Investment Strategy - Maintain "Buy" Rating

Investment strategy - maintain "buy" rating

Textile sub sectors: the slump of external demand and the slump of cotton prices make the traditional textile sub industry boom still going downhill, but from the policy side, capital side and market sentiment, the undervalued cyclical stocks still have opportunities in the short run. Therefore, we suggest that we should pay attention to the ruthless A, which is too pessimistic, but the fundamentals can still grow steadily.

Clothing sub industry: the effect of rising demand and demand for early price increases gradually, and the early spring festival factors will weaken the industry's high growth in the first quarter.

Although the order meeting system has basically guaranteed the high growth of revenue in the first half of 12 years, the second half of the year will continue to focus on 3/4 months.

Stock price performance

This week, the Shanghai Composite Index rose 0.49%, while the textile and garment sector lost 2.14 percentage points, of which the textile and apparel sub sectors rose by 3.16% and 2.21% respectively.

Affected by policy and liquidity easing, this week's high resilient textile cycle stocks and stocks rose to a higher level, while higher valued brand apparel companies rose less.

We focus on the textile technology stocks such as yak technology, China silver cashmere industry, Huafu color spinning, and so on.

Raw material price

On Friday, the 328 cotton price index was 19353 yuan / ton, the weekly ring ratio rose 0.34%, the CotlookA index rose 0.50% this week and the zhengcotton main contract rose 1.30% (the main contract has been pferred from 1205 to 1209).

As of January 20th, China's cotton storage capacity has reached 2 million 476 thousand tons, accounting for the increasing proportion of domestic cotton circulation (in 2011 China's cotton output is about 7 million 300 thousand tons), and the cotton stored in the short term will not be put into the market, so it will support the spot price.

At the same time, the Spring Festival holiday has ended, cotton enterprises will start one after another, seasonal stocking has also led to a rebound in cotton prices.

Cotton price forecast: from a fundamental point of view, cotton prices are hard to say, but with the improvement of policy and capital side, the rebound of cotton prices will continue.

Risk warning

Export falls are more than expected; price rises are more demanding than demand.