The sales volume and price of luxury goods group increased both: Hermes group’s revenue in 2021 increased by 42% year-on-year at constant exchange rate, its net profit increased by 77% year-on-year, and the revenue in Asia (excluding Japan) increased by 45% year-on-year and 65% year-on-year compared with 2019. In January 2022, the average selling price of Hermes global products increased by 3.5%; In fiscal year 2021, Kaiyun group’s revenue increased by 35% and net profit increased by 70% year-on-year. The company said that YSL would increase its price again in 2022; LV will adjust the price of some commodities from February 16, 2022 to adapt to the changes of international business environment.
Market review: textile and garment sector: last week (February 14 to February 18, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by + 0.80%, + 1.78% and + 1.08% respectively, and the textile and garment sector increased by 1.63%, ranking 17th among 31 Shenwan industries; Among them, the textile manufacturing sector rose 2.23%, and the clothing and home textile sector rose 0.84%. In the past month (from January 19, 2022 to February 18, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by – 2.22%, – 6.47% and – 3.37% respectively, and the textile and garment sector fell by 2.64%, ranking 18th among the 31 Shenwan industries.
Cosmetics sector: the cosmetics sector rose 12.02% last week, outperforming the Shanghai and Shenzhen 300 index by 10.94pct. The cosmetics sector fell 0.12% in the past month, outperforming the CSI 300 index by 3.25pct. Compared with the 31 industries of Shenwan, the cosmetics sector ranked first in the past week and 11th in the past month.
Industry news: Italian luxury goods group OTB plans to double the number of stores in China in the next three years; On February 17, the State Food and Drug Administration issued a notice announcing the list of 50 batches of non-conforming cosmetics, including related products of many well-known brands such as Bawang, Dabao and Amre; Synthetic biotechnology skin care brand “Suhua” has completed tens of millions of Yuan Angel round financing; One called“ β- The new cosmetics raw materials of “nicotinamide mononucleotide” have been put on record recently. Since this year, the State Food and drug administration has successively released three new cosmetics raw materials.
Investment suggestions: 1) textile and garment industry: from the perspective of fundamentals, we maintain the previous view. It is expected that the general environment of terminal retail demand is still weak. However, due to the influence of the advance of the Spring Festival in 2022, the retail data of that month is expected to perform better year-on-year, which is more objective from January to February. In terms of subject matter, we continue to recommend the brand related to sportswear with the continuous prosperity of sports track and the catalysis brought by the Winter Olympic Games, and continue to recommend Anta sports, Li Ning and Tebu International; In the field of non sportswear, it is considered that the consumption toughness of high-end category is strong, and it is recommended to pay attention to the leaders of undervalued value of subdivided categories, including medium and high-end home textile leaders Luolai Lifestyle Technology Co.Ltd(002293) , high-end sports fashion brands Biem.L.Fdlkk Garment Co.Ltd(002832) , Baoxiniao Holding Co.Ltd(002154) (hazzys, a sports fashion brand under it). In terms of textile manufacturing, we continue to recommend Shenzhou International, Huali Industrial Group Company Limited(300979) , which has strong growth sustainability and a solid position as a high-quality head manufacturer. In addition, in the recent style adjustment, it is suggested to pay attention to textile and clothing targets with undervalued value, high dividend and relatively stable cash flow, including China LiLang (see the attached table for details).
2) cosmetics industry: the cosmetics industry maintains its early view and focuses on the demand side in the short term. With the intensification of industry competition, the increased layout of international brands, the differentiation of consumer demand and the tightening of industry supervision, it is believed that Chinese brands still need to make continuous innovation and breakthrough in product strength. We continue to recommend Proya Cosmetics Co.Ltd(603605) which actively improves the product power, has strong operation ability, has formed a clear strategic layout of multiple large single product series, multiple categories and multiple brands, has high performance growth, has a stable position as a subdivision leader, actively expands new categories and effects, and actively increases brand investment to improve influence.
Risk tip: the macroeconomic growth rate is down, and the terminal consumption is weak due to repeated epidemics or extreme weather, which affects the consumption demand of clothing, cosmetics and other products; The intensification of industry competition and the price war of foreign leading brands will have an adverse impact on China’s benchmark brands; E-commerce platform traffic growth slowed down and traffic costs increased.
