Apparel Industry: Businesses gradually pick up and seek transformation

Textile and Apparel Industry May 2015: Businesses gradually recover and seek transformation. April textile and apparel sector: outperformed the broader market, the index rose 20.09%, the Shanghai Composite Index rose 18.51% over the same period, the Shanghai and Shenzhen 300 rose 17.25%. In the SW industry, the textile and apparel sector rose by the eighth place, and was equal to March. The performance was still relatively good.

Retail: According to the statistics of the China National Business Information Center, the retail sales of apparel products of 100 key large retail enterprises nationwide increased by 2.1% year-on-year in April 2015, an increase of 1.0 percentage points from the same period of last year.

Imports and Exports: According to data from the General Administration of Customs, China’s textile and apparel exports totaled approximately US$19.876 billion in April, a year-on-year decrease of 16.33%, and an increase of 58.19% compared with the previous period. From January to April, total exports of textiles and garments totaled US$79.657 billion, a year-on-year decrease of 2.72%. Contrasting with the continuous decline in exports of textiles and garments, China’s cotton yarn imports are in stark contrast. From January to March 2015, China’s cumulative import of cotton yarn was 590,600 tons, a year-on-year increase of 15.26%.

Cotton price: Domestic cotton spot market prices continued to decline slightly. Trading at the end of the month was slightly active and the prices were basically stable. The average monthly price has declined from March. The international cotton market rose first and then surged. The decline in US acreage, lower stocks, and good exports have provided support for cotton prices, but India's inventories are still large and global demand is still slowly picking up, suppressing cotton prices.

Industry trends: Xinjiang introduced 9 items and 40 measures to increase steadily to support the textile industry to promote employment; Shandong will launch the “Internet + Textile and Apparel” campaign, with 200 brand names exceeding 200 in 2017; 117th Canton Fair impression: Transfer of textile and apparel orders to Southeast Asia The trend is obvious; in the first quarter of 2015, the major economic indicators of the printing and dyeing industry grew steadily.

Important announcement: Landsell’s share capital is increased to RMB15 million with its own capital, and after the capital increase, the company holds a 20% stake in the target company. Youngor intends to increase its capital to HK$200,000 in a wholly-owned subsidiary, Xinma International, with its own funds. After the completion of the capital increase, the registered capital of Singapore International will be changed to HK$293,971.22 million. Jinfeida intends to purchase 100% equity of Aojiajiao, and paid a total consideration of 2.65 billion yuan in transaction considerations, of which RMB 397.50 million was paid in cash, and the remaining portion was RMB 2.2255 billion to be paid by issuing shares. Luolai Business Consulting, a wholly owned subsidiary of Rolli Home Textiles, plans to use its own capital of 200 million yuan to establish industrial investment with Jiahua Yufeng. The Annunciation's wholly-owned subsidiary, Zhongxin Bird Ventures, plans to invest in the establishment of Xiaoyu Finance, which reported an investment of 55 million yuan and a 10% stake in Xiaoyujinfu.

Investment Strategy: After more than two years of adjustment, textile and garment companies gradually recovered and actively transformed. The enterprises in the textile manufacturing sector are relatively weak, and there are many enterprises that suffer loss in their main performance. Backdoor mergers and acquisitions have become the main way out. The differentiation of garments and home textiles is obvious. With the further acceleration of industry consolidation and the rising trend of bottoming in the industry, leading companies will benefit first. We are optimistic about the future development of stable companies, such as children's clothing, Summa clothing, outdoor equipment industry, Pathfinder, the layout of the noble birds of the sports industry, the layout of the Great Health Industry Youngor, as well as the lower valuation of the leading company Family.