In the first three quarters, the revenue of the textile and apparel sub-industry still increased, waiting for the coming of spring
Analysis conclusion
2008 was one of the most difficult years in history for the textile and apparel industry. The concentrated release and deepening of various negative factors aggravated the industry’s plight. Data shows that since the beginning of the year, industry revenue and profit growth have declined sharply. The growth rate of fixed asset investment has dropped significantly, and the industry’s exports have continued to decline in a single month. Domestic sales have become the only bright spot supporting the growth of the domestic textile and apparel industry. However, the growth rate has also slowed down since October, and downward revisions to future expectations are inevitable. The industry’s Winter has arrived.
Judging from the third quarterly reports of listed companies in the textile industry, it is basically similar to that of the entire industry. In the first three quarters, the revenue of the textile and apparel sub-industry still increased, but there was almost no growth in profits. The slight decline in the overall gross profit margin of the industry and the increase in period expenses (especially financial expenses) are obviously the main reasons why the profit growth is lower than the revenue growth. The polarization of the industry is still intensifying. It is worth noting that some key companies with superior early performance began to There is also an expected downward inflection point. The chemical fiber sub-industry has shown a cyclical collective plunge. Considering the situation downstream, we believe that this downturn is likely to last longer than before.
Judging from the current valuation level of the listed companies in the industry, both in terms of price-to-book ratio and price-to-earnings ratio, they are at the bottom of history, and the valuations of some key companies have been lower than historically low levels. Taking into account the non-cyclical characteristics of the industry, the trend of historical valuation levels and future industry policies, the warm trend will continue. We believe that the space for further decline in the textile sector in the future is relatively limited, but the essential improvement of the industry valuation level depends on this round of industry washout. The attributes evolve after the card.
Looking forward to the industry’s situation in 2009, the policies are generally warm – the increase in the export tax rebate rate, the transformation of the value-added tax, the slowdown in appreciation or possible depreciation of the RMB, and the country’s entry into an interest rate cut cycle will all have a positive impact on industry operations and profits. We believe that the positive effects of warm policies are expected to gradually accumulate in 2009, but it is difficult to fundamentally solve the current essential problems of the industry in the short term (declining demand and structural problems of the industry itself). Therefore, the short-term downturn of the industry is difficult to change.
The future improvement of the industry depends on the growth of consumer demand brought about by the recovery of the real economy and the resolution of the industry’s internal structural problems. Both take time to digest. We predict that the first half of 2009 may become a periodic low for the industry, and is expected to gradually stabilize in the fourth quarter of 2009.
Based on the industry’s own advantages, its position in the national economy and its ability to self-adjust, we are relatively optimistic about the industry coming out of winter. Although this round of adjustment will go through a more painful process, in the long term, we believe that this survival of the fittest will be conducive to improving the overall competitiveness and sustainable development capabilities of the industry. More companies in the industry will make greater profits in the industry chain. With the transfer of links, more companies will transform from pure manufacturing and processing to technological innovation, brand retail, etc., which will also help improve the final valuation level of the industry.
We currently maintain a “neutral” rating on the industry. In 2009, we are moderately optimistic about the winners in the face of industry adversity. We believe that companies that can survive the winter will usher in a brighter spring after the industry recovers. (1) A brand retail enterprise focusing on domestic sales (2) A growth leader in a segmented industry with relative monopoly advantages (clothing accessories, fabrics, accessories) (3) With an industrial chain, internal management, cost control and diversified investment and other leading companies with comprehensive advantages. Their future growth space is broader. In the short term, you can focus on trading opportunities with favorable policies.
2008 was one of the most difficult years in history for the textile and apparel industry, and it was also a year at the forefront. From the appreciation of the RMB against the U.S. dollar to the rapid appreciation against the Euro, from the continuous increase in the cost of raw and auxiliary materials and labor costs due to inflation in the early stage to the plummeting price of main raw materials in the later stage, from the increasing financial burden caused by the rise in interest rates due to macroeconomic control in the early stage to the later stage. The overall investment reduction in the industry due to the downward adjustment, from the slowdown in export consumption demand caused by the financial crisis to the slowdown in domestic consumption growth… all negative factors were released and intensified in 2008, while the Pearl River Delta and the Yangtze River Delta The successive closures of a number of small and medium-sized textile and garment export companies in the region also reflect the difficulties faced by the industry from one aspect. Before the winter of 2008 came, the textile industry had already felt the chill in advance. How long will this winter of the industry last? In such an industry Against this background, how to grasp the investment strategies of the industry and related companies in 2009? We hope that through the following analysis, we can provide investors with a perspective on the industry’s operating trends and investment opportunities in 2009.
The current situation of the entire textile industry: winter has arrived
(1) Industry revenue and profit growth rate declined rapidly
According to data from the Statistical Center of the China Textile and Apparel Industry Association, in the first 11 months of 2008, the main revenue of textile enterprises above designated size increased by 13.80% year-on-year, while total profits fell by 1.77% year-on-year. This is the first time in the industry in the past 10 years. Profits are down. In the first eight months, the industry still had a slight profit growth, but the data in the first November shows that the industry situation has further deteriorated after the third quarter. The proportion of industry losses in the first 11 months was 20.44%. Judging from the breakdown of specific indicators of the income statement, the domestic textile industry as a whole in the first 11 months�The interest rate was 10.99%, a slight decrease year-on-year. However, due to the increase in period expenses, the industry profit margin dropped more significantly. In the first 11 months, industry operating expenses and financial expenses increased by 18.52% and 19.37% respectively year-on-year, both exceeding the growth of main revenue. This is also the main reason for the decline in industry profits. In the first November of 2008, the industry’s gross profit margin and profit margin dropped by 0.17 percentage points and 0.52 percentage points respectively compared with the same period in 2007. We predict that there is still room for a slight decline in industry profitability in the future.
Factors such as the macro-control that began at the beginning of the year, rising costs, the continued appreciation of the RMB, and the subsequent deepening of the financial crisis caused by U.S. subprime mortgages, resulting in a significant slowdown in export demand, have all become the triggers for this round of adjustments in the industry. The industry itself has been extensive for many years. The inherent contradictions hidden in the rapid growth have further exacerbated the crisis in this round of industry. The industry’s winter has arrived.
AAEGRTHRTH
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