1) up to now, 83 A-shares have been listed, including 30 textile manufacturing sub sectors and 53 garment home textile sub sectors. The proportion of Chinese textile and garment enterprises has increased in recent years, but it is relatively low in general, about 0.2% in 2018. The situation of domestic textile and clothing listed companies is basically the same as that of the United States and Japan, with a small number of companies and a low market value.
2) A-share accelerates the internationalization process, and the consumption leader is an important allocation direction. At present, there are two companies in the textile and garment industry (Senma clothing, Hailan home) that have become MSCI component stocks, all of which are large cap stocks. Bienlefen was included in the FTSE Russell index. As of October 25, 2019, there are 31 funds allocated to the north.
3) since 2013, the income of textile and garment industry has increased slowly, and the growth rate of net profit has decreased year by year. Due to weak terminal demand, clothing and home textile sector performance differentiation. In 2018, the exchange rate of RMB depreciated significantly, and the profit level of textile manufacturing sector was better. Roe volatility decreased due to the impact of net sales interest rate.
4) under the background of slow growth of retail sales of consumer goods, the prosperity of textile and clothing is stable. The recovery of high-end consumption and the stabilization of mass consumption. In the second quarter, the prosperity of the textile industry declined, and the enterprises still have strong confidence in the operation of the third quarter.
5) the overall scale of the industry continues to grow, and the development cycle of the sub industry is different. In the future, the growth rate of children's wear and sportswear will be higher. The competition pattern of textile and clothing industry is relatively scattered, and the leading bargaining power of the industry is strong. The bargaining power of textile manufacturing enterprises continued to improve: leading manufacturing enterprises accelerated production integration and overseas production capacity layout.
6) a number of policies stimulate terminal clothing consumption, but Sino US trade frictions affect textile exports. With the continuous improvement of garment quality and environmental protection standards in the production process, the upgrading of enterprises' production capacity and the acceleration of the clearance of small and medium-sized enterprises have been accelerated; the two child policy has been fully liberalized, and children's wear and mother infant consumption have become a high prosperity track in the garment sub sector; the Sino US trade negotiations have continued, and the overseas production capacity transfer of textile enterprises has eased the uncertainty of product export.
7) technological innovation: intelligent manufacturing, new retail and other factors accelerate the growth of the industry.
As of October 25, 2019, the one-year rolling P / E ratio of the textile and garment industry is 23.38 times, lower than the historical average since 2005 (31.32). Since the beginning of the year, the A-share market investment sentiment has been high, but the textile and clothing sector has a limited increase, ranking 24th in Shenwan's 28 sub industries.
We believe that this is the time to allocate outstanding performance and still have valuation and repair space for individual stocks. We continue to recommend Senma clothing (002563. SZ), Hailan home (600398. SH), bienlefen (002832. SZ) and kairun stock (300577. SZ). As of October 25, 2019, the cumulative income of value / growth portfolio since the beginning of the year is 20.99% / 11.72% respectively, outperforming the SW textile and clothing index by 15.06/5.8pct respectively.
