During the nineteen great period, new contradictions were raised by President Xi Jinping". The quality and efficiency of economic development should be emphasized, and the goal of beautiful China will be basically achieved by 2020. We judge the government environmental protection requirements will be further tightened, improve the environment and promote economic transformation and upgrading, the future of textile and apparel industry environmental pressure will continue to increase.
Textile and garment industry chain is long, pollution mainly concentrated in dyeing and finishing links, mainly to water pollution, dyeing and leather industry pollution is serious in sub industries. We believe that the impact of environmental trends Yan textile clothing industry is mainly reflected in two aspects: one is the upstream energy and raw materials prices, resulting in the cost of the industrial chain end promotion; two is to strengthen the government's direct printing and dyeing, tanning two segments of the industry regulation, to accelerate productivity, leading to the overall industry affected. But the leading companies are expected to benefit from the industry to enhance the degree of concentration.
Printing and dyeing industry: Environmental tightening, leading is expected to enjoy "residual" bonus".
The printing and dyeing industry has low threshold and scattered market. With the government to strengthen the requirements of environmental protection, industry ushered in the supply side reform, 2010-15 printing and dyeing cloth production in the enterprises above the scale of 59 billion 300 million meters down to 51 billion meters, 16 years after production rebounded, we judge with the central and local governments to introduce more policies to further improve environmental standards, the industry will once again enter the capacity to promote systole, enhance the degree of concentration.
In the long run, the environmental protection threshold will increase and the investment will lead to the withdrawal of small and medium-sized enterprises, the industry is expected to further concentration, leading enterprises will enjoy the "residual dividend", market share and bargaining power has been improved;
In the short term, after the dye, coal, environmental protection and other costs increased, the existence of price expectations.
Tanning industry: environmental protection, high pressure, continuous production capacity, tannery leader will benefit.
China's leather industry overcapacity, the market is dispersed, high polluting industries, especially in tanning, feathers (cashmere) processing, enterprises use of solvent based adhesives or treatment agent will produce more waste water, waste gas and solid waste.
In recent years, the prosperity of the industry has been descending. At the same time, the government has strengthened the management of leather industry, formulated a number of standards to improve environmental protection requirements, and gradually reduced the backward production capacity. After 2010, China's light leather output and the number of leather enterprises showed a downward trend. In July 2017, the Ministry of environmental protection will be listed as the key industry for the leather industry to issue emission permits, and the market share will be further concentrated to the leading enterprises.
Investment proposals: environmental protection to the production capacity of good leader, recommended aviation shares.
Environmental protection tends to be strict, on the one hand leading to upstream cost rise, affecting the overall profitability of the industry chain, on the other hand, directly promote the printing and dyeing, leather industry to capacity, leading enterprises are expected to benefit from industry concentration.
We are optimistic about environmental protection to promote the industry to capacity after the leading market share and bargaining power to enhance, the first printing and dyeing leading Qi Min shares, tanning bibcock Industrial Science and technology will also benefit, and other areas involved in dyeing and finishing of other segments leading is also expected to partially benefit. Among them, Qi Min is the leading domestic printing and dyeing company. For many years, the advanced production and environmental protection equipment have been continuously introduced. The environmental protection standards are in the leading position. With the improvement of environmental protection requirements, the optimization of competition pattern and the increase of upstream cost, the company will promote the ability of price raising and marginal improvement of its performance.
Risk analysis: lower enforcement of environmental protection than expected, lower downstream demand, fluctuations in raw material prices, etc..