Spin The export situation of the garment industry in the first half of 2012 is weak, and the domestic sales growth rate has dropped. It is estimated that the textile manufacturers' operating conditions are still not optimistic in the second half of the year, and the retail sales are expected to drive the improvement of garment retailers. In 2012 1-6, China's textile and clothing exports increased by 1.63% over the same period, and the cumulative growth rate continued to decline. Due to no obvious improvement in the order of enterprises, it is expected that the textile manufacturing enterprises will not be optimistic in the second half of the year. In terms of domestic sales, the total retail sales volume of textile and garment industry increased by 16.9% in 1-6 months, although it has dropped somewhat compared with the same period last year, but it is better than the first quarter. In June, the total volume of textile and clothing industry grew by 20.2% year-on-year, a record high in recent years, indicating that the retail terminal is warming up month by month. The consumption growth rate is expected to increase steadily in the second half of the year, and the sales rebound will lead to the improvement of the garment retailing business.

Development trend: the rise of e-commerce, the era of service winning. (1) online shopping is coming. Clothing is the first category of online shopping. In 2011, the scale of clothing online shopping in China amounted to 204 billion 900 million yuan, and women's clothing accounted for 41%. The brand name and traditional brand of online shopping were evenly distributed; men's clothing accounted for 15%, while traditional line brands occupied most of the country, and the brand effect showed the value. Because of its heavy shopping experience and strong brand stickiness, high-end women's wear and business casual men's clothing are less affected by foreign brands and online shopping, so the industry outlook is positive in the future. (2) from the perspective of the development trend of the industry, we believe that the garment industry is changing from "channel to King" to "service is king".

Investment strategy: future brand clothing The driving force of business growth still comes from two aspects: extension and expansion, and endogenous growth. However, we should be vigilant against "investment trap" and suggest that we should layout "leading white horse" and pay attention to "elastic varieties". (1) be vigilant against "investment trap": investors need to be vigilant against the deterioration of financial statements brought about by excessive channel expansion, specifically as accounts receivable rises, prepaid accounts rise, operating cash flows deteriorate, inventory accumulation in direct and franchisees is accumulating, and companies have to deal with off-season stocks through discount sales, resulting in a decline in gross margin and a rise in rate of fees, resulting in a decline in net profit margin. (2) layout "leading white horse": the men's wear industry has maintained steady growth, and the inventory situation is relatively benign. Statements of key companies are steady, leading enterprises have capital advantage and scale effect. In the short term, the high growth of China Daily will result in a high growth rate in the autumn and winter of 2012, and the performance in the second half of this year can be expected. In the long run, leading enterprises are going their own way to promote brand power, and the gross margin level is expected to continue to increase year by year. (3) pay attention to "flexible varieties": the home textile industry is still in the development stage of the industry's life cycle, and its long-term prospects are good. Since the second half of 2011, domestic textile has been in the process of digestion channel inventory. The 2012Q2 terminal situation has improved compared with the first quarter, and the inventory situation has gradually improved. The second half of this year is accompanied by the gradual emergence of the cardinal effect, and the boom is expected to hit bottom.

Recommend the company: from the valuation point of view, the current brand clothing (except textile surface accessories) corresponds to the average valuation in 2012 about 22 times; outdoor and daily chemical industry valuation is relatively high, close to 40 times; men's clothing and home textiles average valuation is about 20 times; casual wear valuation is about 18 times. We look forward to 3 men's leading white horse stocks: (1) Seven wolves To increase the smooth development of the future, "wholesale" to "retail" to strengthen the terminal control; (2) nine Mu Wang: to build high-end brand men's clothing in China, the proportion of direct business is high and business is steady; (3) reporting birds: the two venture will enter a fast growing period, and multi brand strategy will enhance the future value. Pay attention to flexible varieties: (4) Roley home textiles: as the leader of home textiles, it has strong market competitiveness and resilience in the second half of the year. At the same time, it can hold potential growth stocks for a long time: (5) Shanghai Jahwa: the brand development plan is appropriate, and the cooperative business of the king has become a new growth point in the second half of the year; (6) the high end women's clothing brand of multi brand and strong design enjoys the high growth feast of the industry.