Market review: textile manufacturing is better than the market, brand clothing to restore confidence is sufficient.

The market has declined since the beginning of the year, and the downward range of A-share textile manufacturing is less than that of the market. In the past month, A-share brand clothing performed better than the market, reflecting the recovery of confidence in the second half of the year; from March to May 2022, affected by the epidemic, clothing retail double-digit decline, of which sports brands were less affected. Domestic textile exports rebounded rapidly to double digits in May. Vietnam's textile exports maintained a high degree of prosperity. Recently, raw material prices and exchange rates encountered inflection points, and the cost pressure of manufacturing enterprises can be controlled.

The first main line of investment: recovery after the epidemic, the fundamentals of the leading brand of the prosperous track rebounded.

1) Sports shoes and clothing is the evergreen racetrack. In 2021, the sporting goods industry is 371.8 billion yuan, with a CAGR of 14%, and the per capita consumption has several times the space of the developed countries. After the industry reshuffle, the leader stands out. Recent trends show that local leading brands actively expand their influence in new media and sports communities, regardless of brand strength or current growth rate, to achieve anti-surpassing of international brands.

2) in casual fashion, the down jacket industry maintains double-digit growth, in which Bosideng International brand has a strong potential and is expected to continue to meet the needs of functional upgrading and fashion upgrading, with sufficient growth potential in the medium and long term. Head middle and high-end men's wear growth, anti-economic cycle ability is better, good news bird group and Biyin Lefen active marketing to enhance brand influence, develop young, fashion, women category-driven growth.

The second main line of investment: be optimistic about the long-term growth of high-quality manufacturing enterprises.

The global garment / fabric factory scale is about 3.2 / 1.5 trillion RMB. China's textile exports account for 35% of the world, with a prominent position, accompanied by the migration of clothing and other terminal processing industries to Southeast Asia.

In the textile manufacturing sector, we suggest that we should actively pay attention to three main lines: first, deeply bind head sports brands, leading enterprises with strong competitiveness and abundant orders, Shenzhou International Group and Huali Group; second, under the background of high inflation overseas, locate high-end, strong anti-inflation manufacturing enterprises Lutai An and Shengtai Group Third, in the context of the upgrading of China's textile industry, it is expected to rely on the strength of differentiation to achieve domestic alternative invisible track champions Taihua Xincai and Weixing shares.

Investment advice: be optimistic about the rebound in short-term fundamentals and long-term competitiveness.

The consumer market and supply chain of China's textile and clothing industry have the leading attraction in the world, and the competition is fierce but the long-term space is also broad. In the short term, the recovery after the epidemic in the second half of the year is expected to lead to a rebound in fundamentals. We suggest that we should actively pay attention to the leading consumer brands that locate prosperous racing tracks, have strong brands and are expected to take the lead in recovery, as well as leading manufacturing enterprises with abundant orders, long-term competitive barriers and room for growth.

Key recommendations of Hong Kong stocksLi Ning Co. Ltd., ANTA Sports Products, Shenzhou International Group, Xtep International, Bosideng International, Topsports International Holdings LimitedA-share key recommendationHuali Group, Taihua New Materials, Weixing Co.,Biyin Lefen, the good news bird,Shengtai Group, Lutai A。

Risk Tips:Repeated epidemic situation, vicious competition among enterprises, exchange rate and raw material prices fluctuated greatly.