Trend: consumption is down and recovery is expected in late 2019 or early 2020

(1) status quo: since 2018, social zero has been going down, following the trend of nominal and actual social zero in July, August and September in the opposite direction, due to the Mid-Autumn festival peak, double 11 drainage in October, social zero, clothing retail diving again, due to stagflation actual and nominal social zero gap continues to widen. Per capita disposable income is still in a downward trend. (2) future: the consumption cycle peaked in q1, 2018, passed and came to an end in the overheating period and stagflation period of the clock of merrill lynch successively, and in 2019, it will be in the middle of the recession period of the clock of merrill lynch. Recessions provide more policy space than stagflation, and the timing of the property trough in 2019 determines when the subsequent post-natal cycle of consumer goods and consumption actually begins. We predict that the profit growth rate of industrial and industrial enterprises is expected to hit the bottom in the short cycle around early 2019, and drive the growth rate of per capita income in the lag period of one year to recover with consumption in late 2019 or early 2020.

Plate differences: consumption trend downward, textile hope to continue to steady

Clothing: trend downward, obvious differentiation. The decline narrowed and became more differentiated. In the short term, the fundamentals of children's wear, business leisure and sports apparel with strong optional attributes and low cyclical elasticity are better than those of other sectors. In the long term, women's wear with high price and strong optional attributes and mid - and high-end apparel are suitable for early layout in 2019. From the stock, the fundamentals of strong plate leader, epitaxial strong stocks are expected to perform better. (2) home textile: decline narrow, priority layout. The decline narrowed, line pressure is more obvious. Due to the stable industrial competition pattern and obvious postpartum cycle effect, plate opportunities will appear earlier than apparel in 2019. (3) textile: performance hope to continue steady. In the first three quarters of 2018, the company's performance was accelerated quarter by quarter. The gross profit rate was increased quarter by quarter. The net interest rate was increased for two consecutive quarters.

Strategy: embrace barriers and prioritize layout

(1) embrace barriers: because of the downward trend of consumption, first, the performance of enterprises with obvious barriers to competition will be more stable; Second, it is easier for such enterprises to improve the degree of concentration during this period. Third, this kind of enterprise has a strong ability to resist risks and has less risk in the period of stock price rebound. (2) priority layout: first, the plate, according to the consumption cycle theory, low price, must choose strong attributes of children's clothing, public plate cycle elasticity is small, consumer cycle downside risk is smaller; Second, in terms of time, home textile and women's wear in the sector are expected to rebound in late 2019 or early 2020. Third, individual stocks, the low point of the short cycle because low valuation is the long cycle layout of the industry, the company has a clear logic of the best period of high growth leader.

Investment advice

· excellent performance of manufacturing leaders with obvious competitive advantages in the field (lutai A, jiansheng group, bailong east, etc.); · stable performance in the downstream demand slowdown environment; The overall performance of the leading garment enterprises is down, the overall performance of high-quality growth enterprises is better than the leading ones, the expansion shop acceleration (taiping bird, goliath, sports sector leading companies), the continuous reform of the supply chain (taiping bird, samma), high growth industry segment leading (sports, children's clothing, business leisure) the overall performance of the company is expected to be better than other.

Accordingly, we continue to look forward to semma clothing, jiansen group, taiping bird, bi Yin lefen, rutai A, fu Anna, goliath, belong Oriental, anzheng fashion, mercury home textile, earth element fashion, luo lai life, huafu fashion and anta sports, li ning, special step international and so on.

Risk tips :(1) weak domestic and foreign downstream consumption demand; (2) substantial fluctuations in the exchange rate; (3) the price of raw materials fluctuates greatly.