The A-share textile and apparel sector rebounded strongly, with many stocks hitting their daily limits
As we enter autumn, the traditional peak season for foreign trade clothing has arrived, even this year after the epidemic is no exception.
On Thursday, October 15, the market index fluctuated and weakened throughout the day. Individual stocks fell more than they rose. Only more than 40 stocks rose by more than 9%, and nearly 40 stocks fell by more than 9%. However, the market is highly differentiated and short-term sentiment continues to be sluggish. Among them, the A-share textile manufacturing sector continues to rise sharply. Jujie Microfiber, Huafang Co., Ltd., Xinye Textile, Blum Oriental and many other stocks hit their daily limit.
As of the close, the Shanghai Stock Exchange Index fell 0.26% to close at 3332 points; the Shenzhen Component Index fell 0.48% to close at 13624 points; the GEM Index fell 0.95% to close at 2737 points.
Since the end of September, the A-share textile and apparel sector has been soaring. According to Wind, the textile and apparel index has increased by 9.6% since September 30.
The number of companies hitting the daily limit continues to fall, Textile Bank leads the gains in the two markets
A total of 36 stocks hit the daily limit on the 15th, a decrease of 10 shares from the 46 stocks on the previous trading day. Among Shenwan’s 28 first-level industries, the textile and apparel sector rose 2.17%, ranking first. The parent company of Cotton Times, Wenjian Medical, closed its daily limit less than half an hour after the opening. Mask concept stocks Kute Intelligent and Blum Oriental both reached their daily limit shortly after the opening.
The market began to fluctuate after the holiday with continuous positive lines, and the market’s money-making effect began to decline. Recently strong sectors have also begun to adjust, such as photovoltaics and military industry. Individual stocks in the sector have begun to compensate for losses. However, the textile sector has suddenly emerged and become the leading sector in the two cities. Why is the textile sector starting at this time? There are several logics:
01
The “cold winter” that has not happened in 60 years has catalyzed the sales of winter clothing , the performance is expected to rebound
Since the end of September, the temperature in various places has dropped significantly. During the National Day, in the golden autumn season of October, some areas have felt a strong chill, unconsciously Autumn pants are starting to be worn; if the temperature is relatively low in the fourth quarter, it will be beneficial to the sales of winter clothing with higher gross profit margins, and the performance will be significantly improved; at the same time, the 21st New Year will be on February 11, so that the entire sales season will be The timing will be longer than last year; secondly, the La Nina climate this year may create a cold winter that has not been seen in 60 years. Double Eleven is approaching, resulting in a “hand-buying” event.
02
Golden Week and live broadcasts promote sales to continue to increase
Online sales in various industries in September improved faster than in August, with sportswear and home textiles achieving outstanding performance. Due to the demand for long holiday travel, the sales of outdoor shoes and clothing in September were very optimistic. The growth rates of sports shoes and clothing across the entire network reached 31% and 50% respectively. The home textile category is suitable for live streaming, so it has continued to perform better than the clothing category since the third quarter. In September, the growth rate of the entire home textile network reached 53%.
03
A large number of overseas orders are transferred to Chinese companies, and the order volume is scheduled to next year
The overseas epidemic situation is still severe. The textile industry in India, Sri Lanka and other countries has been hit hard and has difficulty in delivering goods. In order to ensure continuous supply, European and American retailers have transferred many orders originally produced in India to China. Among the orders transferred from India to China, orders for towels, sheets and other products are relatively large. According to estimated data, the current number of orders has been scheduled until May 2021.
When the epidemic broke out in China at the beginning of the year, some Indian media believed that the epidemic could cause more foreign investment to flow into India to reduce dependence on China’s manufacturing market and thereby replace China’s manufacture. However, India’s wishful thinking has been overturned. Whether it is the textile industry or infrastructure, India’s wishes have come true one by one.
Li Xingqian, Director of the Foreign Trade Department of the Ministry of Commerce, responded to the transfer of Indian textile orders to China at a media communication meeting yesterday. Li Xingqian pointed out that China is the world’s largest textile producer and Exporting countries have obvious advantages in exporting labor-intensive products. It is normal market behavior for multinational companies to adjust production orders globally and for international buyers to select suppliers based on production capacity. China took the lead in resuming work and production, effectively ensuring supply in the international market and supporting the smooth operation of the international industrial and supply chains.
04
Technology giants accelerate industrial change and reduce industry costs
Technology giants such as Alibaba, Huawei, Lenovo, and Tencent have made arrangements to accelerate the transformation of the clothing industry. When Alibaba announced Rhino Manufacturing’s entry into the apparel industry before, it said that the apparel industry already has a sales volume of 3 trillion in China and is one of the top three vertical industries in the consumer goods industry, and the service industryThe pain points of the industry are deep enough. The traditional business model of production and sales has caused huge waste. Alibaba can give full play to its advantages to promote the industrial upgrading of the clothing industry.
In fact, in addition to these technology giants in the market, some cutting-edge technology companies have already made achievements in smart clothing manufacturing. For example, the underwear brand “Jueyi” uses big data and intelligence to Manufacturing, reshaping the clothing supply chain, achieving high turnover, low inventory or even almost zero inventory. Xindong Technology was established in 2018. An ultra-precision 3D digital material simulation technology created in cooperation with the China Textile Information Center allows fabrics to take advantage of digital technology, helping companies quickly virtualize product display and zero-cost pre-sales, reducing fabric costs. It saves 50% of R&D costs and 70% of marketing expenses for manufacturers and brands, and shortens the delivery cycle by 90%.
05
The position of the sector is relatively low, the value is low, and there is a demand for supplementary growth
The current valuation level of the textile and apparel sector is below the historical valuation center. With the marginal improvement of sector performance, there is still room for upward valuation in the future. Within the scope of large consumption, the sector is still The low valuation and the relatively low position of the sector provide certain investment opportunities compared to other sectors.
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