Textile and garment export data in December: China’s textile export volume in December 2021 was US $14.284 billion, with a year-on-year increase of 16.21% in December, an increase of 6.20 PCT compared with the year-on-year increase in November, and a cumulative year-on-year decrease of 5.60% from January to December. The export volume of clothing and clothing accessories was US $15.927 billion, with a year-on-year increase of 14.50% in December, 8.32 PCT slower than that in November, and a cumulative year-on-year increase of 24.00% from January to December.
USDA monthly report on cotton production, sales and inventory in January 2022: according to the forecast of USDA monthly report in January 2022, compared with December 2021, the global cotton production forecast in 2021 / 22 is reduced by 132000 tons, consumption is reduced by 6000 tons, import is reduced by 83000 tons, export is reduced by 84000 tons, and ending inventory is reduced by 158000 tons. China’s cotton output and consumption in 2021 / 22 are predicted to increase by 55000 tons and decrease by 109000 tons respectively compared with December 2021.
Market review: textile and garment sector: last week (January 10 to January 14, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index rose or fell by – 1.63%, – 1.35% and – 1.98% respectively, and the textile and garment sector fell by 0.40%, ranking 15th among 31 Shenwan industries; Among them, the textile manufacturing sector rose 0.03%, and the clothing and home textile sector fell 0.79%. In the past month (from December 15, 2021 to January 14, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index rose or fell by – 3.83%, – 6.52% and – 6.40% respectively, and the textile and garment sector rose by 3.08%, ranking fifth among the 31 Shenwan industries. Cosmetics sector: the cosmetics sector fell 2.50% last week, underperforming the CSI 300 index by 0.52pct. The cosmetics sector fell 18.69% in the past month, underperforming the CSI 300 index by 12.29pct. Compared with 31 industries of Shenwan level, the cosmetics sector ranked 22nd in terms of rise and fall over the past week and 32nd in terms of rise and fall over the past month.
Industry news: UNIQLO’s market performance in Greater China in the first quarter of fiscal year 2022 was sluggish, and its revenue decreased slightly by 0.80% year-on-year; Lululemon announced to cut its revenue and profit outlook for the fourth quarter; Nextplc, the largest online clothing group in the UK, raised prices; Shiseido China has decided to sell its Za Jirui and Bomei brands; Two of the five cosmetics testing institutions randomly sampled by Shanghai market supervision bureau were ordered to make corrections within a time limit; P & G is acquiring Tula skincare, a high-end skin care brand.
Investment suggestions: 1) textile and garment industry: in the short term, China’s consumption has yet to improve. Recently, scattered epidemics have occurred in many first tier cities, which is expected to suppress the overall consumption willingness. In the selection of individual stocks, we recommend paying attention to the brand targets related to sportswear with the continuous prosperity of the track and the catalysis of the recent winter Olympics, and continuously recommending Anta sports, Li Ning and Biem.L.Fdlkk Garment Co.Ltd(002832) with high-end positioning. In addition, we recommend new recommended brands and special step international with outstanding product upgrading effect and good sales growth momentum as shown in the performance forecast; In the field of non sportswear, it is recommended to pay attention to the leaders of undervalued sub categories, including home textile Luolai Lifestyle Technology Co.Ltd(002293) and men’s wear Baoxiniao Holding Co.Ltd(002154) . In terms of textile manufacturing, we continue to recommend Shenzhou International, Huali Industrial Group Company Limited(300979) , which has full orders, strong growth sustainability and a solid position as a high-quality head manufacturer. In terms of production capacity in Ningbo, the epidemic prevention and control of Shenzhou International is progressing smoothly, the impact is expected to be limited and normal resumption of production is in sight. 2) Cosmetics industry: the cosmetics industry maintains the previous view, and the short-term data is expected to be less surprised. In the medium and long term, we believe that under the background of increasingly fierce industry competition, domestic brands can increase their share by virtue of differentiated product power and more subdivided and localized brand positioning. We continue to recommend Proya Cosmetics Co.Ltd(603605) which actively improves product power, has strong operation ability, has formed a clear strategic layout of multiple large single product series, multiple categories and multiple brands, has high performance growth, has a stable position as a subdivision leader, actively expands new categories and effects, and actively increases brand investment to improve influence.
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.
