Market Analysis: Is It Difficult To Sustain The Textile Boom Under The Overseas Epidemic Situation?

After the National Day holiday, the domestic textile plate ushered in "riots". Among them, the Shenwan textile and clothing index rose by 11.44% (as of October 20), while the Bull Stock Jujie microfiber rose by 97.77% within 10 days.

On the evening of October 19, Jujie microfiber issued the announcement on abnormal fluctuation of stock trading, which said, "in view of the fact that some orders from India's textile industry returned to China due to the epidemic situation reported by some social media recently, the company has not found any increase in the order volume due to this matter through multi-party verification of the company."

Jujie micro fiber on October 20 midday disclosure of the three quarterly forecast also poured a ladle of cold water on fanatical investors. Jujie microfiber predicts that in the first three quarters of 2020, the company will make a profit of 13-16 million yuan, down 71% - 64% year-on-year; in the third quarter, it will make a profit of 4.36-7.36 million yuan, down 73% - 54% year-on-year.

On October 20, Jujie microfiber changed from Lianyang to Lianyang, falling 1.92%, and driving the whole textile sector to weaken. On the same day, Shenwan textile and clothing index only slightly rose 0.24%.

The 21st century economic report reporter learned that although some Indian textile orders flow back to China, in the view of industry insiders, this trend may not last long.

"This kind of return will not be sustainable. After all, the cost advantage lies there, and the domestic labor cost is getting higher and higher. If the overseas epidemic situation gradually stabilizes and India and Southeast Asia resume production capacity, the orders will still go back; on the other hand, if the overseas epidemic situation breaks out again and again, the demand side will also be affected. " On October 20, textile industry analysts of a medium-sized securities firm in South China pointed out in an interview.

The atmosphere of speculation

Since September, many large-scale export-oriented textile enterprises in India have been unable to guarantee normal delivery due to the epidemic situation, while European and American retailers have transferred a number of orders originally produced in India to China in order to ensure that supplies in the Thanksgiving and Christmas sales seasons will not be affected.

Previously, the 21st century economic reporter also pointed out in relevant reports that the reporter confirmed from a number of domestic textile enterprises that there were indeed enterprises that suddenly received orders originally from India, and the turnover of factories soared five times.

This trend led to A-share textile concept plate all the way forward. Jujie micro fiber is one of the most exaggerated bull stocks. As of October 20, the share price of Jujie micro fiber was 49.62 yuan / share, with the dynamic P / E ratio of 124.4 times, while the median price earnings ratio of textile industry was only 17.60 times, with a total market value of 4.936 billion yuan.

According to the public information, Jujie microfiber is an enterprise engaged in the R & D, production and sales of superfine fiber series of fabrics, clothing and home textile products. Its main products are superfine fiber finished products, superfine fiber imitation leather fabric, superfine fiber functional fabric and superfine fiber dust-free clean products. The main export customer of the company's products is decathlon, which accounts for about 70% of its sales revenue.

In the first half of 2020, Jujie micro fiber realized a business income of 198065700 yuan, a year-on-year decrease of 24%, and the net profit attributable to shareholders of listed companies was 8.6366 million yuan, a year-on-year decrease of 69.84%. In recent three years, the company's main business is overseas market, the proportion of overseas sales revenue in total revenue is 74.41%, 75.48% and 66.95% respectively, and the export destination is mainly Europe.

According to its semi annual report, in the first half of 2020, due to the serious epidemic situation in Europe, the sales of the company's products in Europe were greatly affected.

Although the company's performance has not improved in the previous three quarters, it has not seen a single sign of improvement.

On October 20, the Secretary Office of Jujie microfiber also told the 21st century economic report reporter who called as an investor: "we will not be affected by (the Indian side). Because our customers are mainly decathlon, which makes products such as towels and beach towels. This year's epidemic situation has affected people's going to the seaside for holiday, so the amount of (products) used is less, and decathlon's orders for us are lower than that in 2019. "

In fact, judging from the dragon and tiger list released by the company, due to the small circulation plate, most of the important drivers behind the rapid rise of Jujie microfiber are hot money and retail investors, rather than the improvement of fundamentals. According to the data from the dragon and tiger list, the top five trading seats behind the company from October 14 to 20 were all business department seats, with small transaction amount, and no organization participated in the transaction, and the "reverse buying and selling" atmosphere was strong.

For example, the total transaction amount of the top five buying seats on the evening of October 20 was only 50.13 million yuan. Among them, the two buying seats were occupied by "Dongcai tiantuan", which is known as the retail concentration camp. The second business department of Dongfang Fortune Securities bought 6.8514 million yuan on the same day and then sold 6.4791 million yuan. The seats of Tuanjie Road Business Department of Dongfang Fortune Securities bought 6.1157 million yuan and sold 4.9614 million yuan.

Can order backflow continue?

Jujie microfiber market performance is only a corner of the current A-share textile plate. Since the 11th, the textile and clothing sector has been in the forefront of growth, Xinye textile, Bailong orient and other stocks have exceeded 20% respectively. In addition, the upstream led to a sharp rise in domestic staple fiber prices. According to wind data, staple fiber 2105 rose by 12.62% since October 12.

However, compared with Jujie microfiber, there are also some rising enterprises that are expected to usher in the performance realization period. The 21st century economic reporter learned that the orders of some textile enterprises have improved significantly compared with the previous month, and the capacity utilization rate has basically recovered.

According to a survey record of Shenwan Hongyuan securities, the capacity utilization rate of bLung Oriental has increased significantly since September, and is expected to recover to 90.5%. The orders in the fourth quarter are good, and it is expected to resume good growth. Vosge's orders have increased significantly since September, and the orders have been scheduled to January 2021.

According to the export data released by the General Administration of customs, the export volume of China's textile yarn, fabrics and products reached US $13.352 billion in September, a year-on-year increase of 34.69%, realizing a high growth for several consecutive months. The recent textile orders have been transferred from abroad to China, bringing opportunities for China's textile enterprises to do export. The export of textiles in the next few months is expected to maintain the current hot phenomenon. "

In addition, the domestic epidemic situation has been well controlled, and the textile industry has entered the traditional sales peak season. Under the background of cold winter, the demand for textile and clothing in the fourth quarter is expected to grow rapidly.

"Orders transferred to China are mainly concentrated in the home textile industry, with towel and bed sheet orders larger." Zhang Xiang, the textile industry analysis teacher of Tianfeng securities, pointed out that in his view, the main reasons are as follows: "first, China has the whole textile industry chain, and has strong control over the epidemic situation; second, the domestic cotton price (14380, - 320.00, - 2.18%) is relatively low, and the cost advantage of raw materials is obvious."

However, it seems that the industry is not optimistic about whether the booming situation of textile and clothing brought by transfer order can continue.

A researcher in the textile industry of the agricultural products team of China CITIC construction investment futures said that although China's textile industry has industry supporting advantages, under the background of environmental pressure and rising production and processing costs, some parts of the domestic textile industry will still maintain the trend of outward transfer.

On the other hand, if the epidemic situation repeats, foreign demand will also cause a blow. Cicrc pointed out: "if the epidemic situation is not effectively controlled for a long time, the global economic recovery will be hindered, and China's exports will face downward risks. In addition, the threat of trade protectionism has not subsided, and the trade policy of the new US administration remains to be observed. "