Cathay Securities and Haitong Securities: The performance of brand apparel and home textiles in Q3 2025 is impressive, and the decline in textile manufacturing has narrowed

According to the Zhitong Finance APP, Guotai Junan released a research report stating that in Q3 2025, the revenue growth of the A-share apparel sector turned positive, and net profit achieved significant growth, mainly due to the low base in Q3 2024. In terms of segments, home textiles performed relatively well. In the textile manufacturing sector, the decline in revenue and profit for A-share textile manufacturing in Q3 2025 both narrowed. Looking ahead, the short-term impact of tariff burdens will end by year-end, and future order prosperity is the core variable; most overseas brands completed price increases in Q3, and the consumption trend in Q4 (high base in the U.S.) will be an important observation indicator. Based on the further clarification of the transshipment tax rate policy for exports to the U.S., the concentration and capacity advantages of midstream OEMs with mature overseas production capacity will become prominent. Guotai Junan's main viewpoints are as follows: Industry Review 1) Demand Side: ① Domestic Demand: From January to September, the online retail sales of clothing physical goods in China increased by 2.8% year-on-year, accelerating compared to January to August. ② U.S. Apparel Retail: In August, the retail sales of clothing and apparel accessories stores in the U.S. increased by 8.3% year-on-year, accelerating compared to July; since May, U.S. textile and apparel retail growth has accelerated for four consecutive months on a month-on-month basis. 2) Export Side: ① China's Exports: In September, China's textile and apparel export value decreased by 1.5% year-on-year, with textile and garment export values increasing by 6% and decreasing by 8% year-on-year, respectively. ② Vietnam Exports: In September, Vietnam's textile and footwear export values increased by 9% year-on-year, both accelerating compared to August. Summary of Brand Apparel Q3 2025 Reports 1) Performance Review: In Q3 2025, the revenue growth of the A-share apparel sector turned positive (Q2/Q3 were -3.0%/0.9%; the sector growth rate is the median of individual stock growth rates, the same below), and net profit achieved significant growth (Q2/Q3 were -22.0%/+10.6%), mainly due to the low base in Q3 2024. In terms of segments, home textiles performed relatively well, with Luolai and Mercury achieving significant growth in revenue and profit. 2) Operational Efficiency: In Q3 2025, the inventory turnover days of most brands still increased year-on-year, with only Ge Li Si, Youngor, Luolai, and Mercury Home Textiles showing a year-on-year decrease in inventory turnover days. 3) Hong Kong Stock Movement: Weather factors and weak domestic demand led to general pressure on Q3 revenue, with some experiencing a slowdown compared to Q2. Summary of Textile Manufacturing Q3 2025 Reports 1) Performance Review: On the revenue side, the decline in A-share textile manufacturing narrowed in Q3 2025 (Q2/Q3 were -1.9%/-0.4%), with Nanshan Zhishang, Fuchun Dyeing and Weaving, and Kanglongda leading in growth. On the profit side, the decline in A-share textile manufacturing narrowed in Q3 2025 (Q2/Q3 were -20.4%/-11.2%), with Huafu Fashion, Lutai A, Kairun Co., Jian Sheng Group, and Kanglongda leading in growth. 2) Future Outlook: ① The short-term impact of tariff burdens will end by year-end, and future order prosperity is the core variable. Most overseas brands completed price increases in Q3, and the consumption trend in Q4 (high base in the U.S.) will be an important observation indicator; ② The ordering cycle for brands may further shorten in the next 2-3 years, and reduced order visibility may further impact the valuation center of the OEM industry; ③ Based on the further clarification of the transshipment tax rate policy for exports to the U.S., the concentration and capacity advantages of midstream OEMs with mature overseas production capacity will become prominent; ④ Some enterprises still need to observe the ramp-up of new production capacity and efficiency improvement rhythm, with a balanced and reasonable production line allocation mechanism established based on rich management experience being the most critical. Investment Recommendations Looking ahead to 2026, the performance recovery logic of the export manufacturing sector is relatively clearer, mainly based on three factors: ① The implementation of tariff policies for exports to the United States provides a certain visibility for industrial development; ② The pressure of sharing tariffs with brands has significantly eased; ③ Optimization of production line allocation and the advancement of capacity ramp-up continue to improve efficiency. The North American consumer end is still supported by expectations of interest rate cuts. Recent luxury goods companies' financial reports show that the North American market's growth rate is leading and has accelerated further compared to Q2, but attention should be paid to the resilience performance under high base in Q4 and consumer reactions after brand price increases in Q3. Recommended stocks include Huali Group (300979.SZ), Jiuxing Holdings (01836), Shenzhou International (02313), and Chaoying International Holdings (02111). Three Main Lines for Brands: ① Home Textiles: The big product strategy is expected to stimulate replacement demand and drive the sales of traditional products. Distributor inventories are at low levels, which may promote a recovery in orders. Recommended stocks include Luolai (002293.SZ), Mercury Home Textiles (603365.SH), and Fuanna (002327.SZ); ② Affordable Luxury: Changes in customer structure combined with product creativity drive structural growth opportunities. Recommended stocks include Prada (01913) and Samsonite (01910); ③ Undervalued High Dividend: It is recommended to pay attention to companies with robust performance assumptions and strong operational capabilities. Recommended stocks include Bosideng (03998), Jiangnan Buyi (03306), and Taobo (06110). Risk Warning Terminal consumer willingness is less than expected, fluctuations in raw material prices, and intensified competition