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Wu Xiaoyu: Why Is The Textile And Clothing Industry Suitable For The Trend And Medium And Long-Term Value Investment?

2011/5/17 14:23:00 49

Wu Xiaoyu Clothing Value Investment

In the post crisis era, the long term debt consumption pattern of external demand has been severely damaged.

Bankruptcy and bankruptcy

Nowadays textile export business is becoming more and more difficult and profit margins are getting thinner and thinner.

Facing the RMB appreciation, labor and raw material costs are always high.

Trade protection

More risks such as the intensification of the doctrine and the possible reduction of the export tax rebate rate, as investors, do we think that the textile industry has no investment value?


The answer is obviously negative.

In the long run, the clothing industry is more suitable for medium and long term value investment, and textile enterprises are more suitable for trend investment.

If you want to profit from investing in textile enterprises, first of all, A.


Textile Listed Companies in the stock market fall into three categories:


The first category is traditional processing and manufacturing enterprises, such as Lu Tai A, Weixing shares, hang min shares, etc. the success of such enterprises is to increase market share with scale advantage, and the power of performance comes from capacity expansion and cost effectiveness.

Their sales growth is generally lower than the performance growth rate, the valuation is relatively low, generally 10~20 times.

Such enterprises are sound in business and focus on sustainability of performance, so the possibility of explosive growth in their share prices is very small.

The best investment time of traditional processing enterprises is that it is more suitable for the defensive strategy when the market is overheated.


The second category is the resource enterprises, such as the Zhongyin wool industry, Huafu color spinning, Jia Linjie, Zhonghe stock and so on. These enterprises are highly capable of pferring their products because of the high grade of products, and they can also consider pricing power, so they are cashmere, wool and cotton.

Raw material

When it rises, it will show a very good stock price trend.

Textile enterprises have to pform and break through on the basis of continuing their main businesses. First, they are going from upstream to downstream. However, from the perspective of historical experience, these models are very difficult.

The two is to have pricing power. Although no textile company in China has full pricing power at present, if we can digest the cost pressure brought by the price increase of raw materials, we can regard this passive pfer capability as having certain pricing power.

The best investment time for such enterprises is to achieve high returns in the early stage of the rising price of raw materials.

When judging the investment time, we must combine the supply and demand of raw materials and the economic policies of different countries to make a comprehensive analysis.


The third category is the "non honest" enterprises.

Such enterprises do not do well because their own textile business is not prominent, or management is not very optimistic about the prospects of the textile industry, so they have different degrees of involvement in other areas with better profitability and larger space.

However, the fact is that the majority of textile enterprises involved in diversified development have not been effectively promoted in terms of their profitability and growth.

Investing in such enterprises suggests that investors should focus on short-term trend strategy. If the business of the enterprise is the key supporting area of current policy and the current hot spot of investment, then the probability of a sharp rise in share price will be great.

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