Textile and garment industry research weekly report: industry spring is coming.

2018-10-15


Undervaluation growth: Taiping Bird/Jiansheng Group/Golis/Anzheng Fashion/Huafu Fashion.

At the end of 17 years, the textile and garment industry as a whole fell by 23.85 per cent, ranking first in the market, with valuations falling to their lowest level since the end of 2014. However, with the continued recovery of consumer demand and industry inventory, channels continue to adjust in place, textile and clothing such as high-end women's clothing, home textiles and other sub-sections have recovered, the fundamentals of marginal improvement is obvious, plate valuation gradually reasonable, we believe that the allocation of opportunities to come, 2018 textile industry spring arrival.

1, the industry recovery is obvious, the valuation is gradually reasonable, the textile sector ushered in the allocation of opportunities.

Industry recovery: the overall recovery of the consumer industry, in recent years, brand clothing channels and other adjustments brought about by the performance pain period has been marginal improvement. November above the limit of clothing sales in the month of 9.6 YoY (4.5pct). In November, textile and clothing exports performed well: the textile yarn category still achieved a high growth of nearly 11% on the basis of the high base in November 16, exceeding expectations, reflecting the continued improvement of the upstream business climate of the manufacturing industry.

Reasonable valuation, layout oversold high-quality companies. We sorted out undervalued growth companies (Jiansheng Group, Taiping Bird, Souyutte, Anzheng Fashion, Goliath, Huafu Fashion) with a net profit CAGR of more than 20% in 18-19 and high growth companies (Antarctic E-commerce and Kairun) with a net profit CAGR of more than 40% in 18-19, and suggested investors to focus on high-quality targets in the sector from two main lines.

2. Continue to lay out companies whose 17Q4 performance may exceed expectations, and focus on recommending Taiping Bird: Before the annual report season, investors are advised to lay out companies whose performance in the fourth quarter may exceed expectations or usher in a performance inflection point in advance, and focus on recommending Taiping Bird, a brand clothing enterprise that has been deeply engaged in the fashion clothing industry for many years, has excellent multi-brand and multi-channel operation, has improved marginal competitive advantages, and will usher in future performance.

3, home textile industry recovery leader benefit, new recommended Rolai life, Fuana.

After four years of adjustment, the industry recovery trend has been established in 2017. We believe that the main reasons for this round of recovery and continuation are the overall recovery of consumer demand and the high growth of e-commerce channels.

Second-and third-tier city consumption upgrade and channel expansion, coupled with rising costs small brands out of the market, home textile leading benefit concentration increased, recommended Lorai life, Fuana, focus on: Mercury home textiles.

4, focus on the main points of the recommended company.

Kairun shares: B2B, B2C is expected to both exceed market expectations, our rapid growth of the company's performance judgment has been verified. 1)B2B business: in 2017, new customers such as famous products and Netease strict selection were added, and CAGR20%+ is expected to be added in three years. 2)B2C business: more sophisticated management, Runmi launched a new brand "Yuqi", to "deep buyers" way, positioning pan-travel products. New categories and new channels and new marketing to help the company to "China's first travel brand" further. The second millet ecological chain company Shuomi brand "juvenile line" on the line, positioning children's travel market, is expected to become the second run rice. 3) EPS is expected to be 1.01/1.51/2.18 yuan in 17-19 years, CAGR nearly 50% in the next three years, with a target price of 75.5 yuan, corresponding to about 50 times PE in 2018.

Taiping Bird: 1) Market expectations are low, we believe that 2017Q4 results exceed market expectations, to meet the performance upward inflection point. 2 The three-year adjustment period (channel, design adjustment) has passed, and the next few years will enjoy the growth dividend. In terms of channels, shopping centers and new e-commerce channels account for more than 50%; in terms of design, it has re-attracted young consumers born in the 90 s, while the main competitors are still adjusting. It is expected that the competitive advantage will increase and the market share will also increase in the next few years. 3) EPS is expected to reach 0.96/1.38/1.79 yuan in 2017-2019, with a compound growth rate of 37% in net profit over the next two years, giving a 25 times valuation in 2018 and a target price of 34.50 yuan.