In this special report, we review the epidemic situation in 2020 and compare the trend of the sector under its influence with the impact of the current epidemic on the textile and clothing sector, in order to answer the following questions:
What impact will the epidemic cause in 2020? What are the different effects of the outbreak in 2022? At the beginning of 2020, covid-19 epidemic caused the downturn of social consumption. At the beginning of 2022, the epidemic broke out in Jilin, Shanghai, Guangdong and other places. Due to the strong selectivity of the clothing and jewelry sector, the terminal fluctuation is greater than the overall consumption. The clothing knitwear / gold, silver and jewelry social zero: in April, they were - 22.8% / - 26.7% (total social zero - 11.1%), and from January to April, they were - 6.0% / + 0.2% (total social zero - 0.2%). Compared with 2020, the impact on the first and second tier cities under this round of epidemic is more obvious, and the e-commerce business is affected due to logistics restrictions.
After the impact of the epidemic in 2020, why are the sectors divided? How to view the performance of sports shoes and clothing at present? After the epidemic in 2020, benefiting from the improvement of residents' participation in sports, the catalysis of Xinjiang cotton incident and the encouragement of national policies, the fundamentals of sports shoes and clothing sector rebounded first, and the share price of the sector rose by more than 250% from 2021q2 to 2022q2. At present, affected by the high base and the epidemic situation, we expect the water growth rate of 2022q2 of the sector company to be under pressure. However, in the medium and long term, we judge that 1) the demand for sports shoes and clothing is expected to rise rapidly after the end of the epidemic, and 2) the sector still has good growth under the background of optimizing the competition pattern.
What changes have taken place in the competitiveness of brand clothing companies after the epidemic? 1) The role of e-commerce channels has changed. After the epidemic, online sales increased rapidly. By the end of 2021, the online retail sales of physical goods accounted for 24.5%. At the same time, the rise of live e-commerce and social e-commerce has brought new business growth points. 2) Optimize the structure of offline stores. The clearance of inefficient stores and the improvement of channel quality. At the same time, in order to improve channel management and control, some companies strengthen DTC construction. 3) After the epidemic, the inventory quality of brand companies recovered rapidly. In the first half of 2020, the inventory turnover of all brand companies deteriorated. However, after the second half of the year, the inventory turnover of the company recovered significantly due to the recovery of terminal demand and the company's efficient inventory removal measures.
What changes have taken place in the competitiveness of manufacturing companies after the epidemic? 1) Downstream demand in Europe and the United States has recovered steadily, upstream production capacity is tight, and orders flow towards a stable supply chain. In 2021, the total amount of China's garment exports increased rapidly by 23.9% year-on-year. At present, Vietnam and other overseas production capacity is relatively stable, and China's production capacity is at risk due to the fluctuation of the epidemic. 2) For manufacturers, stability is more important. ① The independent and integrated industrial chain layout of multiple places is expected to weaken the impact of the epidemic. ② Stable industrial cooperation is conducive to the stability of orders. In 2021, the top four customers of Shenzhou International accounted for 84% / Huali Industrial Group Company Limited(300979) top five customers accounted for more than 90%. Many leading manufacturers cooperate with head brands such as Nike, Adidas and puma. Under the fluctuating environment, it is expected to give priority to order resources.
What investment decisions should we make? Manufacturers [ Huali Industrial Group Company Limited(300979) , Zhejiang Natural Outdoor Goods Inc(605080) , Shenzhou International] with enhanced fundamental certainty are recommended in the short term, and the corresponding PE in 2022 is 27 / 26 / 28 times respectively. It is recommended that [ Biem.L.Fdlkk Garment Co.Ltd(002832) ] with stable water performance corresponds to 18 times of PE in 22 years. Recommend the target of high growth sports track [Li Ning, Anta sports and special step international], corresponding to 28 / 24 / 21 times of PE in 22 years.
Risk warning: the impact of covid-19 epidemic exceeded expectations; Exchange rate fluctuation risk; Store expansion was less than expected.
