1 Status: The company has continued to decline since 2018. After the nominal and actual social zeros in July, August and September, the stagflation was due to the Mid-Autumn Festival’s peak, the double eleven draining in October, and the clothing retailing. The actual and nominal social zero gap continues to widen. Per capita disposable income is still in the downtrend channel. 2 Future: The consumption cycle of 2018Q1 peaked downwards. In 2018, it was spent in the overheating period and stagflation period of Merrill Lynch, and it was close to the end. In 2019, it will spend more than half of the decline period of Merrill Lynch. The recession period will provide more policy space than the stagflation period, and the bottoming time of the real estate in 2019 will determine the actual start time of the post-real estate consumer goods and consumption cycle. We expect that the profit growth rate of industrial enterprises is expected to bottom out in the short period around the beginning of 2019, and the per capita income growth rate of one year after the lag period will recover with consumption at the end of 2019 or around the beginning of 2020.

Plate differences: consumption trends are downward, textiles are expected to remain stable

1 Clothing: The trend is downward and the differentiation is obvious. The decline was narrowed and the differentiation was obvious. In the short-term, low-end, strong optional attributes, small cycle elasticity, children's wear, business casual, sports apparel sector fundamentals are superior to other sectors. In the long run, high-priced, optional attributes of women's clothing, high-end apparel sector 2019 is suitable for advance layout. From the perspective of individual stocks, the leading stocks and strong stocks are expected to perform better. 2 home textiles: the decline is narrowed and the layout is prioritized. The decline was narrowed and the pressure on the line was more pronounced. Due to the stable competition pattern in the industry and the obvious cycle effect after the real estate, the plate opportunity will appear in clothing in 2019. 3 Textile: The performance is expected to remain stable. The decline in revenue was narrowed. At the same time, the exchange rate was lower and the competition pattern was better. The major cotton-spun leading companies performed even better. The performance of the first three quarters of 2018 was accelerated quarter by quarter. The gross profit margin was upgraded in a single quarter, and the net interest rate increased for two consecutive quarters. In the long run, the low exchange rate is superimposed on the bottom of the cotton price, and the long-term trend is upward.

Strategy: Embrace barriers, prioritize layout

1 Hug barriers: Due to the downward trend of consumption, first, the performance of enterprises with obvious barriers to competition will be more stable; second, the enterprises will be more likely to increase concentration during the period; third, the enterprises have strong anti-risk ability. The stock price rebound period is less risky. 2 Priority layout: First, in terms of consumption cycle, according to the consumption cycle theory, low-cost, must-have attributes of children's wear, the mass sector cycle elasticity is small, the downside risk of the consumer cycle is smaller; second, time, the sector in the home textile, women's clothing In the end of 2019 or early 2020, the first rebound; third, individual stocks, short-term lows due to low valuation is the best period for long-term layout industry, company logic clear high growth leader.

Investment Advice

Leaders with outstanding performance in manufacturing and outstanding competitive advantages in the field (Lutai A, Jiansheng Group, Blum Oriental, etc.) are expected to maintain a stable performance in the environment of slowdown in downstream demand; overall leading performance of apparel is down, quality growth The overall performance of the company is better than the leader, the expansion of the store (Tai Ping, Song Lisi, sports sector leading company), supply chain continuous reform (Taiping, Senma), high-growth industry leader (sports, children's wear, business and leisure) company overall performance Hope better than others.

 Accordingly, we continue to be optimistic about Senma Clothing, Jiansheng Group, Taiping Bird, Biyin Lefen, Lutai A, Fuanna, Ge Lisi, Blum Oriental, Anzheng Fashion, Mercury Home Textile, Geeci Fashion, Luolai Life, Huafu Fashion And Anta Sports, Li Ning, Xtep International, etc.