Brand clothing: Sports continue to lead, and the valuation is basically close to the bottom of history. We look forward to the fundamental rebound and valuation repair after the epidemic is controlled
2021 harvest year of domestic products: after the Xinjiang cotton incident on March 24, 21, domestic brands received favor, superimposed with good epidemic control, released consumption power, Q2 society had zero growth rate, and domestic brands took the lead; In the second half of the year, affected by the repeated epidemic since August + flood + warm winter, the growth rate of the industry fell as a whole.
22q1 dual pressure restricts retail growth: from January to February, benefiting from the cooling of the south, retail performance is commendable, and clothing agencies grew by 4.8% year-on-year. However, due to the impact of risk control of multiple epidemics in March, the overall growth rate of the industry decreased significantly. Superimposed on the ultra-high base after 3 / 24, it put pressure on the growth rate of national brands from the last week of March to April
From the performance of various sub industries in 21 and 22q1: 1) sports local clothing leaders still lead: with the high growth of the industry itself (increased penetration), the accumulation of R & D advantages of leading enterprises (consumers’ functional requirements), and the high concentration of marketing resources (top events and athletes focus on leading brands), sports leaders continue to become the growth leader in 22q1, And continue to show a retail growth level higher than that of overseas brands; 2) A-share sports fashion: Biem.L.Fdlkk Garment Co.Ltd(002832) , Baoxiniao Holding Co.Ltd(002154) with the support of the increase in the number of stores and the improvement of the efficiency of the same store, they continued their strong growth trend; 3) Home textile three leaders: Shenzhen Fuanna Bedding And Furnishing Co.Ltd(002327) franchise delivery performance is excellent, and mercury e-commerce revenue growth leads. Although Luolai is slightly affected due to its headquarters in Shanghai, the decline in Q1 performance is also lower than that of most garment enterprises; 4) Outdoor: driven by camping economy, Comefly Outdoor Co.Ltd(603908) domestic and export sales increased at a high rate, and the performance exceeded expectations; 5) Men’s and women’s wear and casual wear: affected by the epidemic, Q1’s income declined, while rigid costs dragged down the profit performance, and the pressure on the profit side was more obvious
Recommended targets: 1) sports is still the most important main line: be optimistic about the sustainable potential of domestic product leaders in R & D, supply chain and retail management, and recommend Anta sports (22 / 23 valuation 26 / 21x), Li Ning (22 / 23 valuation 29 / 23x) and Tebu International (22 / 23 valuation 22 / 17x); 2) Bosideng is highly recommended at the moment: the annual report of 22 / 3 / 31 still maintained double-digit growth and the improvement of net interest rate under the pressure of warm winter. At the same time, the epidemic of 22 years was just in the off-season of its sales. In the new fiscal year of 23 / 3 / 31, the company will strive to expand the price band (especially light and thin down products) and continue to maintain the performance growth target during the new three-year plan. Therefore, the valuation of fy23 in the new fiscal year is only 15.5x, which is highly recommended; 3) A-share sports fashion leader: Biem.L.Fdlkk Garment Co.Ltd(002832) (estimated 16 / 12x in 22 / 23) and Baoxiniao Holding Co.Ltd(002154) (estimated 10 / 8x in 22 / 23) in active channel expansion; 4) In addition, outdoor faucet Comefly Outdoor Co.Ltd(603908) , home textile three faucets Luolai Lifestyle Technology Co.Ltd(002293) , Shanghai Shuixing Home Textile Co.Ltd(603365) , Shenzhen Fuanna Bedding And Furnishing Co.Ltd(002327) are also worthy of attention
Textile manufacturing: under the challenge of external environment, the sub industry leaders with strong orders and high production capacity stability showed higher than expected growth. From the demand and cost environment faced by 21 and 22q1:
In Q2, the export demand of some Chinese enterprises began to rise due to the outflow of outstanding orders in Q2; However, since the second half of the year, most Southeast Asian countries have tended to “coexist with the virus” and the degree of epidemic prevention control has been reduced. However, China’s 22q1 epidemic clearing policy is due to the short-term impact on the operating rate and logistics in some regions. Some enterprises reflect that some export orders have flowed out to Southeast Asia and India
Domestic demand orders are generally cautious: affected by the impact of the epidemic on retail in the second half of the 21st century, brands are more cautious in placing orders for the first order, and the trend is more obvious in the second half of 22q1
The cost of raw materials remained high: since the second half of 20 years, the cost of raw materials, energy and shipping has increased significantly, and 22q1 has basically remained at a high level. Under the background of rising cost, it is important for manufacturers to negotiate with downstream prices
The exchange rate was positive in March of 22 years: after the appreciation of RMB against the US dollar for two consecutive years, it began to depreciate in March 2022, from 6.3 to 6.6 from mid March to the end of April, with a depreciation of 5%, which is conducive to the thickening of the performance of export-oriented enterprises
21 and 22q1 exceeded expectations, mainly based on individual logic: 1) Huali Industrial Group Company Limited(300979) : the global leader in shoe making, and the revenue / profit of 21q4 increased by 34% / 37%. Although 22q1 had a short-term impact on the production capacity due to the outbreak of the North Vietnam epidemic in February, the annual expectation remained unchanged. The production capacity of the global sports shoes supply chain will continue to be in short supply in the next two years, and Huali will continue to be in short supply; 2) Zhejiang Jasan Holding Group Co.Ltd(603558) : cotton socks and seamless clothing are the leaders. Cotton socks are growing steadily. At the same time, under the upsurge of women’s sports, new customers are opening up smoothly and seamless orders are growing rapidly; 3) Zhejiang Xinao Textiles Inc(603889) : wool yarn is the leader. Due to the lack of backward wool textile manufacturing in Southeast Asia, there is no alternative capacity for the time being, and the demand for foreign trade is exploding; 4) Zhejiang Weixing Industrial Development Co.Ltd(002003) : zipper and button faucet have been paid more attention in the supply chain of major sportswear manufacturers by virtue of one-stop service, quick reaction ability and cost competitiveness in the second half of 20 years
Recommended targets: 1) manufacturing leaders of global production capacity layout: with the increasing stability of production capacity in Southeast Asia, leading companies with overseas production capacity have more vigorous orders and smoother production capacity release. Huali Industrial Group Company Limited(300979) (22 / 23 valuation 21 / 19x), Shenzhou International (22 / 23 valuation 27 / 21x), Zhejiang Jasan Holding Group Co.Ltd(603558) (22 / 23 valuation 15 / 11x), Virgin (22 / 23 valuation 8 / 6x), etc; 2) Enterprises whose raw materials and exchange rate are expected to bring performance flexibility: the recent trend of RMB devaluation is obvious, and the manufacturing companies with high export proportion and production capacity concentrated in China benefit the most. It is recommended that Zhejiang Xinao Textiles Inc(603889) (22 / 23 year valuation 7 / 6x); 3) Domestic subdivision leaders with strong substitution logic, such as Zhejiang Weixing Industrial Development Co.Ltd(002003) (22 / 23 year valuation 20 / 17x)
Risk warning: the epidemic repeatedly affects the delivery date of retail or production enterprises, the price fluctuation of raw materials and the unexpected fluctuation of exchange rate
