Textile And Garment Industry: The Logic Of The Sustained Recovery Of Clothing Consumption Remains Unchanged

Key points:

A share accelerates the process of internationalization, and the consumption leader is an important allocation direction. At present, among the 90 listed companies in Shenwan textile and garment sector, 30 companies are allocated northward. Among them, the northbound capital shares of clothing and home textile sub sector account for a high proportion of free circulation shares. A total of 1 company (semma apparel) in the textile and garment industry has become a constituent stock of MSCI.

The epidemic situation led to weak terminal demand and performance differentiation. Since 2013, the growth rate of industry income has been slow, and the growth rate of net profit has been negative for three consecutive years; the textile manufacturing sector has benefited from the sharp increase in the export of anti epidemic products such as masks and protective clothing, and its performance is relatively bright; due to the gradual alleviation of domestic epidemic situation and the impact of cold winter, the performance of 2020q4 and 2021q1 is expected to be expected.

Affected by the epidemic situation at home and abroad, the prosperity of textile and garment industry gradually rebounded. The zero data of clothing society increased by 4.6% year-on-year in November, and decreased by 7.6 PCT month on month. From January to November, the cumulative year-on-year decline of 7.9 PCT led to a recovery in clothing consumption, but the recovery rate was relatively slow compared with other categories. Due to the earlier cooling in winter this year, there is more rigid demand, and the consumption occurs in October. At the same time, the sales time of double 11 is lengthened, which leads to the limited effect of boosting the overall sales volume due to the promotion consumption of double ten one. As the double 12 sales promotion can still bring higher sales, and the two large-scale cooling in December in northern China will boost the sales scale of winter clothes with high unit price. The Spring Festival holiday in 2021 is later than in previous years, which can extend the sales period of winter clothing products. It is expected that the peak season of clothing sales can last until the end of February next year.

The overall scale of the industry continues to grow, and the development cycle process of the sub industry is different. In the future, the growth rate of children's wear and sports apparel is higher, and the competition pattern of textile and garment industry is relatively scattered, and the bargaining power of industry leaders is strong. The bargaining power of textile manufacturing enterprises continues to improve: leading manufacturing enterprises accelerate production integration and overseas production capacity distribution.

Intelligent manufacturing + c2m + live e-commerce reshapes the competition pattern of textile and garment industry, promotes industry concentration, improves clothing quality and environmental protection standards in the production process, promotes enterprise capacity upgrading and accelerates the clearance of small and medium-sized enterprises; Sino US trade negotiations continue, textile enterprises' overseas capacity transfer eases product export uncertainty.

As of December 25, 2020, the annual Rolling P / E ratio of textile and garment industry is 36.00 times, slightly higher than the historical average since 2005 (31.19). Since the beginning of the year, masks and MCN concept stocks have risen, and the demand for live e-commerce, c2m strategy and masks has increased rapidly, ranking 26th among the 28 sub industries of Shenwan. In terms of configuration, focus on new economy + mask performance in the short term, and lay out Baima stocks in the long term. We continue to recommend SEMAR clothing (002563. SZ) and kairun (300577. SZ). As of December 25, 2020, the cumulative income of the core portfolio since the beginning of the year is - 8.28%, which is lower than the SW textile and clothing index of 0.4pct.