At present, the raw materials are fluctuated at low levels and retail prices are high. The China Cotton Price Index (328) recently fell by 2.28%, continuing to show a trend of low volatility. In September, the clothing PPI rose by 4.54% year-on-year, a slight decrease from the 4.64% in August, and the overall trend of high-end shocks since the third quarter continued. The consumer price index (CPI) for the month of September rose by 3.4% year-on-year, which was a 2% increase from the 3.2% in August. This was the highest number since the 2002 increase.
The increase in prices has accelerated the growth of retail sales. In September, the retail sales of clothing, shoes, caps, knitwear, and textiles above designated size increased by 27.6% year-on-year, which was 5.7 percentage points higher than the 21.9% in August, and the growth rate reached a new high since February. The export growth rate of textile and garments fell again. In September, the export value of textile yarns, fabrics and products increased by 16.64% year-on-year, and the growth rate decreased significantly from 25.24% in August, reaching the low point since March. Clothing exports amounted to US$15.033 billion, up 13.88% from the same period of last year, which was a sharp drop from the 26.91% increase in August. The textile and garment export situation is still not optimistic.
The growth rate of apparel output continues to fall, but the turning point can be expected. In September, the accumulated investment in fixed assets of the textile, clothing, shoes, and cap manufacturing industries increased by 40.50% year-on-year, a decrease of 1.6 percentage points from 42.10% in the previous eight months, and the growth rate slowed but remained high. Cloth production increased by 11.25% year-on-year, 0.41 percentage point higher than the 10.84% ​​in August, and destocking is still underway. Clothing production increased by 6.41% year-on-year, down 1.39 percentage points from 7.80% in August.
In terms of investment strategy, it is advisable to look for companies that can sustainably raise prices. Taking into account the impact of the overall macroeconomic environment and price increase on sales volume, we believe that the acceleration of apparel retail price is expected to slow down at the end of the fourth quarter. Regarding the textile and apparel industry investment opportunities, we believe that the structural price increase resulting from the upgrading of product structure and the expansion of branded consumption is more sustainable, and remains the most noteworthy investment opportunity, maintaining the industry’s “look†rating. The proposal focuses on locking up high-growth branded apparel and home textile sub-sectors ahead of schedule. We continue to favor investment targets with decisive growth under the dual drive of benign expansion and connotation growth. What is important is not only the outbreak of short-term performance, but also the long-term sustainable growth ability based on the company's management capabilities. Taken together, we recommend Pathfinder, Sutut, Summa Costume and Baoxin Bird, which have been confirmed by high growth rates and have valuation advantages.
Risk Warning: The continuous increase in labor costs and commercial rents, macroeconomic declines have hit consumer confidence, the appreciation of the currency and the economic crisis in Europe and the United States have exceeded expectations, and policy tightening has exceeded expectations, leading to higher costs.
The increase in prices has accelerated the growth of retail sales. In September, the retail sales of clothing, shoes, caps, knitwear, and textiles above designated size increased by 27.6% year-on-year, which was 5.7 percentage points higher than the 21.9% in August, and the growth rate reached a new high since February. The export growth rate of textile and garments fell again. In September, the export value of textile yarns, fabrics and products increased by 16.64% year-on-year, and the growth rate decreased significantly from 25.24% in August, reaching the low point since March. Clothing exports amounted to US$15.033 billion, up 13.88% from the same period of last year, which was a sharp drop from the 26.91% increase in August. The textile and garment export situation is still not optimistic.
The growth rate of apparel output continues to fall, but the turning point can be expected. In September, the accumulated investment in fixed assets of the textile, clothing, shoes, and cap manufacturing industries increased by 40.50% year-on-year, a decrease of 1.6 percentage points from 42.10% in the previous eight months, and the growth rate slowed but remained high. Cloth production increased by 11.25% year-on-year, 0.41 percentage point higher than the 10.84% ​​in August, and destocking is still underway. Clothing production increased by 6.41% year-on-year, down 1.39 percentage points from 7.80% in August.
In terms of investment strategy, it is advisable to look for companies that can sustainably raise prices. Taking into account the impact of the overall macroeconomic environment and price increase on sales volume, we believe that the acceleration of apparel retail price is expected to slow down at the end of the fourth quarter. Regarding the textile and apparel industry investment opportunities, we believe that the structural price increase resulting from the upgrading of product structure and the expansion of branded consumption is more sustainable, and remains the most noteworthy investment opportunity, maintaining the industry’s “look†rating. The proposal focuses on locking up high-growth branded apparel and home textile sub-sectors ahead of schedule. We continue to favor investment targets with decisive growth under the dual drive of benign expansion and connotation growth. What is important is not only the outbreak of short-term performance, but also the long-term sustainable growth ability based on the company's management capabilities. Taken together, we recommend Pathfinder, Sutut, Summa Costume and Baoxin Bird, which have been confirmed by high growth rates and have valuation advantages.
Risk Warning: The continuous increase in labor costs and commercial rents, macroeconomic declines have hit consumer confidence, the appreciation of the currency and the economic crisis in Europe and the United States have exceeded expectations, and policy tightening has exceeded expectations, leading to higher costs.
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