Intensified competition in service industry

Industry investment logically combing the textile sub-industry - big logic to support the leading companies in 2015 to achieve good results: In the first half of 2014 affected by the expected decline in cotton prices, the cotton textile industry chain is clearly digesting inventory, the implementation of the direct implementation plan at the end of July New cotton listing in September is expected to lead to a sharp downward trend in cotton prices around October. If the follow-up cotton prices stabilize, the entire cotton textile industry chain will return to normal operating rhythm, and the demand for restocking will be good for leading companies, according to our study. Analysis of the continued recovery in overseas demand, the end of the *** appreciation cycle, and accelerated integration within the industry will effectively support the investment logic of leading textile companies such as Luthai A, Blum East, and Huafu Color Spinning. Accelerated integration within the industry will, on the one hand, benefit leading companies, and on the other hand, weaker companies will accelerate their transition and enter new industries, manifesting themselves in the capital market, highlighting the value of shell resources and the emergence of M&A-like subject investment opportunities. We have sorted out textile companies with a market capitalization of less than 3 billion. We recommend focusing on the shares of Busen, Veken, Sanfang Lane, Taiya, and Fengzhu Textile, based on market capitalization, asset liquidity, and geographical scarcity.

Apparel sub-sectors - We believe that brand companies will continue to promote mergers and acquisitions within the industry in the second half of the year. It is recommended that we pay attention to Meisheng Culture, Seven Wolves, and Semir Clothing.

Industry dynamic tracking

Saturday: In the first half of 2014, operating income, net profit, and net cash flow from operating activities increased by -2.12%, 7.35%, and 319263.12%. The number of self-operated stores decreased by 94 compared with the beginning of the year; the number of distributors increased by 61. The sales revenue of online sales channels in the first half of the year was 121 million yuan, an increase of 84.38%, accounting for 13.82% of the company’s revenue.

Last week, the industry was relatively flat

Last week, the textile and clothing sector rose 2.11%, Shenzhen Component Index rose 4.00%, of which textiles, garment sub-sectors rose 1.33%, 2.90% last week; from the top ten stocks in the rise or fall, hundred pants industry, The M&A theme stocks such as Hangmin and other stocks continued to rise. They rose 15.86% and 11.76% last week, and the year-to-date cumulative gains were 82.91% and 41.24% respectively. The major stocks of Jiaxin Silk, Veken, etc., which had larger gains in the previous period, had a correction.

From the perspective of PE valuation, the textile and apparel segment currently has a PE of 16 times, corresponding to a 14-year predicted net profit growth of 18.86%. Relatively speaking, the sector's valuation is in the midst of the first-level sub-industry, which is slightly behind the median. s position.

The price of cotton continued to fall slightly. Last week, the price of cotton dropped by 0.26% to 17,138 yuan/ton. On August 1st, the Zhengzhou stock exchange No. 1 cotton contract 1505 (CF505) fell to 13,890 yuan/ton, which was the first time since October 2009 to fall below 14,000 yuan/ton.