中國紡織品與鞋業(yè)：為做好準備

1、1 February 2019China Textiles & FootwearChina Textiles & FootwearSetting the scene for 2019EQUITIESTEXTILES APPAREL & LUXURY GDSChinaEQUITIESTEXTILES APPAREL & LUXURY GDSChinaKey focus for 2019: FX and raw material prices trends turn positive; shift to SE Asia to accelerateUpgrade Crystal to Buy as

2、risk-reward turns attractive; maintain Buy on Shenzhou, Pacific Textiles and StellaDivergingfatesin2018.ExcludingShenzhou,whichistheonlynamethatregistered apositivereturnin2018(+19%),thesectorssharepricedroppedonaverage26%in 2018(vs.HSI-14%).ApartfromFX,whichwasacommonchallenge,thecompanies under ou

3、r coverage suffered from various company-specific issues from staff shortagesandhighramp-upcoststochangesincustomersorderingbehaviour.Interestingly, China saw an 8% increase in 2018 (vs. 4% in 2017) in textiles and garment exports and there seems to be a limited impact from US-China trade tensions.

4、We expect that Shenzhou delivered the highest earnings growth of 25% in 2018e, while estimating Yue Yuen saw a 44% decline at the other end of the spectrum. See the company section of this report for our 2018e expectations.Looking forward. We highlight three key focus areas for 2019: 1) Trade tensio

5、n: We believe the impact should start to surface with an accelerated migration out of China. That could lead to stronger bargaining power for companies with overseas capacity; 2) FX volatility: HSBC looks for RMB-USD at 6.80-6.85 by 1H19, implying a 6% y-o-y depreciation, which should be positive fo

6、r a margin recovery. Weestimate a 10-15bps boost in margin for every 1% RMB depreciation for the sector. Yet, recent strength in RMB could introduce uncertainties for the rest of the year. 3) Raw materials: Cotton prices have shown a softer trend with a low-single-digit decline in the past three mon

7、ths. Oil and leather prices are on a downtrend,too.Stock picks. We upgrade Crystal to Buy as risk-reward turns favourable. Trading at an industry-low valuation on low expectations, we expect most of the negative factors in 2018 to reverse and bargaining power to improve, thanks to its overseas capac

8、ity. We maintain Buys but fine-tune our estimates for Pacific Textiles and Shenzhou and maintain Buy for Stella with no changes HYPERLINK /R/10/dCzzJhl ( “Sneakerization” x “casualization”, 17 Jan 2019). We rate Yue Yuen Hold, as expectation of recovery in 2019e seems already in the price. Sector do

9、wnside risks: Sharp decline in end-demand, unfavourable global trade policy, sharp FX movement and rise in input costs.Scott Chan*, CFAAnalyst, Consumer & Retail ResearchThe Hongkong and Shanghai Banking Corporation Limited HYPERLINK mailto:scotttkchan.hk scotttkchan.hk+852 3941 7005Erwan RambourgGl

10、obal Co-Head of Consumer and Retail Research HSBC Securities (USA) Inc. HYPERLINK mailto:erwanrambourg erwanrambourg+1 212 525 8393Karen Choi*Head of Consumer and Retail Research, Asia Pacific The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch HYPERLINK mailto:karen.choi

11、karen.choi+82 2 3706 8781Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andis not registered/ qualified pursuant to FINRAregulations HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A Register now HYPERLINK /regform.php?id=aTdlZjE6N21kazVgM2A China Textil

12、es and Footwear: TPs, ratings and valuation at a glanceCompanyTickerMkt-CapADTVPriceNewOldUpsideRating* P/E(x) Dividend Yield(%) USDmUSD m30-JanTPTPCY18eCY19eCY20eCY19eCY20eCrystal International2232 HK1,55.736%Hold - Buy11.0%4.1%Pacific Textiles1382 HK1,268.824%Buy11.3%8.7%Shenzho

13、u2313 HK17,39635.590.8107.0118.018%Buy24.8%2.7%Stella1836 HK1,0120.410.011.811.818%Buy13.7%7.6%Yue Yuen551 HK5,3824.3-6%Hold19.113.311.96.0%6.2%Source: Refinitiv Datastream, HSBC estimates; all TPs in HKD *We make no change to ratings apart from Crystal InternationalDisclosures

14、& DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.Issuer of report: The Hongkong and Shanghai Banking Corporation LimitedView HSBC Global Researchat: HYPERLINK / China Textiles and Foot

15、wear: Estimates revision Revenue Net profit 2018e2019e2020e2018e2019e2020eCrystal-1%-1%-1%-4%-9%-6%Pacific Textiles-3%-3%-3%-3%-3%-3%Shenzhou0%-4%-4%0%-3%-3%Stella Nochange Nochange Yue Yuen2%2%2%-29%-11%-8%Source: HSBC estimatesRMB-USDrateChina textiles and garmentexports7.006.807.006.806.606.406.2

16、06.006.87 6.375.80Jan-18Apr-18Jul-18Oct-18RMBto USD 1H18averageExport value (USDbn)Export value (USDbn)800600400200012M1212M1312M1412M1512M1612M1712M1840%Textile exportTotal yoy changeTextile exportTotal yoy changeGarment exports20%10%0%-10%Source: RefinitivDatastream,HSBCSource: CEIC,HSBCCottonpric

17、etrendLeather price trend40%30%20%10%0%-10%-20%-30%-40%Jan-14 Dec-14 Nov-15 Oct-16 Sep-17 Aug-18 ChinayoyInternationalyoy350300250200150100500Jan-15 Sep-15 May-16 Jan-17 Sep-17 May-18 Leatherpriceindex10%5%0%-5%-10%-15%-20%-25%-60%Source:CEICSource:Bloomberg-60%50%40%50%40%30%20%10%0%-20%-30%-40%-50

18、%ShenzhouMar-18May-18Jul-18Sep-18Nov-18Jan-19HSIYY / Stella Pacific TextilesCrystalYueYuen Shenzhou PacificTextiles Stella CrystalHSISource: Refinitiv Datastream, HSBCAlso, please see our recent sector reports: HYPERLINK /R/20/gPfFjHT Dissecting Fast Retailings supplier lists on 30 November 2018 HYP

19、ERLINK /R/20/rmNRR9P Read-across from 1H FY19 results on 28 November 2018 HYPERLINK /R/20/kqMDJPp Read-across from adidas 3Q18 results on 8 November 2018 HYPERLINK /R/20/9KfMVwk Finding shelter in troubled times on 5 October 2018HSBC HK/China sportswear and manufacturing valuation comparisonsMkt-Cap

20、 Price30- P/E (x) EPSgrowth _ P/B (x) ROE Dividend Yield CompanyUSD mCcy JanTP Rating CY18 CY19 CY20 CY18 CY19 CY20 CY18 CY19 CY20 CY18 CY19 CY20 CY18 CY19 CY20Sportswear361 Degrees1361 HK424 HKD1.6N.R. N.R. -10% 14%5%8%8%9%6.7% 7.6% 8.3%Anta2020 HK13,996 HKD40.949.3Buy22.618.316.2 35% 24%1

21、3%29%29%26%1.3% 1.1% 1.2%China Dongxiang3818 HK885 HKD1.21.5Buy -17% -5%-2%7%6%6%7.2% 6.9% 6.7%Li Ning2331 HK2,732 HKD9.810.2Buy28.320.316.7 39% 39%22%13%17%18%1.1% 1.5% 1.8%Pou Sheng3813 HK1,042 HKD1.5N.R. N.R.16.012.410.4 12% 29%19%1.11.00.97%9%10%1.5% 1.9% 3.0%Xtep1368

22、HK1,421 HKD5.05.3Buy15.712.710.9 1% 23%16%12%14%15%4.2% 5.0% 5.7% 21.6 17.2 15.1 29% 25% 14% 23% 24% 22% 1.8% 1.8% 2.1%ManufacturingCrystal International2232 HK1,520 HKD4.25.7Buy11.09.27.7-21%19%20%14%15%16%2.9% 3.5%4.1%Eclat1476 TT3,099 TWD348.0446.0Buy21.618.316.345%18%13%27%29%3

23、0%3.6% 4.3%4.8%Feng Tay9910 TT4,173 TWD192.5226.0Buy24.420.318.320%20%11%36%37%35%3.1% 3.7%4.1%Makalot1477 TT1,291 TWD190.0225.0Buy26.719.116.516%40%16%17%23%25%3.4% 4.7%5.4%Pacific Textiles1382 HK1,266 HKD6.98.5Buy11.310.19.211%13%9%26%27%28%7.2% 8.0%8.7%Regina Miracle2199 HK670 HKD6.5N.R.N.R.25.71

24、7.512.151%47%44%11%14%18%1.2% 1.7%2.4%Shenzhou2313 HK17,396 HKD90.8107.0Buy24.821.218.425%17%15%23%24%24%2.0% 2.4%2.7%Stella1836 HK1,012 HKD10.011.8Buy13.710.18.7-7%36%16%1.01.01.08%10%11%6.6% 7.1%7.6%Texhong2678 HK1,217 HKD10.4N.R.N.R.13%18%11%21%21%20%4.6% 5.6%6.1%Yue Yuen551 HK5,388 HKD26.224.6Ho

25、ld19.113.311.9-45%44%12%7%10%11%5.8% 6.0%6.2% 21.0 17.2 15.0 12% 22% 14% 20% 22% 22% 3.2% 3.6% 4.0%International peersInternational peersAdidasADS GR47,217 EUR 206.2 255.0Buy 24.5 21.0 18.3 27% 17% 15% 26% 28% 27% 1.5% 1.7% 2.0%ColumbiaCOLMUS6,064 USD 88.7 N.R. N.R. 24.6 21.8 19.7

26、21% 13% 11% 15% 15% 16% 1.0% 1.1% 1.2%Esprit330HK385 HKD1.62.1 Holdnmnmnm 81% -34% -88% -11% -9% -1% 0.0% 0.0% 0.0%FootLockerFLUS6,384 USD 56.7 N.R. N.R. 12.5 11.6 10.9 8%8%6% 23% 21% 21% 2.4% 2.6% 2.7%LululemonLULUUS18,268 USD 148.6 N.R. N.R. 40.7 34.2 28.8 43% 19% 19% 11

27、.89.88.0 32% 31% 35% 0.0% 0.0% 0.0%NikeNKEUS110,499 USD 81.3 95.0Buy 39.6 27.5 24.3 19% 44% 13% 30% 37% 33% 1.0% 1.1% 1.3%PumaPUM GR8,341 EUR 484.0 610.0Buy 38.1 27.2 22.0 40% 40% 24% 12% 15% 17% 0.7% 0.9% 1.1%UnderArmourUA US8,923 USD 20.9 N.R. N.R. 95.5 63.2 41.8 15% 51% 51%4.74.

28、44.0 4%7% 10% 0.0% 0.0% 0.0% 37.3 27.4 23.4 23% 34% 16%4.03.32.8 27% 31% 29% 1.0% 1.2% 1.3%Source: Refinitiv Datastream, I/B/E/S consensus estimates non-rated stocks, HSBC estimates for rated stocks. Note: Prices as of 30 Jan 2019.Crystal International (2232 HK) Trading at an industry trough valuati

29、on, expectations are low and in- line 2018 results could start to rebuild investors confidence Improving control on order mix and potentially higher bargaining power for overseas capacity are key drivers for margin recovery TP HKD5.70 unchanged as roll-over offsets more conservative margin assumptio

30、ns; upgrade to Buy (from Hold) on valuationRisk-reward is attractive againA quick recap of a very tough 2018: Crystals shares price plunged 47% in 2018 (vs. HSI -14%) and was the worst performer within our HK-listed OEM coverage. Consensus 2018 net profit has come down close to 25% to the current le

31、vel of cUSD150m due to margin pressure, which stems from: 1) unfavourable FX that resulted in inflated costs in China; 2) staff shortage in China led to sub-optimal order allocation and one-off freight costs; and 3) ramp-up costs in overseas capacity. All of these factors together have also hurt sen

32、timent and de-rated the stock from 13x to 9x now.Crystal Core EBITmargintrendCrystal Production split in1H18China8.8%7.9%7.3%7.1%7.2%Low Cost Countries (Vietnam, Cambodia, 8.8%7.9%7.3%7.1%7.2%64%36%5.0%201620172018e 2019e and Sri Lanka)Source: Company data,HSBCestimatesSource: Company data,HSBCMost

33、of these factors should reverse in 2019e, in our view. First, RMB depreciation should ease the margin pressure in China. Second, faster expansion in SE Asia last year should even out the utilisation in China and one-off fulfilment costs should not recur. Finally, with more than 60% capacity outside

34、of China, we expect Crystal to see higher bargaining power on ASP or product mix that should be another positive for margins.We also think expectations have become low enough for investors to revisit the stock again. Despite the above reversing factors, we lower our estimates to buffer for potential

35、ly higher new capacity ramp-up costs. We are now in line with consensus, which implies only 30bps net margin improvement on 13% revenue growth in 2019e, off an arguably low base. The current trading level implies 9x FY19e PE, which is the lowest in our coverage universe despite 19% growth and a 3% y

36、ield. We think Crystals risk-reward is attractive.FY18 previewCrystal International FY18 previewYear to 31 Dec (USDm)20172018eyoy2H172H18eyoyRevenue2,1782,51816%1,1511,31815%Cost of sales(1,736)(2,032)17%(913)(1,060)16%Gross profit44248610%2372589%Other income9108%63-54%Selling and distribution expe

37、nses(40)(46)16%(23)(25)10%Administrative and other expenses(218)(262)20%(117)(137)17%Operating profit194189-3%10399-4%Interest on bank borrowings(17)(16)-2%(9)(8)-10%Share of results of an associate(3)2nm(2)1nmProfit before tax1741740%92920%Income tax expenses(26)(26)1%(13)(14)9%Profit for the year1

38、491480%7978-2%KeymarginsGross margin20.3%19.3%-1.0ppt20.6%19.6%-1.1pptOperating margin8.9%7.5%-1.4ppt9.0%7.5%-1.5pptCore operating margin8.5%7.1%-1.4ppt8.4%7.3%-1.2pptNet margin6.8%5.9%-0.9ppt6.9%5.9%-1.0pptKeyratiosSelling and distribution expenses to sales1.8%1.8%0.0ppt2.0%1.9%-0.1pptAdmin and oth

39、er expenses to sales10.0%10.4%0.4ppt10.2%10.4%0.2pptEffective tax rate14.8%15.0%0.2ppt14.1%15.4%1.3pptSource: Company data, HSBC estimatesEarnings revision, valuation and risksCrystal International Estimate revisionsUSDmFY18eFY19eFY20eRevenueNew2,5182,8333,061Old2,5342,8513,079Change-1%-1%-1%Netprof

40、itNew148176209Old155192222Change-4%-9%-6%Source: HSBC estimatesWe fine-tune our revenue assumptions down by 1% in 2018-20e. Our net profit is down by 4- 9%, mainly driven by more conservative margin assumptions. This is primarily due to potential accelerated ramp-up costs in Vietnam and Bangladesh.

41、We now look for 13% top-line growth in 2019e and expect earnings to be up 19%.Our unchanged target multiple of 12x FY19e is based on the supply chain sector average. Applying that to FY19e (from FY18-19e average) EPS of HKD0.48, our TP is unchanged at HKD5.70. With 36% implied upside, we upgrade the

42、 stock to Buy from Hold.Key downside risks: Trade policy changes, significant changes in the cost of labour and raw materials, uncertainties over the execution of expansion plans, and abrupt changes in key customers orders.Financials & valuation:CrystalInternationalBuyFinancial statementsYear to12/2

43、017a12/2018e12/2019e12/2020eValuation dataYear to12/2017a12/2018e12/2019e12/2020eProfit & loss summary (USDm)EV/sales0.5Revenue2,1782,5182,8333,061EV/EBITDA4.3EBITDA255263300342EV/IC1.1Depreciation & amortisation-61-75-83-90PE*8.711.09.27.7Operating profit/EBIT194189216253PB1.2Net interest-17-16-9-6

44、FCF yield (%)-10.4PBT174174207246Dividend yield (%)3.0HSBC PBT174174207246* Based on HSBC EPS (diluted)Taxation-26-26-31-37Net profit149148176209HSBC net profit147138164197ESG metricsCash flow summary (USDm)GovernanceIndicators12/2017aCash flow from operations173222238295No. ofboardmembers9Capex-149

45、-160-130-130Average boardtenure(years)16.5Cash flow from investment-251-160-130-130Female boardmembers(%)11.1Dividends-65-44-53-63Board membersindependence(%)44.4Change in net debt-214-2-46-96FCF equity-133996156Balance sheet summary (USDm)Intangible fixed assets176171166162Tangible fixed assets6247

46、21776823Source: Company data, HSBCCurrent assets1,007891876990* GHG intensity and energy intensity are measured in kg and kWh respectively against revenue in USD 000sCash & othersTotal assets4171,8221731,7991241,835Operating liabilities321427428497Issuer informationGross debt530284190127Share price

47、(HKD)4.18Free float19%Net debt11411266-30Target price (HKD)5.70SectorTextiles, Apparel & LuxuryShareholders funds9111,0221,1471,296GoodsInvested capital1,0661,1801,2631,319RIC (Equity)2232.HKCountryHong KongBloomberg (Equity)2232 HKAnalystScott Chan, CFARatio, growth and pershareanalysisMarketcap(US

48、Dm)1,520Contact+852 39417005Year to12/2017a12/2018e12/2019e12/2020eY-o-y % changePrice relativeRevenue23.515.612.5EBITDA30.83.313.814.2Operatingprofit30.5-2.614.616.8PBT20.40.018.619.1HSBCEPS36.7-21.119.019.910.9010.909.909.908.908.907.907.90Ratios (%)6.905.904.903.902.90 Crystal InternationalRel to

49、 HANG SENG INDEX6.905.904.903.902.90EnvironmentalEnvironmentalIndicatorsGHG emissionintensity*36.4Energyintensity*168.9CO2 reductionpolicySocialIndicatorsEmployee costs as %ofrevenuesEmployeeturnover(%)DiversitypolicyRevenue/IC ROICRevenue/IC ROICROE ROAEBITDA margin Operating profit margin EBITDA/n

50、et interest (x) Net debt/equity2.518.98.915.414.39.010.57.515.07.616.68.354.0-2.3Net debt/EBITDA (x)-0.1Note: Priced at close of 30 Jan 2019CF from operations/net debt152.1199.0361.1Per share data (USD)EPS Rep (diluted)0.0620.0520.0620.073HSBC EPS (diluted)0.0610.0480.0580.069DPS0.0160.0160.0180.022

51、Book value0.3800.3580.4020.454Pacific Textiles (1382 HK) Key customers sell-through has led to share price volatility But no change in fundamental story: order and margin recovery still under way; delayed Vietnam ramp-up could be a FY20e story Cut TP to HKD8.50 from HKD8.80, cut forecasts 3%; mainta

52、in Buy on valuation but near-term catalyst could be lackingHurt by unfavourable weather in JapanPacific Textiles shares were among the best performers during September-November 2018 (+36% vs. sector +5% and HSI -5%). Recall that in HYPERLINK /R/10/KWfMppR Upgrade to Buy: Too cheap to ignore?, 5 Sept

53、ember 2018, we highlighted that margin recovery would be a key driver to earnings recovery and we see no change in this.the stock has 16% 2018 date, by a negative read- across from key brand in our Uniqlo, represented 64% of sales in 1H reported in Japan 2018, 4-10%. parent Fast Retailing (9983 JP,

54、JPY49,910, Not rated), explained the due to an condition store sales picked up again in think could see a slightly order book in 2H as Uniqlo continues to digest before Uniqlo SSSG trend in Japan14.0%12.0%yoyyoygrowth(3-monthaverage)8.0%6.0%4.0%2.0%Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May

55、-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-180.0%Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18-2.0%-4.0%Source: Company data, HSBCApart from a slower sell-through, investors are likely concerned about a slower-than-expected r

56、amp-up in Vietnam. The company previously guided for a full ramp-up by end-2018; however, a pending government approval on sewage treatment system construction means that utilisation has improved only very gradually from 40% in 3Q18 to now 50%. We now see top-line and margin recovery due to Vietnam

57、ramp-up being more of a FY20estory.Earnings revision, valuation and risksPacific Textiles Estimates revisionsHKDmFY19eFY20eFY21eRevenueNew6,4646,8877,301Old6,6467,0767,494Change-3%-3%-3%NetprofitNew9221,0111,102Old9511,0421,134Change-3%-3%-3%Source: HSBC estimatesa by a in 0% a We make no changes to

58、 our margin assumptions given RMB depreciation likely will help buffer the impact of deleveraging. Net, we cut our net profit forecast by the same magnitude as revenue change, 3%.Pacific Textiles 12m forward PE chart161217xShare Price (HKD)14xShare Price (HKD)811x8x45xJan-10Jan-11Jan-12Jan-13Jan-14J

59、an-15Jan-16Jan-17Jan-18Jan-19-Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19Source: Refinitiv Datastream, HSBCTrading at 10 x CY19e PE in an earnings upcycle versus a historical range of 8-17x, we think the valuation remains attractive. Together with a 7% dividend yield, we think the r

60、isk-reward for the stock is still favourable in a volatile equity market. With our revised estimates, we lower our TP to HKD8.50 (from HKD8.80). Our new TP is based on an unchanged 12.5x target PE, whichis0.5 sd above the average since 2010, as we expect a solid dividend distribution to support a pr