Report summary:
At the current time point, we mainly recommend Bros Eastern Co.Ltd(601339) , Comefly Outdoor Co.Ltd(603908) , Baoxiniao Holding Co.Ltd(002154) :
(1) Bros Eastern Co.Ltd(601339) : the performance in 21 years exceeded expectations. In the medium and short term, on the one hand, 200000 ingots are expected to be put into production in 22 / 23 years respectively; On the other hand, the company’s cotton inventory is expected to remain low in Vietnam until the first half of the year. In the long run, we put more emphasis on the company’s non cyclical growth logic, that is, the improvement of bargaining power brought by the increase of the company’s share. In addition, focus on the company’s growth with the expansion of Shenzhou, the largest customer.
(2) Baoxiniao Holding Co.Ltd(002154) with high-end track positioning and extension expansion space: 1) the main brand has increased its efforts to open stores in the central region by creating sports suits and broadening application scenarios, maintaining a growth rate of more than 15% and higher than that of the industry; 2) Hazys: on the basis of high efficiency, the brand still has extension shop space; In addition, the brand still has the logic of expanding categories such as shoes, bags and golf series, which is expected to maintain an increase of more than 25% in the future; 3) BAONIAO is expected to maintain an increase of more than 10%, and usher in the improvement of net interest rate with the production of Hefei factory; 4) Small brands zhonglefeiye and kemiche are expected to maintain an increase of more than 35% and gradually contribute to profits.
(3) for the target of high view track, Comefly Outdoor Co.Ltd(603908) : 1) there are sufficient export orders and it is expected to grow steadily in the future; 2) Domestic business benefited from the policy of superposition and double reduction of epidemic situation, driving the hot demand for camping. In the medium and long term, the proportion of domestic sales revenue is expected to exceed half in the future, and the superimposed net interest rate will be improved to 15% +.
Market review: outperforming the Shanghai Composite Index by 1.01pct
This week, the Shanghai Composite Index rose 3.02%, the gem index fell 5.59%, and the SW textile and garment sector rose 2.01%, outperforming the Shanghai Composite Index by 1.01pct and the gem index by 7.60pct. Among them, SW textile manufacturing rose by 5.11%, and SW clothing and home textile rose by 0.53%. At present, the PE of SW textile and garment industry is 15.12. This week, mothers, infants and children performed best, with an increase of 5.08%; Outdoor and sports performance was the worst, with a decrease of 2.07%.
Market data tracking: China’s cotton price index rose 0.74% this week
As of February 11, China’s cotton 328 index was 22886 yuan / ton, up 0.74% this week. As of February 11, China’s imported cotton price index (1% tariff) was 22040 yuan / ton, up 2.18% this week. As of February 10, the closing price of cotlooka index (1% tariff) was 21880 yuan / ton, up 3.17% this week. On the whole, the price difference of cotton inside and outside this week was 846 yuan / ton, which was 311 yuan / ton lower than that at the end of last week.
According to the latest February global cotton supply and demand balance released by the U.S. Department of agriculture (USDA), the total global cotton production in 2021 / 2022 is expected to be 26.161 million tons, down 175000 tons from the previous month, mainly from the United States and India, with a reduction of 5.5/108000 tons respectively. The reduction of Indian cotton is mainly due to heavy rainfall during the cotton harvest; Consumer demand is expected to be 27.091 million tons, with a month on month increase of 40000 tons; The ending inventory is expected to be 18.355 million tons, down 153000 tons month on month. China’s total cotton output in 2021 / 2022 is expected to be 5.879 million tons, unchanged from the previous month; Consumer demand is expected to be 8.6 million tons, unchanged month on month; The ending inventory is expected to be 7.876 million tons, with a month on month decrease of 60000 tons.
Industry news
Canadian geese: the annual expected downgrade, FY22Q3 Chinese mainland DTC revenue increased by 35%; Tapestry, the parent company of Coach: the revenue in the latest quarter increased by 27%, mainly from the contribution of European and American markets; Aiming at China’s swimsuit market, Japan Descente group repurchased all equity of arena China joint venture.
Risk tips
Second outbreak of the epidemic; Fluctuation risk of raw materials; Systemic risk.
