Where Are The Opportunities For Textile And Clothing In 2020?

In 2019, the Tmall double 11 war, clothing and clothing became the consumer goods that we must buy: UNIQLO 16 minutes sales break 500 million results again brushing the new record speed, Metersbonwe brand, the whole channel 2 hours break through 420 million, Semir electronic business channel sales 6:36 break 1 billion......

However, this is only the data of Shopping Festival. The market trend of this sector in 2019 is not so beautiful.

From the beginning of 2019 to December 27th, the textile and apparel industry index of Shen Wan increased by 5.62%, lagging behind the 30.11% of Shanghai and Shenzhen 300.

In the molecular industry, from the beginning of December 27th to the beginning of the year, other garments, other textile and printing and dyeing products with a relatively large number of companies accounted for more performance, while other garments increased by 18.4%. Casual wear showed poor performance, up 1.3%, and men's and wool's losses were over 5%.

In terms of valuation, the industry PE (historical TTM, excluding negative values) was about 19 times as high as December 27th, and textile and apparel had dropped to the level of 2012.

As of December 27th, the value of Shanghai and Shenzhen 300 was 20.41 times, and the valuation of textile and garment industry was 19.8 times. The valuation premium of the textile and garment industry is -3% relative to that of Shanghai and Shenzhen 300. The value premium of the textile and garment industry relative to Shanghai and Shenzhen 300 has been 30% since 2005, and the current premium level is low.

One

What has affected industry performance?

Textile and clothing are optional consumption. First of all, the slowdown in economic growth, when consumers cut clothing expenditure, the proportion of consumption of necessities will be increased.

Secondly, the impact of Sino US trade war and the transfer of production capacity to Southeast Asia have affected the decline of textile and garment exports.

Therefore, since 2019, the textile and garment industry continued to boom. According to the National Bureau of statistics, the total retail sales of clothing products in 2018 were 987 billion 40 million yuan, down 4.8% compared with the same period last year, and the retail sales volume of clothing products for the first time showed negative growth. As of the first half of 2019, clothing retail sales amounted to 474 billion 970 million yuan.

Inventory has always been the focus of the clothing industry. 2017 is the cold winter, and the fourth quarter of every year is the peak season for clothing sales, prompting businesses to actively stock up. But by the warm winter weather in 2018, it eventually led to the backlog of winter stock in the whole industry in 2018.

In 2019, it encountered another warm winter weather. In the 11 and December of this year, the average temperature difference between the major cities in China and the same period in 2018 reached 0.22 degrees. That is to say, the overall temperature in major cities is slightly higher than that in warm winter and 2018. In this case, sales of clothing in winter will be weak. Coupled with the overall slowdown in consumption growth, even with double eleven in November, textile and apparel retail sales still showed a slowdown.

Judging from the sub sectors, its scale is expanding, but the growth rate has slowed down, and the children's clothing and sports apparel industry has a relatively high boom.

Benefiting from the increase of domestic disposable income and the importance of sports, people's demand for sports and leisure continues to increase, coupled with the change of consumer structure, making sports preferences of fashionable consumption preferences, which make sports apparel become one of the fastest growing categories in the domestic apparel industry. According to Sina, Euromonitor data show that the growth rate of sportswear exceeded 19% in 2018. In 2019, even though the growth rate has slowed down, it is still one of the fast growing categories of clothing.

The advantages of the leading edge are highlighted, and the gap between the leading and small enterprises has been widened gradually. It is suggested that Anta sports (2020.HK) with strong multi brand cultivation ability and Lining (2331.HK) with outstanding brand adjustment efficiency should be advised.

Two

Pay attention to the company's situation.

At the beginning of December, Anta disclosed Earnings Preview: it is expected that revenue growth will exceed 35% in 2019, with operating performance of more than 5 billion 945 million yuan, with a growth rate of over 45%, and net profit to parent is expected to exceed 5 billion 330 million yuan, with a growth rate of 30%+.

Two reasons led to an increase of over 35% in revenue.

(1) in the first three quarters of 2019, Anta brand achieved double digit, double-digit, double digit number, Q4 continued to grow, ANTAKIDS and electricity providers grew rapidly.

(2) non Anta brand (Q3 separately listed as FILA brand) increased continuously with 65-70%, 55-60%, 50-55% and Q4 respectively, and the annual growth rate of water consumption increased by more than 55%.

(3) the Descente of other brands is growing fastest, with an estimated retail turnover of about 1 billion yuan this year.

On the whole, Anta is constantly adjusting its product structure and widening its price band. It is expected that revenue growth will be similar to that of water production, while FILA brand will be slightly higher than the growth rate of water sales because of the wholesale transformation of a few outlets.

Assuming that the net profit growth rate of 2019 and 2020 is 32% and 36% respectively, EPS is 2.02, 2.72 yuan, corresponding to PE is 35x and 26x respectively.

Since this year, Lining's stock price has risen by over 200%, and its share price has reached a new high of nearly 9 years. It has become the best performing stock in the MSCIAC Asia Pacific Index, and it is also one of the best performing apparel companies in the world.

The company currently covers professional sports, sports and leisure, sports and fashion, outdoor sports, children's wear and other fields. The brand includes Lining, China Lining, Lining YOUNG, spring label and LNG series. China's Lining driven national trend will continue, and children's wear Lining YOUNG has developed rapidly in recent years. With the expansion of stores, it is expected to become a new growth point of performance. With the excellent marketing and overseas exposure, Lining has gained a high degree of market concern in recent years.

Channel, basically completed the transformation from wholesale to retail. In the 2014-2018 year, Lining's electricity revenue increased from nearly 300 million yuan to 2 billion 218 million yuan, with an average annual compound growth rate of 66%. The same sales volume of wholesale and retail sales is mediocre, mainly due to changes in the channel of the company. The transformation of the channel does take time, but online sales are expected to maintain a high degree of vitality, and eventually both offset each other.

Fourth quarter companies will launch new models to stimulate sales by creating explosions and diversified marketing. It may be difficult to break through the quarterly sales under the high base, but it has confidence in the sales side and profitability of the company. Its products rely on higher technology capabilities and brand strength, and believe that they can continue to achieve better growth. Assuming that the net profit growth in 2019 and 2020 was 105% and 24% respectively, EPS was 0.63 yuan and 0.8 yuan respectively, corresponding to PE 36.5x and 28x respectively.

In addition, the domestic children's clothing industry is still growing, and its overall growth is relatively fast. The industry structure is scattered and there is no absolute leader. Data show that in 2018, children's clothing leading Semir clothing market accounted for about 5.6%, and the total market share of 2~5 was about 4.4%. Comparatively speaking, Barbara, Semir's 002536.SZ, has a strong scale advantage. The market share of Barbara brand is the first in the domestic children's apparel industry, and is expected to benefit from the increase of children's clothing market concentration.

From the Q3 data, Semir clothing original children's clothing business (mainly Bala brand) is absolutely leading, 2019Q1~Q3 revenue achieves more than 20% growth rate, 2019H1 growth rate is close to 30%, Q3 growth rate 10+%, casual wear gets single digit growth (the first half of the same year increased by 12%), mainly due to the environment recession and the increase of frequency of leisure clothing delivery.

It has acquired the French Kidliz brand, and the agent has introduced the famous American children's wear brand The Children 's Place. Although the loss of Kidiliz will affect the net profit, the three quarter shows that children's clothing business has shown some resilience, and the electricity supplier channel (children's wear + casual wear) has also maintained a high growth rate (Q3+30%), which is more optimistic about the performance improvement in the four quarter sales season.

At the same time, the company improved the accuracy of mid end products by increasing the number of orders (4 times / year to 8 times / year). On the whole, it is expected that the company will achieve the goal of setting up the equity incentive before next year, and deduct the double digit growth of non net profit.