Key investment points
The textile and garment sector outperformed the market by 1.25 PCT this week, with Shanghai Yimin Commercial Group Co.Ltd(600824) , Modern Avenue Group Co.Ltd(002656) , Hangzhou Nbond Nowovens Co.Ltd(603238) rising ahead. This week (02.21-02.25), SW textile and garment sector fell 0.42%, CSI 300 fell 1.67%, and textile and garment sector outperformed the market by 1.25pct. Among them, SW textile manufacturing sector fell 0.67%, and SW clothing and home textile fell 0.7%. From the valuation level of the sector, the industry PE calculated by SW textile and garment overall method (TTM, excluding negative value) is 18.11 times, which is lower than the average value in recent one year. The top five companies in the textile and garment sector were: Shanghai Yimin Commercial Group Co.Ltd(600824) (+ 22.51%), Modern Avenue Group Co.Ltd(002656) (+ 9.56%), Hangzhou Nbond Nowovens Co.Ltd(603238) (+ 9.18%), Zhejiang Jiaxin Silk Corp.Ltd(002404) (+ 7.49%), Zhejiang Jasan Holding Group Co.Ltd(603558) (+ 7.25%).
This week, the household goods sector lagged behind the market by 0.19pct, with Qumei Home Furnishings Group Co.Ltd(603818) , Nanjing Olo Home Furnishing Co.Ltd(603326) , Chengxin Lithium Group Co.Ltd(002240) rising ahead. This week (02.21-02.25), SW household goods fell 1.86%, CSI 300 fell 1.67%, and furniture fell 0.19pct behind the market. From the valuation level of the sector, at present, the industry PE calculated by SW household goods overall method (TTM, excluding negative value) is 23.98 times and SW furniture is 22.41 times, which is lower than the average value in recent one year. The top five companies in the furniture sector were: Qumei Home Furnishings Group Co.Ltd(603818) (+ 12.83%), Nanjing Olo Home Furnishing Co.Ltd(603326) (+ 9.69%), Chengxin Lithium Group Co.Ltd(002240) (+ 7.87%), Keeson Technology Corporation Limited(603610) (+ 5.76%), Fujian Yongan Forestry (Group) Joint-Stock Co.Ltd(000663) (+ 4.35%).
Important industry news:
\u3000\u30001. Dazzle Fashion Co.Ltd(603587) then throw the sports tide brand starter. Trend Sports Brand starter has recently completed a round C financing of US $40 million. This round of financing is led by QY capital and followed by old shareholders Sequoia China and M31 capital, including Dazzle Fashion Co.Ltd(603587) Dazzle Fashion Co.Ltd(603587) is not the first time to invest in starter. In October 2020, starter completed round B financing of USD 30 million and Dazzle Fashion Co.Ltd(603587) followed the investment. It is reported that after this round of financing, starter will accelerate the market brand promotion, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) business layout and the construction of a new retail system in Greater China. At present, the operation subject behind starter wechat and tmall flagship store is Xiamen one start sports, which used to be the Pledgee of Shenzhen new power sports Co., Ltd., whose holding company is black ant group. In 2019, starter opened tmall flagship store in China, and launched its first offline store in Beijing Xidan Dayue, officially entering the Chinese market. In the following six months, starter opened nearly 20 stores in more than 10 cities across the country. In November of the same year, starter China received 100 million yuan of a-round financing from Sequoia Capital China Fund. Starter’s target population in China is the “Z generation” represented by the post-90s and post-00s. According to public data, by the end of 2021, starter has opened nearly 100 stores across the country, covering Beijing, Shanghai, Guangzhou and Shenzhen and many new first and second tier cities.
\u3000\u30002. No. 1 central document is released on schedule. What are the highlights of cotton? The No. 1 central document issued by the market was released on schedule in February 22, 2022. The contents of this year’s document continue to follow the changes in the fundamental policy and market situation of the country. There are many new changes in the wording of “three rural issues”, especially in the aspect of cotton work, and in the same period, we must stick to the new situation. The document clearly proposes to improve the cotton target price policy. Since 2017, the state has deepened the cotton target price reform in Xinjiang. The target price will be fixed for three years. The price level will be 18600 yuan per ton from 2017 to 2019 and 18600 yuan per ton from 2020 to 2022. In 2021, the cotton market price was at an all-time high, significantly higher than the target price subsidy standard, so the subsidy procedure was not started. Facing the complex domestic and foreign cotton market situation since 2022, the historically high cotton price faces great downside risks, which highlights the significance of ensuring farmers’ cotton planting income and stabilizing cotton production. In addition, the target price of cotton in 2023 will be reformulated according to the changes of the market situation. Therefore, it is of great significance to continue to improve the target price subsidy for formulating a new target price policy next year.
\u3000\u30003. Bosden’s ESG rating was upgraded to BBB. Recently, Morgan Stanley adjusted bosden’s ESG (environmental, social and corporate governance) rating from “BB” to “BBB”, which is at the leading level in China’s textile and garment industry. The promotion of Bosideng’s ESG rating benefited from the excellent performance of the enterprise on issues such as product quality improvement, supply chain, employee welfare and social responsibility. As of fiscal year 2020 / 21, the brand has obtained 231 patents. Meanwhile, Bosideng, as the main drafting unit of GB / t14272 down garment national standard, has participated in the drafting and revision of a number of international, national and industrial standards, leading the development of industrial standardization. In fiscal year 2020 / 21, Bosideng participated in the “China brand day” and was selected into the “powerful brand project” of China Central Television. In 2021, Bosideng was also selected into the “top 50 global most valuable clothing brands in 2021” published by the international brand value evaluation authority brandfinance for the first time. As of fy2020 / 21, 49% of the purchased raw materials have been bluesign ® 95% of the cooperative suppliers have passed RDS certification, and 95% of the down used by the products have passed RDS certification, helping the brand build advantage barriers. With the continuous warming of the concept of ESG and the heavy pressure of the national “double carbon” policy, China’s textile and garment enterprises, as the second largest polluting industry after oil, ESG management is imperative. The promotion of Bosideng’s ESG rating fully demonstrates the strength of the brand’s sustainable development. At the moment of the surge of ESG, Bosideng performed steadily. In August 2021, Euromonitor International certified that Bosideng’s down jacket scale was the largest in the world. The semi annual report of fiscal year 2021 / 22 showed that Bosideng’s revenue and profit increased again. Bosideng’s ESG rating reached the best level in China’s textile and garment industry, It has played a good exemplary role in the industry.
Important announcement of the company: [361 °] positive profit forecast; [ Baoxiniao Holding Co.Ltd(002154) ] announcement on the guarantee provided by the holding subsidiary for its subsidiaries; [ Baoxiniao Holding Co.Ltd(002154) ] announcement on participating in online auction to purchase equity.
Investment suggestion: for the clothing and home textile sector, it is suggested to pay attention to Anta sports and Li Ning, the leaders of sportswear with higher prosperity and better competition pattern, as well as Chow Tai Seng Jewellery Company Limited(002867) , Bosideng, Ningbo Peacebird Fashion Co.Ltd(603877) .
Risk tips: 1 Real estate sales did not meet expectations; 2. The epidemic situation in China continues to occur repeatedly; 3. Intensified brand competition; 4. The epidemic situation in Southeast Asia may affect the production capacity release of the textile manufacturing industry; 5. The exchange rate fluctuates greatly.
