July recovery in textile exports continued poor domestic sales

The performance of the sector was reviewed last week. The Shanghai Composite Index rose 1.12%. In the spinning sector, manufacturing gained 2.39% and clothing and home textiles rose 4.01%. Individual stocks, the first three companies led by the plate Lugang Technology, Rodger shares, Pathfinder, led the top three companies for the seven wolves, science and technology, Jialin Jie. In Hong Kong stocks, led by Hengdeli, Prada, Daphne International; led gains for Anta Sports, Rainbow Textile, and Libang.

Industry important data. (1) Cotton: The average price of 328 cottons is 19,210 yuan/ton (-0.06%); Cotlook A92.09 cents/lb (+0.24%); the difference between cotton prices inside and outside the country is 3,282 yuan/ton (-2.11%); Grade 137 Long-staple cotton: 28,580 yuan/ton (+0.28%). (2) Chemical fiber: polyester short 10352 yuan / ton (+1.50%), spandex 40D49100 yuan / ton (+1.24%). (3) Yarn: 32S cotton yarn 25841 yuan/ton (-0.03%). China will stop throwing storage on August 1. It will start purchasing the new cotton on September 1. It is expected that the domestic cotton price will remain stable during the temporary period of the policy in August; the international cotton price will continue to maintain consolidation. The difference between cotton prices inside and outside the country also fluctuates. The focus of the next week will be the USDA August supply and demand report; the weather factors before the listing of Xinmian are still hot topics of market volatility. In addition, the spandex conference held at the end of July had decided to increase some of the tight spandex prices, resulting in an increase in the market price of spandex; due to the lower growth rate of spandex production capacity, the industry has already been operating at full capacity. With the advent of the traditional peak season in September, the spandex market will continue to it is good. Exports: In July, the export value of Chinese textile products increased by 15.83%, and the growth rate rebounded significantly. Exports of footwear products fell by 2.33%. Poor domestic sales: In July, the retail sales of 50 large-scale retail enterprises increased by 4.2%, and the growth rate was significantly lower than that in June.

A, H shares and overseas important announcements and news. 1 Pathfinder: 2013H1 net profit increased by 63.12% year-on-year (mainly because income tax rate was reduced to 15%), which was expected; 2 Jiumu Wang: H1 net profit decreased by 14.03% (mainly due to income tax rate increase to 25%); 3 hundred rounds of pants industry : H1 revenue decreased 16.89%, net profit fell 26.86%; 4 Weixing shares: H1 net profit increased 10.35%, the company's forecast range of January to September net profit growth rate of 0% -30%; 5 Vosges shares: H1 net profit increased 48.07 %, gross margin 22.05%, a significant year-on-year increase of 7.05PCT; 6 Lutai Textile: investment of 2 million US dollars to set up subsidiaries in the United States; 7 Rainbow Textile: H1 holders' profit attributable to the surge of 207.8%, mainly low-cost cotton Reserve-driven; 8 Anta Sports's net profit fell 18.7%; 2014Q1 ordering meeting growth rate for high single-digit growth, for the first time since 2012Q3 positive growth.

Maintain neutral rating. Combined with terminal tracking data, terminal retail growth in July will be lower than in June (50 data July data has been confirmed, see the main text), although the plate rebounded last week, but we believe that the July data is not enough to become a catalyst for stock price rise. From the data of sold rates, the data of the upcoming 2014Q1 trade fair for menswear companies will not be too optimistic. In general, we maintain the industry neutral rating. From the semi-annual report point of view, some companies that have taken the lead in clearing stocks and dumping packages have shown elasticity, such as Summa apparel; and companies with poor balance sheets last year will appear in the income statement this year. On the stocks, brand apparel, the first deduction Summa costumes, shares of Latitude, followed by rich Anna, Luo Lai home textiles. For manufacturing companies, they are still in a weak recovery phase. Both Blum Orient, Huafu Color Spinning, Vosges shares, Lianfa shares, and Rainbow Textile all testify to the weak recovery pattern of the cotton spinning industry, combined with order tracking, and the first three quarters. No doubt high growth, Q4 still need to observe the situation of orders, preferred Lutai A, followed by Huafu color spinning and so on.