Textile and Apparel Industry: Textile and apparel export growth slowed down in September, and the trend will continue in the fourth quarter

Description of the incident: On October 14, 2010, the General Administration of Customs released the latest export data. From January to September, the cumulative export of textiles and garments was US$1,498.20 billion, an increase of 23.14% year-on-year, of which, textile exports were US$56.33 billion, an increase of 30.70% year-on-year. Its annex exports reached US$93.49 billion, an increase of 19.00% over the same period last year.

In the month of September, exports of textiles and garments totaled US$20.016 billion, an increase of 19.49% year-on-year, of which textile exports reached US$6.815 billion, a year-on-year increase of 20.19%, and apparel exports reached US$13.201 billion, a year-on-year increase of 19.13%.

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In January and September, the export data of the industry continued to increase from April, but the growth rate declined, and the monthly export value of textile and clothing decreased by 9.11 percentage points from the previous month. We believe that the slowdown in the growth rate of the industry's exports in September is mainly due to the following reasons: (1) The effect of restocking in Europe and the United States has gradually decreased. The European Union will set a fiscal austerity schedule to reduce the fiscal deficit. In August, the euro zone retail sales fell by 0.4% in August. In September, the manufacturing purchasing managers index hit a new low in January. Although the US economy has stabilized, the employment and credit markets have been slow to recover. There is a certain degree of restraint on consumer demand. (2) The increase in export prices affects the export volume. Although September raw material prices continued to climb (in September domestic 328 cotton prices 22,600 yuan / ton, an increase of 75.49%, an increase of 25.99%; polyester staple fiber price of 10,600 yuan / ton, an increase of 21.33%, a year-on-year increase of 10.44% ) The increase in wages, trade frictions, and pressures for appreciation of the renminbi caused by difficulties in recruiting companies have forced companies to increase the prices of their export products. However, some companies with weaker bargaining powers have chosen to use the pressure of rising costs. The breach of contract gave up the order, which weakened the effect of the increase in export value due to the increase in export prices.

2. We believe that the growth rate of exports in the fourth quarter will continue to operate at the falling channel. The reasons are as follows: (1) The rising prices of raw materials (cotton due to reduced production, increased demand, cotton farmers reluctant to sell, hot money speculation and other factors affect the skyrocketing prices, and then drive the price of chemical fiber products will rise) weakening China's export advantages, enterprises or increase exports Price or less orders, the increase in export prices to increase the risk of order transfer, and less orders directly reduce the export volume. (2) In August, the trade deficit between the United States and China expanded significantly, hit a record high, and accounted for 60% of the total trade deficit in the United States, which would increase the pressure of appreciation in the latter period. (3) The fiscal tightening effect in Europe has gradually appeared in the second half of the year, which will restrain the growth of domestic demand in Europe. (4) Foreign trade barriers are becoming more and more severe. The Toxic Substances Control Act and the Foreign Producer Legal Accountability Act recently passed by the United States are another measure taken by the United States to impose trade restrictions on China.

3. In consideration of the above reasons, we maintain the “neutral” rating on the industry. In the later period, we recommend investing in large export enterprises with strong bargaining power and stable order status, such as Luthai A, Huafu Spunbond, Rebecca, etc. The above company's "overweight" investment rating. (Tianxiang Investment Consultant Co., Ltd.)