Domestic And Foreign Cotton Price Difference Is Also Expected To Continue To Shrink The Gross Profit Margin Of Enterprises.

< p > announcement of the General Administration of customs, in February of 2013, China's a href= "//www.sjfzxm.com/news/index_c.asp" > textile > /a > and clothing export volume increased by 31.86%, of which 26.30% of textiles and 35.30% of clothing.

Exports to the United States increased by 15% in February compared with the previous year, while the value of exports to the EU increased by 9.9% in February compared with the same period in February.

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< p > USDA released the global monthly a href= "//www.sjfzxm.com/news/index_f.asp" > cotton < /a > supply and demand monthly report in March 8th. According to the report, the global cotton inventory consumption in the 12/13 year decreased from 77 in February to 76.

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< p > < strong > investment point < /strong > < /p >

< p > the export situation of textile and clothing is constantly improving, which is expected to be conducive to the 13 year sales growth of the company.

In terms of the monthly growth rate, the export volume of China's textile and clothing in February was significantly higher than that of last year or January. In February, the export volume of China's textile and < a href= "http://pop.sjfzxm.com/popimg/fz/index.aspx" > clothing < /a > the growth rate were 38.21% and 94.17% respectively, while the January and February February growth rates were 19.70% and 12.10%, 6.01% and -15.01% respectively.

The main reason is the sustained recovery of international market demand, especially the United States and Europe (which account for more than 30% of China's total exports), of which the US economy is recovering well and the European economy is beginning to stabilize.

Considering that the main business of the company is closely related to exports, most of the domestic sales accounted for 60% of the total are also indirect exports. Therefore, the expected export situation of our clothing exports is better. We think it will be beneficial to the 13 year sales growth of the company.

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< p > internal and external cotton price difference is expected to continue to improve, and is expected to benefit the company's 13 year gross margin.

The pricing of the company's products is mainly based on domestic cotton prices, but it will also consider the difference between the inside and outside cotton prices and give the customers a corresponding discount. Therefore, the reduction of cotton prices within and outside the company will be conducive to the improvement of the gross profit margin of the company.

USDA's cotton report shows that global cotton 12/13 inventory consumption is further improved than forecast.

At the same time, according to the global cotton planting intention data released by the International Cotton Advisory Committee in 13/14, the cotton planting area of 13/14 in the new year may be reduced by 9%, and the predicted annual output will be 23 million 200 thousand tons, which will be reduced by 2 million 699 thousand tons compared with 12/13.

After three consecutive years of oversupply and demand, global cotton is expected to have a more balanced supply and demand in 13/14.

These will effectively support the growth of foreign cotton prices in 13 years, and the difference between domestic and foreign cotton prices is expected to continue to shrink "/p".

< p > < strong > Finance and valuation < /strong > < /p >

< p > we expect the company's earnings per share for 2012-2014 years to be 0.35, 0.46 and 0.59 yuan, respectively, and maintain 1.39 times PB valuation for 13 years, corresponding to target price of 11.30 yuan, and maintain the company's buying rating.

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< p > < strong > risk warning < /strong > < /p >

< p > the risk of falling cotton prices; the trend of domestic textile and garment export warming is not up to the expected risk.

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