoor industry. The performance growth rate is slower than in the past but still higher than other sub-sectors in the apparel industry.

Lu Thai A: Plans to invest 8 million US dollars in the form of its own funds to establish Lu Thai (Cambodia) Co., Ltd., with a production scale and an annual processing capacity of 3 million shirts. Setting up garment processing factories overseas can help reduce labor costs and improve overall competitiveness. The company’s yarn-dyed fabrics segment has strong competitiveness, but in the garment processing segment, labor costs account for more than 80%. With the increasing domestic labor costs, the profitability and international competitiveness of the company’s garment processing business have been affected. Great impact. We estimate that labor costs in Southeast Asian countries are about one-third of those in China. We believe that the establishment of a shirt processing base in Cambodia is an important step for the company’s overseas expansion.With the progress of production, the possibility of further overseas expansion in the future cannot be ruled out. The price of long-staple cotton has recently risen sharply from about 28,000 yuan/ton in September to 35,500 yuan/ton, an increase of nearly 30%, which is a substantial benefit to the company’s future order negotiations. At the same time, we expect that the cotton direct subsidy policy will be launched on a pilot basis in Xinjiang in 2014. The new policy will help reduce domestic cotton prices, reduce the gap between domestic and foreign cotton, and enhance the international market competitiveness of China’s textile industry in the medium and long term.

Editor in charge: Chu Meihui

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