Zhou's views and investment suggestions
This week, several leaders in several sports apparel sectors announced that their performance exceeded expectations and raised the guidelines. We believe that the overseas leading performance reflects: 1) overseas clothing consumption is still in a strong repair trend, which is expected to continue to drive the rapid growth of China's leading textile manufacturing orders; 2) The growth of running shoes, outdoor products and other categories is relatively strong, reflecting that the prosperity of outdoor sports demand is significantly better than that of the garment industry as a whole, and the structural opportunities are prominent; 3) The strong growth of DTC channels of various brands reflects the importance of facing consumers and digital management for the promotion of brand value and sales; 4) The revenue of some brands has not recovered under the background of significant demand recovery, which is mainly dragged down by the damage to the production capacity of upstream Southeast Asian manufacturers, reflecting that the trend of order return may continue.
1) Deckers achieved a revenue of US $1.188 billion in fy22q3, with a year-on-year increase of 10.2%, about 0.68% higher than the market expectation. Considering that the company is the second largest customer of Huali Industrial Group Company Limited(300979) , it is expected that its rapid growth in fiscal year 22 will contribute considerable order growth to the company. 2) Arthur's net profit in 2021 was US $78 million, more than twice the expected value; Among them, the net profit of functional running shoes increased by about 31% / 71.2% and that of Greater China increased by 112.5%. Referring to the strong performance of the company's running shoes in Greater China, brands such as Tebu, Li Ning and Anta, which maintain a leading position in the field of running shoes in China, are expected to benefit. 3) In fiscal year 2021, Columbia outdoor's Q4 sales increased by 23% to US $1.130 billion, and its annual revenue increased by 25% to US $312.64 billion, significantly higher than previously expected, mainly due to the excellent performance of DTC channel and the improvement of sales environment. 4) VF group fy22q3 achieved a total revenue of US $3.6 billion, an increase of 22% at the same time; Net profit increased significantly by 49% to US $517.8 million. 5) In 2021, the Q4 sales of SKECH reached US $1.65 billion, an increase of 24.4% at the same time; The annual revenue was US $6.28 billion, an increase of 36.7% over the same period.
Investment suggestions: it is suggested to pay attention to Huali Industrial Group Company Limited(300979) , Zhe Jiang Taihua New Material Co.Ltd(603055) with prominent supply chain stability, orderly promotion of capacity expansion, better than expected sales performance of downstream customers, special step international with prominent advantages of running shoes, comprehensive layout of outdoor skiing and other categories, Anta sports with remarkable achievements in DTC reform, Li Ning with leading brand potential, etc.
Data and announcement tracking
Market review: last week (February 7, 2022 ~ February 11, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 rose 3.02%, 0.78% and 0.82% respectively, and the textile and garment sector rose 2.67%, including the textile sector rose 2.12% and the garment sector rose 2.34%.
Raw material price: 328 grade cotton spot 22886 yuan / ton (0.05%, weekly rise and fall); American cotton Cotlook a139 7 cents / pound (0.04%); The price difference between domestic and foreign cotton is 757 yuan / ton (- 1.57%).
Announcement of key companies: 1) Xin Hee Co.Ltd(003016) : Junsheng investment, the shareholder of the company, reduced its holdings of 2079100 shares through block trading on February 10, with a reduction ratio of 0.48%. 2) Nanji E-Commerce Co.Ltd(002127) : Recently, the company passed the acquisition proposal and agreed to acquire tbhglobalco with a capital of RMB 330 million, LTD has bought some trademarks in Chinese mainland and Hongkong, and has bought hundreds of good Limited Hong Kong Company 100% stake in 100 good Limited Hong Kong Company with its own capital of 180 million yuan.
Risk tips
Repeated epidemic risk, exchange rate fluctuation risk, rising labor costs in Vietnam and lower than expected price increase risk.
