Textile and Garment 2013 Annual Report and Quarterly Report Summary

1. Growth ability: High-end apparel, men's and men's shoes, and mass leisure are all undergoing adjustments. The growth rate of home textiles sales has slowed to single digits, and domestic-made watch brands have maintained a relatively high growth rate. (1) Terminal demand is poor. All apparel and home textiles are affected by the big environment. The income of companies with direct sales declines relatively slowly, while the cost rigidness drags down the profit margins. As the previous two years, there was a greater adjustment in the income of goods under pressure; (2) Companies that were mainly affiliated with the franchise business had an adjustment process for the franchisees to inventory, and the first adjusted performance first rebounded (such as Mengjie Home Textiles' 13 year performance, 14th Anniversary of Annals of Good News, 14-year performance of Rollei Home Textiles Co., Ltd.; but even after the rebound, the income has returned to the original high growth of more than 20%; (3) The two domestic sub-sectors of watch brands and home textiles are significantly better than other segments. industry.

2. Profitability: The existence of economies of scale led to the decline in high-end shopping malls, men's and men's shoes, and mass leisure. Home textiles and mid-range domestic watch brands have improved. (1) Companies dominated by direct sales are still delisting in 13 years and 14Q1, and terminal discounts have been increased. This directly leads to the decline in the gross profit margin of such companies, such as several high-end brands, Jiumu Wang, etc.; (2) Wholesale-oriented companies have emphasized the integration of the supply chain system for 13 years (the unreasonable procurement of destocking), gross profit margin is still slightly increased, such as Septwolves, Lilang, Home Textiles, etc.; we estimate that the process is basically at 14,15 The end of the year; (3) The net profit margins of high-end brands, men's and men's shoes, and general casual (except Senma clothing) have both declined due to falling revenue and rigid cost.

3. Operating capacity: Most of the inventory and receivable turnover rate showed a downward trend. (1) Receivables turnover: Volkswagen Leisure (except Soutel), home textiles, high-end direct-operated brands such as Lanzi and Libang, watch-based mainly Fiyta and Hendry turnover More than 10 times; (2) In addition to Jiumuwang, the wholesale-oriented men's men's shoes have a relatively low number of turnovers, and further declines in 13 years compared with 12 years, further increasing the credit for the downstream; (3) inventory turnover rate: high-end watches The turnover rate of retail and high-end shopping mall brands is generally within 1 and has shown a decline in the past two years. (4) Popular leisure has the fastest turnover rate and 13 years of improvement due to the characteristics of the industry itself; The turnover rate of shoes is between the mass leisure and high-end brands, but the inventory turnover rate of the affiliate channel shows a further decline in inventory turnover.

4. Driving factors: Most of the channels have been adjusted, and the brands whose channels are still in a healthy increase are rare. The e-commerce business has been advancing rapidly. (1) Apparel and Home Textiles The 13th year offline channel focuses on channel rectification and closing of unprofitable stores. Most of the brands showed a net closure of channels in 2013, with an increase mainly in home textiles, watches, etc., and only a net increase in the main brand of Baoxi Bird in men's clothing. (2) The rapid development of e-commerce, online business to stimulate revenue growth. In 2013, all companies increased the pace of expansion of their online business. Outdoors, home textiles and other sub-sectors were suitable for online channel sales because of their higher level of product standardization, and their rapid development in 13 years. Such as Pathfinder, the proportion of online income in the 13 years reached 19.3%, Fu Anna 15.1%, 12% of Rolle, 10.5% of seven wolves and so on.

5. Maintain the industry's “carefully recommended” rating: We believe most of the apparel in the first half of 14 years.

Home textile companies are still in the adjustment phase, but expectations for such adjustments have been made. In the context of a poor environment, companies are also seeking various breakthroughs, such as raising the level of supply chain management to reduce the cost of unreasonable production processes and improving product quality, using affluent cash on the books to find potential M&A opportunities, acting for foreign brands, or Derive new brand on the original basis, integrate online and offline, and expect to build a platform based on this. From the perspective of individual stocks, we continue to maintain FIYTA's (self-owned brand driving stable growth, low total market capitalization, stock price at the bottom), Summa apparel (look for the development of children's wear field, growth indicators in apparel stocks), Pathfinder (Online development is fast, in the long term it depends on industry integration and development, and the construction of an “outdoor travel comprehensive service platform”), Haishu Home (Continuation of channel expansion, increase in buyout model, change in proportion, 16 years later, new Growth-driven need to observe), Fu Anna (well-managed, stable performance, low valuation) recommended rating; from the performance flexibility point of view, we continue to recommend the Annunciation (13 years of complete inventory, HAZZYS rapid development, 14 years is expected to achieve more than 70% of High growth).