April 22 social zero data: in April 2022, the total retail sales of social consumer goods fell by 11.10% year-on-year, lower than the consensus expectation of the wind market (5.77% year-on-year), the decline was 7.57pct higher than that in March, and the cumulative year-on-year decline from January to April was 0.20%. Retail sales of clothing decreased by 22.00% year-on-year from March to April, with a year-on-year decrease of PCT from March to April; The retail sales of cosmetics decreased by 22.30% year-on-year in April, with a decline of 16.00pct month on month compared with March, and a cumulative year-on-year decline of 3.60% from January to April.
USDA monthly report on cotton production, sales and inventory in May: according to the forecast of USDA monthly report in May, compared with April 22, the global cotton production forecast for the year 21 / 22 decreased by 381000 tons, the consumption decreased by 246000 tons, the import decreased by 74000 tons, the export decreased by 63000 tons, and the ending inventory increased by 59000 tons. The forecast of China’s cotton output in 21 / 22 remains unchanged, the consumption is reduced by 109000 tons, the import is reduced by 87000 tons, and the ending inventory is increased by 22000 tons. In May, the global cotton production forecast for the year 22 / 23 increased by 569000 tons year-on-year, the consumption decreased by 208000 tons year-on-year, the import increased by 456000 tons year-on-year, the export increased by 438000 tons year-on-year, and the ending inventory decreased by 180000 tons year-on-year.
Market review: textile and garment sector: last week (may 16-may 20, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by + 2.02%, + 2.64% and + 2.23% respectively, and the textile and garment sector increased by 2.88%, ranking 12th among 31 Shenwan industries; Among them, the textile manufacturing sector rose 2.63%, and the clothing and home textile sector rose 3.43%. In the past month (from April 20, 2022 to May 20, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index increased by – 1.49%, – 1.54% and – 1.39% respectively, and the textile and garment sector fell by 0.26%, ranking 10th among the 31 Shenwan industries.
Cosmetics sector: the cosmetics sector fell 1.52% last week, underperforming the CSI 300 index by 3.75pct. The cosmetics sector rose 10.57% in the past month, outperforming the Shanghai and Shenzhen 300 index by 11.96 PCT. Compared with the 31 industries of Shenwan, the cosmetics sector ranked 31st in the past week and 1st in the past month.
Industry news: the revenue of Canadian geese in the fourth quarter of fiscal year 2022 increased by 23.8% year-on-year; Burberry group’s revenue in fiscal year 2022 increased by 23% year-on-year; L’Oreal Group may acquire Swedish niche salon fragrance brand byredo; In 2022q1, the sales of high-end beauty products on China’s e-commerce platform increased by 11% year-on-year; CMF laboratory under Yige group, the parent company of Huaxi, was officially unveiled and put into use; Winona special care cream and ulike hair remover appear in Liu Zhenhong’s live studio in the form of soft implantation.
Investment suggestions: 1) textile and garment industry: in terms of downstream brand clothing, since March, the epidemic has continued to affect many first and second tier cities such as Shanghai and Beijing. The recovery speed of end consumer demand still needs to pay attention to the epidemic, especially the progress of prevention and control in Shanghai and other places. Brand clothing has reflected the negative impact of the epidemic in the first quarterly report. The manufacturing end is relatively stable, but it still needs to pay attention to the sustainability of subsequent orders, Clothing retail and export data in the second quarter are expected to be weaker than those in the first quarter. The short-term 618 promotion is coming. We will pay attention to the progress of sales performance and logistics recovery. In terms of target selection, on the one hand, it is recommended to pay attention to the sports clothing leaders with valuation correction in place, high base in the second quarter, sustained relatively high prosperity and clear long-term logic, including Anta sports, Li Ning and Tebu international. On the other hand, it is also recommended to pay attention to Biem.L.Fdlkk Garment Co.Ltd(002832) , the representative of high-end sports fashion less affected by the epidemic, Luolai Lifestyle Technology Co.Ltd(002293) with long-term stable leading pattern and steady growth. In terms of upstream textile manufacturing, we continue to be optimistic about the textile manufacturing leaders with global layout, strong bargaining power to customers and difficult to replace. We recommend Huali Industrial Group Company Limited(300979) , Shenzhou International with stable orders, global production capacity layout and continuous improvement of leading share. Furthermore, it is suggested to pay attention to the robust targets with high dividend yield and undervalued value.
2) cosmetics industry: we maintain the previous view that the industry supervision is stricter, the layout of international brands is increased, and the sales pressure on the channel side is affected by the epidemic, which continues to aggravate the industry competition. From the first and quarterly reports of the annual report, the brand side still shows a continuous upward trend in the sales expense rate, the diversified reform of channels is in progress, and the Rookies of e-commerce platforms are rising, and the brand is still facing the situation of retreat if it doesn’t advance. At the same time, the trend of consumer demand differentiation and the rise of national tide continues to exist, and continue to pay attention to the shaping and continuous breakthrough of Chinese brands in the product power of the core competitive elements. It is expected that the release of the epidemic situation will have a relatively large impact on the progress of logistics in the middle and lower quarters of the second quarter, especially on the recovery of logistics in Shanghai in August and April, although it is expected that the release of the epidemic situation will have a certain impact on the progress of logistics in the second quarter and the second quarter. We maintain the previous view and continue to recommend Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , etc. with strong product power.
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.
