Textile And Garment Industry Benefits From Inflation And Consumption Upgrading

Main points of investment:

In the 08 years and 1-4 months, the total export volume of the industry reached 50 billion 323 million US dollars, up 15.32% from the same period last year, of which the textile industry grew by 25.13% compared with the same period last year, and the garment industry grew by 9.33% over the same period last year.

Exports to the United States fell sharply, and exports to the United States increased by only 0.20% in 1-4 months, with clothing exports falling by 6.89%.

The EU has become a hot area of textile and clothing export due to the cancellation of quota.

Exports to the EU rose to 33.19% in April.

In 2006, the proportion of clothing consumption in urban and rural residents accounted for 10.37% and 5.94% respectively, 0.58 and 0.27 percentage points higher than that in 2003, while urban and rural food expenditures decreased by 1.34 and 2.57 percentage points respectively during the same period.

Compared with the urban residents, the proportion of rural residents in clothing consumption accounted for the consumption expenditure was relatively low, and the difference between the two in 2006 was 4.43 percentage points.

In the future, with the acceleration of the urbanization process and the increase of the rural residents' income level, there is a big room for increasing consumption of clothing in rural areas.

Inflation has different effects on the profitability of enterprises in different periods. In the early stage of inflation, the price of raw materials increased and the price of products increased, and the inventory of enterprises was still at a low price, and the profits of enterprises increased.

Inflation has different effects on the cost of different types of enterprises.

Because the gross profit margin of brand channel companies is relatively high, the proportion of manufacturing cost is low, and the cost increase has little impact on the profit of enterprises. Besides, brand channel companies can easily pass the cost pressure through raising prices.

Inflation background, low, medium and high-end clothing can be partially raised by price or internal digestion to partially resolve the pressure of rising costs; in the context of consumption upgrading, in addition to 30% of the low-grade clothing, high-grade clothing will be significantly benefited.

Affected by unfavorable factors such as export obstruction and rising cost, the overall situation of the textile industry in the past 08 years is not optimistic. It is suggested that companies with higher export dependence and upstream spinning and weaving enterprises should be avoided.

We should focus on the investment opportunities of garment industry in the context of inflation and consumption upgrading.

We are optimistic about domestic consumer oriented companies with high gross profit margins and terminal brands with brand and sales channels.

The proposed varieties include Weixing shares and seven wolves.