The industry has continued to grow in production and sales, with a slight slowdown in April. On June 8, China Sewing Machinery Association issued a brief report on the economic operation of sewing machinery industry in April. The cumulative industrial added value of 235 regulated enterprises was + 34% (Q1 + 36%) year on year, which was higher than the average value of 20% of the national industrial regulations enterprises in the same period (Q1 + 25%), and the revenue reached 11.2 billion yuan, with a year-on-year profit of +48% (Q1 +50%), and the profit of 660million yuan, which was +77% (Q1 +161%);
In April, export resumed high growth, and Southeast Asia may be limited by the epidemic. The cumulative export of sewing machinery in January to April 2021 was 960million US dollars, representing a year-on-year +53%, of which the export volume and export volume of industrial sewing machines were +49% and +39% respectively. The export volume and export volume of industrial sewing machinery in April were +108% and +81% respectively, which were significantly better than that of the same period in March. The second outbreak of India epidemic in mid March has caused a certain impact on the garment manufacturing countries such as neighboring Bangladesh, and the epidemic has been gradually controlled since May. The PMI of manufacturing industry in India was 55.5, 55.4 and 50.8 respectively in March and may. Compared with the situation that PMI fell from 51.8 to 27.4 after the outbreak of the outbreak in April last year, the response capacity of Indian production departments to the epidemic was significantly improved, and India's overall export also maintained a high-speed growth. The frustration degree of overseas sewing machine demand may be less than the judgment reported before.
The clothing consumption in developed economies has gradually recovered, and the demand for sewing machines in the world is expected to continue to be released. From the perspective of global clothing demand, the United States has turned its head from March to upward, and 21q1 has accumulated US $23.4 billion in imported clothing and accessories, which is +18% year-on-year, which is more than +4% in 2019. The overall consumption has gradually returned to normal.
The cumulative export of domestic clothing and clothing accessories in the first may was + 48.3% year on year, maintaining a rapid growth. With the continuous progress of vaccination, clothing consumption is expected to recover further, releasing the previously depressed sewing machine renewal demand.
In May, the manufacturers of the whole machine concentrated to increase the price and transfer some cost pressure, leading enterprises have the pricing right. Since the beginning of the year, the prices of steel, plastics and other commodities have continued to rise. In May, the price of cast iron in Changzhou rose to 4911 yuan / ton, up by 58.8% year on year, and the average price of Q1 also increased by 20% year-on-year. Although the price has been corrected since June, it still remains high. In order to cope with the pressure of upstream raw material cost rise, Jack led sewing machine main machine factory raised some product prices in March and may respectively. In May, Jack flat sewing series increased 100-320 yuan / set, about 7% higher than the terminal price, and transferred some raw materials. It is worth noting that Jack's price rise in this industry price adjustment is slightly higher than the average level of the industry. For example, flat sewing rises 100-320 vs 70-200 in the industry, and the gap increases by 400 vs. 200-400 in the industry, which shows the company's strong industry pricing right.
Investment advice. Jack, the leading domestic sewing machine, which has been recommended to dig moat in depth, has been continuously recommended. In the whole year, the company's sales strategy or the situation that causes the price rise of raw materials fail to fully lower the price. However, the company has strong pricing right in the industry. Meanwhile, the pressure of boom cycle will help to limit the expansion space of competitors and keep a good view on the continuous improvement of the market share of the company in the future. The current market value of the company is 13.8 billion, corresponding to PE 23 and 18x in 2021-2022, maintaining the "buy" rating.
