Investment Suggestions: The industry is picking up, after the release of third- and fourth-line real estate, the dividends will be released, and the multi-factor will help the home textile industry to further develop. The initial coverage will give the industry an “overweight” rating.

The development of the home textile industry is basically in line with the economic cycle, and it also presents its unique characteristics of supply and demand. The development of the industry can be divided into four phases: 1) The budding period of 1990-2000: At this stage, the home textile products are mainly practical, and the hand-made products are gradually transformed into factories. Mechanized production; 2) Rapid growth period of 2000-2012: Driven by economic development, the number of home textile enterprises has increased rapidly, brand effects in the industry have begun to appear, and home textile products have shown a trend of “beautiful and functional”; 3) 2012-2016 downturn Adjustment period: The downturn stems from three factors: the excessive number of low-end manufacturers in the industry, the slowdown in economic growth, and the decline in the turnover capacity of companies; 4) The full recovery period from 2016 to the present: e-commerce has developed rapidly, the economy has recovered, and the turnover capacity of enterprises has become more reasonable. The textile industry continues to grow rapidly.

Looking into 2018, the macro factors will be positive + the internal structure of the industry will be optimized + industry leaders will continue to make efforts, and the growth trend will continue: Based on the present, we believe that the industry will continue to develop, mainly for three reasons: 1) GDP growth has entered the new normal, the third- and fourth-tier cities and towns There is a huge amount of space for development, and the willingness of the wedding market to accumulate consumerism and the potential of the tourism market are huge. The macro factors are favorable. 2) The market share of the leading enterprises in the industry is low, the national textile enterprises have not yet emerged, the penetration rate of functional products is not high, and the competition in the industry remains There is room for optimization; 3) The industry leads the fast development of online channels, offline channels sink into place, and leading companies are expected to drive the upgrading of home textile products.

Investment advice and valuation: As the industry warms up with the upgrading of third- and fourth-tier consumers and the rapid development of e-commerce, the leading companies are expected to further increase their market share. Recommend the life of Roland (002293), rich Anna (002327), Mercury Home Textiles (603365). Royle Life: Everyone's textile homes are gradually advancing. From the quantity to the quality, we continue to improve, giving a target price of 17.32 yuan, and giving it the “overweight” rating for the first time. Fu Anna: The main business of home textiles is steadily increasing. The home furnishing business of the United States is expected to increase in volume in the future, giving 20 times PE in 18 years and a target price of 13.4 yuan. For the first time covered by giving "overweight" rating. Mercury Home Textiles: The proportion of e-commerce and direct channels increased, and the profitability continued to improve. The joining channel deepened the 3rd and 4th line to fully benefit from the post-real estate dividend, giving a target price of 31.06 yuan. For the first time covered by giving "overweight" rating.

Risk Warning: The macroeconomic growth rate is lower than expected, the offline channel is laid lower than expected, and product sales are lower than expected.