Zero Growth Rate Of Textile Terminal In August

Organization: Zhongtai securities

Rating: Overweight

Market review: in recent months, CITIC textile and clothing index was - 0.01%, of which textile manufacturing and brand clothing were - 3.02% and + 2.32%, and CSI 300 index was + 1.24%. In terms of valuation, PE of textile manufacturing / brand clothing was 10.69% / - 2.85%, reaching 77 / 34 times. From the performance of individual stocks, Pathfinder, taipingniao and jiumuwang were the top gainers, while yujiahui, adier and anzheng fashion fell first.

Industry data & Information:

Brand clothing: in August, domestic demand and export of textile and clothing were turned positive year on year

Domestic demand: from January to August, the total retail sales of consumer goods decreased by 8.6% year-on-year, and the decline rate was 1.3pcts; the retail sales of textile and clothing products were - 15.0% year-on-year, and the decline rate was 2.5pcts. In August, with the gradual recovery of terminal demand, the growth rate of online retail sales of clothing, shoes and hats, knitwear / clothing enterprises above quota / wearing goods increased from + 6.7 / + 8.6 / + 2.0pcts to + 4.2% / + 4.4% / + 1.1% respectively, which achieved the first positive growth in the year.

Export: from January to August, the cumulative export amount of textile and clothing was + 5.6% (2.5 PCTs) higher than that of the previous year. In terms of categories, the total export value of textile / clothing products was + 32.0% / - 15.7% year-on-year, and the growth rate was + 2.2 / + 3.6pcts on a month on month basis. Among them, the export amount of textile / clothing products in August was + 47.0% / + 3.2% year-on-year, and the growth rate was - 1.4 / + 11.8pcts respectively. The demand for clothing export recovered and ushered in the first positive growth in a single month of the year.

Textile manufacturing: domestic cotton prices continue to rise, textile inventory turnover slightly improved

Price situation: as of September 18, 2020, the cotton 328 price index closed at 12803 yuan / ton, with a month on month / year-on-year change of unit price + 337 / - 300 yuan; the cotook a price index closed at 71.15 cents / pound, with a month on month / same change of + 2.1 / - 1.25 cents. The rise of domestic cotton price is mainly due to the arrival of the traditional peak season and the recovery of terminal demand.

Supply and demand and inventory: in September, USDA expects that the domestic supply and demand gap in 2020 / 21 will be reduced by 163 thousand tons to 163 thousand tons compared with August, which is mainly due to the expected increase of production, while the consumption and import and export volume have no change compared with the previous month. In addition, due to the expected ending inventory of + 197000 tons, the warehouse to sales ratio of + 2.0 PCTs to 99.7%.

Industry views and investment suggestions: considering the improvement of residents' fitness awareness after the epidemic and the state's encouragement of national fitness, it is expected that the demand for sports shoes and clothing will increase. It is suggested to pay attention to the domestic sports apparel Longtou Anta sports (36x in 2020), which has a rapid recovery in terminal sales, multi brand and omni channel layout, and is expected to be stronger and stronger Red Dishu fashion (17x, 2020); and bosden, a leader in medium and high-end down garments (15x in fiscal year 20 / 21), which benefits from brand / product / channel upgrading, has less impact on revenue in the new fiscal year, and is undervalued. At the same time, it is suggested to pay attention to Jiansheng group (12x in 2021) whose order recovery is better than expected with the resumption of work and production in overseas countries and the improvement of industry concentration under the epidemic situation.

Risk tips: macroeconomic growth slowdown risk; terminal consumer demand slowdown; cotton price change risk.