Customs data released on estimates show that 1-2 months in 2010 total exports of Chinese textile 28.242 billion U.S. dollars, surged 28.98 percent year on year. Among them, total textile exports 10.159 billion U.S. dollars, up 39.47%; clothing and accessories total exports 18.083 billion U.S. dollars, up 23.75%; footwear total exports 5.314 billion U.S. dollars, up 23.6%.

Comments:

A strong rebound in February, one month up to 89%, substantially more than expected, low base is the main reason. Situation from a single month, February textile and apparel exports to 12.6 billion U.S. dollars, monthly growth rate reached 89.3% year on year, of which textile exports to 4.6 billion U.S. dollars in February, up 78.2%, apparel exports to 8.1 billion U.S. dollars in February, an increase of 96.3%. A strong rebound in February, a change of steady growth trend in January (January textile and garment export growth of 2.2%, textiles 18.2% growth rate, growth rate -5% clothing). We believe that in February with the January data, the huge gap exists primarily because in February 2009 the export of data is a V-bottom, 10-year low base led to a sharp rebound in February.

Last month, we export analysis also pointed out that in January 2009 China exports to the U.S. textile and apparel quotas abolished, leading to the high base in January, February issue of low base. From the look on a monthly basis, as the Spring Festival holiday, few days because, in February than in January textile and apparel exports up 18.83 percent decrease.

Export upward trend has been more obvious, the U.S. economic recovery needs to restore growth, the ASEAN Free Trade Area launched an export bright spot. Cumulative data from January to February, textiles and apparel exports made up 29% of the growth rate, indicating the current demand is in strong recovery, combined with our survey last week, “the fair”, and the recent prevalence of many export enterprises Order a sufficient labor shortage.

After a period of a year of digestion, the current European and U.S. textile and apparel inventory is low, the Chinese textile and apparel market in Europe and the United States has some rigid requirements of traditional, as consumer spending gradually eliminate psychological barriers, the U.S. economic recovery needs to restore growth. In addition, the January 1, 2010 officially launched the ASEAN Free Trade Area, ASEAN has become China’s fourth largest textile trade partner, in January of ASEAN exports growing much faster than other markets, demand for textile products from the ASEAN region will become the bright spot.

For the whole year will show a “high to low,” the trend of textile and apparel exports in 2010 5-10% growth. There are unevenly distributed monthly export growth situation, we expect will show a peak in the first quarter, remained pre-“the first quarter of 2010 related to corporate export honeymoon period” point of view. Chinese New Year late this year, means that enterprises must quickly early delivery in order to ensure that cargo can be in early April and the Easter holiday shelves, is to cause the first few months of this year above the normal level exports, with February Di base effect, so that exports this year show the trend of high to low. However, situation throughout the year, textile and apparel exports grew steadily throughout the year export growth is expected at between 5-10%.

Higher export growth increased by RMB appreciation pressure, increased industry concentration after the crisis, leading more obvious competitive advantage, recommendation Lutai A, Weixing, Huafu color spinning. The recent appreciation of the renminbi expected, labor costs, raw material price increases become a concern of many export-oriented textile industry of the three major problems. However, we found that, after the financial crisis, but good competitive advantage is more prominent, and survival of the fittest to make the industry more concentrated.

Order now big business recovery more fully, and increase bargaining power downstream, cotton and other raw materials is relatively low stock price, strong ability to resist risks, recommended the situation is constantly improving fundamentals, and after some time ago after the current callback PE valuation 10 years has dropped to between 15-20 times the industry leading enterprises, Lutai A, Weixing, Huafu color spinning, maintaining overweight.

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