Social zero data from January to February 2022: from January to February 2022, the total retail sales of social consumer goods increased by 6.7% year-on-year, higher than the consensus expectation of the wind market (4.6% year-on-year), and the growth rate increased by 5.0pct compared with December 2021. The growth rate of clothing retail sales was – 12.2% year-on-year in 2021; The retail sales of cosmetics increased by 7.0% year-on-year, an increase of 4.5pct compared with 2.5% in December 2021. Overall, the consumption growth rate of social zero, clothing and cosmetics recovered from January to February, but the national epidemic has shown a multi-point distribution trend since March, which is expected to have an adverse impact on offline passenger flow and overall consumption confidence. In the future, we still need to pay more attention to the progress of epidemic prevention and control and consumption demand.
Market review: textile and garment sector: last week (March 14 to March 18, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by – 1.77%, – 0.95% and – 0.94% respectively, and the textile and garment sector fell 3.11%, ranking 25th among 31 Shenwan industries; Among them, the textile manufacturing sector fell 2.42%, and the clothing and home textile sector fell 2.69%. In the past month (from February 16, 2022 to March 18, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by – 5.66%, – 7.62% and – 7.27% respectively, and the textile and garment sector fell by 6.98%, ranking 19th among 31 Shenwan industries.
Cosmetics sector: the cosmetics sector fell 3.28% last week, underperforming the CSI 300 index by 2.34pct. The cosmetics sector fell 1.13% in the past month, outperforming the CSI 300 index by 6.14pct. Compared with 31 industries in Shenwan, the cosmetics sector ranked 27th in the past week and 5th in the past month.
Industry news: Italy fashion group Prada2021 sales increased 8% in 2019 compared with the previous year, while sales in Chinese mainland increased by 56% compared with 2019. Loewe, a Spanish luxury brand, and on, a Swiss sports brand, launched their first co branded capsule series; The State Food and Drug Administration issued a circular on the disposal of the ability evaluation results of the inspection and testing institutions for the registration and filing of cosmetics; Hamay Huamei, a beauty collection store, was fined for selling small sample cosmetics whose labels did not meet the regulations Shanghai Jahwa United Co.Ltd(600315) held “to beauty and ingenuity – 2022 Strategy Conference”; The parent company of PMPM, a cutting-edge skin care brand, won a new round of financing.
Investment suggestions: 1) textile and garment industry: since March, the epidemic has spread all over the country, which has had an adverse impact on the recovery of terminal passenger flow. Although the social zero data from January to February has improved, it is estimated that the retail data in March will be adversely affected by the epidemic and is expected to be under pressure. We continue to suggest that from the perspective of sound defense, we should pay attention to the related targets of undervalued and high dividend yield in the field of textile and clothing (see the attached table for details). In terms of stock targets, we have long recommended brand targets related to sportswear with the sustained prosperity of sports track and the catalysis brought by the Winter Olympics. Recently, the sportswear sector of Hong Kong stock market has fallen due to the follow-up events of Xinjiang cotton, and there may be capital game outside China in the short term, but based on the good investment time point in the long term, we continue to recommend Anta sports, Li Ning and Tebu International; In the field of non sportswear, the consumption toughness of high-end category is strong. It is suggested to pay attention to the leaders of undervalued value of subdivided categories, including Luolai Lifestyle Technology Co.Ltd(002293) , Biem.L.Fdlkk Garment Co.Ltd(002832) , Baoxiniao Holding Co.Ltd(002154) . The performance of textile manufacturing in the past 21 years has gradually become clear, and Huali Industrial Group Company Limited(300979) , Shenzhou International have been recommended for a long time.
2) cosmetics industry: the cosmetics industry maintains the previous view. The general environment of intensified industry competition, increased layout of international brands, differentiated consumer demand and stricter industry supervision still exists. It is considered that Chinese brands still need to make continuous innovation and breakthrough in product strength. We believe that companies with large product accumulation and strong product strength will perform more prominently. We continue to recommend Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) and so on.
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.
