In 2015, the development of the textile and apparel industry should grow lightly

We believe that in 2015, the retail market for apparel home textiles will maintain a steady growth; most of the new areas of corporate and new business development processes are still in the preliminary planning and even the conceptual stage, and it is difficult to make substantial contribution to the 2015 performance; the substantive effect of the e-commerce model on physical channel substitution It is the improvement of operational efficiency, the trend will continue, and the contribution of the e-commerce business to the company’s performance will also continue to increase. In recent years, the concrete results of the implementation of internal medicine operations such as the improvement of internal operational efficiency and the refined supply chain management are expected to be further reflected in 2015. The progress of corporate profits will be better than that of the income side.

2015 Terminal Retail and Enterprise Revenues Difficult to Improve Significantly

In 2014, the end retail sales and industry revenue growth rate declined slightly, but the steady state of the enterprises has become apparent. We believe that under the background of the downturn in China’s economic growth hub in the next few years, residents’ income and expenditures will remain stable in 2015, and the growth of the apparel terminal retail market will not be significantly boosted. It is expected that the terminal retail growth rate will be slightly higher in 2015. At 10%. 1) In 2014, the growth rate of household income and consumption expenditure decreased quarter by quarter, and the retail growth rate of the end of the industry fell slightly; 2) Although the revenue of most sub-sectors picked up from quarter to quarter this year, the overall growth in the first three quarters continued to decline compared to the same period in 2013; 3 ) The 2015 spring-summer trade fair data did not change significantly, reflecting the attitude of franchisees remained cautious.

Main Aspects of New Business Growth: Resource Matching Degree and Business Synergy

Apparel home textile companies are actively exploring new business growth points from broadening their existing product lines and entering new industrial fields. At present, the development of new businesses for most companies is still undergoing preliminary planning and implementation, even at the conceptual stage. Although long-term growth space is broad, It is difficult to make a substantial impact on the contribution of 2015 performance. We are relatively optimistic about companies that have a high degree of match between the company's control of resources and new business areas and have a high degree of synergy between traditional businesses and new businesses.

Industry model changes to promote operational efficiency

The essential effect of the transformation of the business model of the industry is the improvement of the operational efficiency of the company. 1) The replacement of e-commerce channels with physical channels continues. In the first three quarters of 2014, the retail sales of “50” and “100” apparels increased slightly by 1.5% and 1.7%, respectively. The decline rate of growth was higher than the overall level of zero clothing. During the same period, the scale of apparel category transactions in the b2c market increased by 53.40% year-on-year. 2) The contribution of the e-commerce business to the company's performance will also continue to increase. At present, the proportion of e-commerce revenues of listed companies is basically below 20%, and there is still much room for improvement. In 2015, the e-commerce business of apparel home textile companies is expected to maintain rapid growth.

Improvements in business efficiency

In 2014, companies improved their operating efficiency and achieved initial results. Among them, the growth rate of net profit growth in the three segments of men's wear, home textile and leisure was better than revenue in 2014. We believe that in recent years, the specific effects of the implementation of a series of internal medicine surgeries such as the improvement of internal operational efficiency and the refined management of the supply chain will be further reflected in 2015, and the profit-end improvement progress is expected to be better than the income-end recovery progress.

Investment Strategy: "One Avoidance" and "Two Main Lines"

Maintain industry "overweight" rating. It is suggested that companies that rely on the concept of “new growth” to boost their valuations in the previous period and have no real improvement in their actual performance in 2015 should be avoided. Actively Deploying 1. Enterprises with high matching of resources and new business areas and companies with high synergy between traditional businesses and new businesses. 2. The model transformation has progressed smoothly, the internal management reforms have achieved remarkable results, and high-quality targets have contributed substantially to the performance.