Five Catalysts Promote The Rapid Development Of Home Textile Industry In China

　　 Judging from the form of the textile and clothing industry in the second half of the year, we believe that: 1. Domestic sales have risen steadily, and foreign demand has recovered weakly; 2. The falling space of raw material price is limited; 3. The total amount of RMB appreciation.

Be optimistic about the domestic market, more optimistic Home textiles Industry. We are more optimistic about the development prospects of the domestic market because of the weak recovery of external demand, the export enterprises' price shifting ability when facing high raw material prices is not as good as that of domestic enterprises, and the greater impact of RMB appreciation. As the products of the home textile industry are mainly medium and high-end, and the market popularity is high, the investment value of the home textile industry is gradually highlighted after listing in the case of capacity release and channel expansion.

Five catalysts promote the rapid development of China's home textile industry. The five catalysts, namely, the continuous increase of high-income groups, the improvement of the prosperity of real estate, the huge development space of the wedding market, the prosperity of tourism and the continuous growth of the demand for children's products, will enhance the overall investment value of China's textile industry. It is expected that the output value of the home textile industry will maintain a growth rate of about 20% in the next 2-3 years.

Maintain the home textile sector“ purchase ”Investment rating. Although faced with high valuation, property regulation and other factors, we believe that in the next few years, home textile enterprises will accelerate their channel layout, consolidate their leading position in the advantageous regions and vigorously develop the weak regions after the rapid increase of production capacity. Their performance will usher in a new round of rapid growth period, and their growth and performance certainty are expected, Therefore, it should enjoy a certain valuation premium. If the real estate sales in the second half of the year decline in a wider range after the policy regulation, it will undoubtedly have a negative impact on the whole industry. However, as the consumer demand for medium and high-end home textile products has become increasingly popular with consumers, their consumer demand will only be delayed rather than frozen, so we believe that these risk indicators are within the controllable range.

In addition, these three enterprises all have a three-dimensional brand system, and their R&D capabilities are in a leading position in the industry with high defensiveness. Mengjie Home textile is the first of the three companies to release its production capacity, its early orders will perform better than expected, and its current valuation is the lowest, so we give it a "buy" rating. The current share prices of Luolai Home Textile and Fuanna have partially reflected their future growth, and we give them the "overweight" rating.