Textile And Garment Industry Is Facing A "Improvement" In 09 Years.

      我們認為當前行業現狀可概況為三點：

1, it will take some time to restore internal and external needs.

2, business operations continue to be cautious.

3, compared with the end of last year, there were signs of improvement in the industry.

Recently, the prices of major raw materials, cotton and chemical fiber products have picked up slightly, but they are still at a low level over the 08 years.

The main reason for the weak price of products is that the demand is not warming up.

However, in order to meet the upcoming peak production season in the two quarter, sales of all kinds of textiles have picked up significantly, and the starting rate of textile enterprises has begun to return to the same period last year.

This is one of the reasons why we think the industry is showing signs of improvement.

The average sales growth of brand clothing listed companies during the Spring Festival period is around 25%, while sales in January even recorded an increase of about 40%.

This is related to the increase of discount sales promotion and the issuance of shopping coupons by the government. It also proves that the brand and channel advantages of enterprises will be more prominent under the background of poor industry conditions.

Overall, clothing sales in the 1 quarter are expected to increase by 2 digits compared with last year. However, the efforts of garment enterprises to digest inventory will continue to increase, and discount sales promotion will be fully utilized.

　　當前行業正面臨“好轉”，主要表現為：

1, the reduction of inventory has been effective, and the imbalance between supply and demand has eased.

2, with the decline in product prices and fuel power prices, the pressure on production costs has been significantly alleviated.

3, the RMB appreciation rate has slowed down significantly.

4, the policy area is exceptionally loose.

Under this background, for enterprises with bargaining power and customer resource stability, their competitive advantages will be more prominent, and the possibility of steadily increasing gross margin and market share will be greater.

Based on two criteria, we need to focus on the firm's growth and valuation margin.

We should focus on two types of enterprises: 1, enterprises with pricing power or relatively strong bargaining power; 2, customers with abundant resources and enterprises with brand and channel advantages.

The key recommendation companies are: prudent management type: good news bird, Mei Bang dress, Rebecca, Weixing share; subject driven: Jin Feida; valuation security type: YOUNGOR, Lu Tai A.

Good news bird: the company has been prudent in 09 years. In addition to continuing to promote its "S.ANGELO" fashion series, it will mainly focus on inventory and strengthen the endogenous growth of the existing brands.

Good brand awareness and reputation are the guarantee that it will continue to maintain a higher gross margin, consume inventory and increase market share as soon as possible.

Net profit per share is expected to be 0.66 yuan, 0.70 yuan and 0.92 yuan in 2008 -2010 respectively, corresponding to PE level of 21, 20 and 15 times respectively.

American Apparel: the market environment for residents to control consumption provides a good opportunity for the development of cheap and cheap casual wear market.

The company occupies an important position in the 18-25 year old market segments in casual wear, plus the comparative advantage of product prices, which is still expected to grow about 25% over the 09 years.

In the past 09 years, the company has been in the opposite direction. Increasing the purchase of commercial real estate has increased capital expenditure and financial cost, which will cause a certain drag on profit growth.

But in a comprehensive way, the company has a higher market position and negotiation ability, and is an object of industrial revitalization planning support. Its supply chain management system is becoming more mature, and it also plays an important role in improving the management and operation efficiency.

Net profit per share is expected to be 0.90 yuan, 1.13 yuan and 1.38 yuan in 2008 -2010 respectively, corresponding to PE level of 33, 26 and 21 times respectively.

Editor in chief: Xu Qiyun