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Since 2014, The State Has Changed The Policy Of Canceling Temporary Purchase And Storage Of Cotton To Direct Subsidy.

2014/3/13 9:03:00 532

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 cotton new policy in 2014, direct subsidy is officially launched in < a href= "//www.sjfzxm.com/news/index_p.asp" > Xinjiang < /a >. Old policy: temporary collection and storage policy, which was collected in 2013 at 20 thousand and 400 yuan / ton. Although the purchase and storage has protected the interests of cotton farmers, it has also created a serious hang up between the inside and outside cotton prices and weakened the international competitiveness of the downstream textile manufacturing industry chain. At present, the price of cotton is about 19 thousand yuan / ton, and the price of outer cotton is about 16 thousand yuan / ton, and the difference between inside and outside cotton price is stable at 3000 yuan / ton. The new policy: from 2014 onwards, the state will cancel the temporary purchase and storage policy, taking Xinjiang as a direct subsidy policy of 380 yuan per mu. 
 we believe that the price of cotton will drop from 19 thousand yuan / ton to 16 thousand yuan / ton after the new policy comes out, and the difference between inside and outside cotton prices will be narrowed. As for the direct subsidy policy, our prediction is as follows: (1) cotton is expected to decrease by 15%: at present, the price of cotton in the tray is priced at 19 thousand yuan / ton. The new policy assumes that the net profit of farmers is unchanged before and after the implementation of the direct subsidy policy. We assume that cotton may be supported by 16 thousand yuan / ton in 14/15. At present, the forward cotton contract of January 2015 delivery has fallen to 16 thousand and 200 yuan / ton, which also proves our calculation. (2) from the window period to the end of 14: we believe that the price of cotton will gradually fall to 16 thousand yuan / ton from the beginning of 14. Although cotton enterprises usually purchase cotton in advance of a production cycle, the cotton subsidy policy will delay the purchase time of cotton enterprises and gradually reduce the price of cotton. (3) the long-term overall cotton price is rising moderately: the cancellation of a href= "//www.sjfzxm.com/news/index_q.asp" > policy < /a > will result in a decline in the enthusiasm of China's inland cotton growing. We believe that the supply of China will decrease and the global economic recovery will be affected. In the long run, there will be an upward trend in the overall cotton price. 
(P) cotton prices fall for a long time. Cotton textile enterprises in the lower reaches are: (1) < a href= "//www.sjfzxm.com" > textile manufacturing > /a > boom for a long time: for cotton spinning enterprises, the price of inner cotton determines the cost, the overall price trend determines the price, the inside and outside cotton price is narrowed, and the long term helps to reduce the production cost and enhance the overall competitiveness of Chinese enterprises. (2) the elasticity of colored spinning is large: we believe that the cotton industry has the largest elasticity of the sub industry with high cost ratio from the cotton price sensitivity. The industry chain of the colored spinning industry is short, and the proportion of cotton cost is more than 70%. In the long run, the low purchasing cost is expected to enhance the overall profitability of the enterprise. (3) performance trend: as cotton spinning enterprises are mostly stockpaged for 3-6 months, the cotton price change has a certain lag to the gross profit level. It is expected that cotton will be digested in the short term and the future performance will be up to the season. 
 investment target: in the long run, the competitiveness of the lewd spinning industry is enhanced, and Huafu color spinning is more flexible. We can focus on colored spinning "duopoly" Huafu color spinning and Baron Orient, and at the same time pay attention to yarn dyed fabric leader Lu Tai A. (1) Hua Fu color spinning: this week, it announced the incentive to grant 30 million stock options to 80 objects. The method is to issue new shares, account for 3.6% of the company's capital stock, and the exercise price is 4.43 yuan. The exercise right condition is 14/15/16, the income growth rate is not less than 10%/20%/30%, and the net profit growth rate is no less than 20%/40%/60%. Taking into account the steady growth of the company's capacity, the recovery of downstream demand, the increase of the bargaining power of the company's yarn spinning and the large price elasticity of the company's gross profit to cotton prices, it is estimated that the EPS of 14/15/16 will be 0.34/0.41/0.50 yuan, corresponding to PE's 12.9/10.7/8.7 times. At present, PB is 1.1 times, and the market value is 3 billion 600 million yuan, which will maintain the increase. (2) Baron Orient: the company has gradually released its capacity to build factories in Vietnam. The largest customer is Shenzhou International. It is estimated that 13/14/15 EPS is 0.72/0.74/0.86 yuan, corresponding to PE is 12.4/12.2/10.4 times. At present, PB is 1.1 times, the market value is 6 billion 700 million yuan, and the increase is maintained. (3) Lu Tai A: export rebounded to drive the company's performance to rise. It is estimated that 13/14/15 EPS will be 0.98/1.18/1.35 yuan, corresponding to PE is 9.1/7.5/6.6 times. At present, PB is 1.5 times, the market value is 8 billion 500 million yuan, and the increase will be maintained.