According to Zhitong Finance APP, Zhejiang Merchants Securities released a research report stating that under a relatively stable domestic demand environment, it is expected that the revenue and profit growth rates of most leading apparel brands will show a quarter-on-quarter improvement in Q1 2025. Against the backdrop of external demand fluctuations, domestic demand has gained more attention. Currently, most of the U.S. import tariffs still need to be passed on to American consumers through price increases at the sales terminals by brand owners. Manufacturers, due to their inherently low net profit margins, can only bear limited shares. In this context, the market is relatively more confident in the performance resilience of manufacturers that have a smaller exposure to U.S. demand, or those that serve brand clients with a higher markup (less sensitive to price), and can basically source raw materials locally and complete the entire localized production process in Southeast Asia.
<h2>The main points of Zhejiang Merchants Securities are as follows:</h2>
Brand Apparel: Strong retail performance at the beginning of the year, policies boost confidence
From the retail sales data, the retail sales of clothing, shoes, hats, and textiles from January to December 2024 increased by 0.3%, and from January to February 2025, it increased by 3.3%. This is mainly due to the consumer promotion policies implemented since the end of September, which have improved customer flow and boosted consumer confidence. Under a relatively stable domestic demand environment, it is expected that the revenue and profit growth rates of most leading apparel brands will show a quarter-on-quarter improvement in Q1 2025:
<ol>
<li>
In terms of channel innovation, Hailan Home benefits from the FCC and JD.com outlet projects, leading to increased revenue, combined with stable performance in its original main business, and it is expected that revenue will show positive growth in Q1 2025; SEMIR continues to promote growth through active store expansion and new retail initiatives, but due to ongoing investment in channels, profit growth is expected to lag behind revenue in Q1 2025;
</li>
<li>
In the sports fashion sector, it is expected that the revenue of Biyin will lead the way due to active expansion in channels, but the profit growth rate is expected to lag behind revenue due to the investment in the new brand KC. Hazzys and Lefeiye under Baoxiniang are expected to continue to perform well in Q1, while Baoxiniang and Baoniao still face short-term pressure, thus revenue is expected to remain flat, with profit performance slightly lagging behind revenue;
</li>
<li>
In the home textile sector, benefiting from subsidies and the gradual end of channel destocking, it is expected that Luolai will achieve both revenue and profit growth in Q1 2025, while Fuanna and Mercury Home Textile are expected to experience fluctuations in revenue and profit due to a high base.
</li>
</ol>
In the context of external demand fluctuations and increased attention to domestic demand, the firm suggests looking for stable targets from the following perspectives:
<ol>
<li>Focus on industry leaders that have positive changes in their business operations or maintain a positive expansion momentum, with attractive valuations: Hailan Home, Weiguan Medical, SEMIR, Jinhong Group, Biyinlefen, Baoxiniang; 2) Hong Kong stocks in sports and functional apparel are expected to continue to show resilience: recommend Anta Sports, Bosideng, Xtep International, 361 Degrees, Li Ning, and Taobo; 3) High-dividend home textile leaders supported by clear subsidy policies: Luolai Life, Mercury Home Textile, and Fuanna.</li>
</ol>
Textile Manufacturing: Maintaining growth under high base in Q1, tariff impact to be observed continuously
In Q1 2025, the manufacturing order base is relatively high, but the leaders still maintain positive order growth, and most manufacturers have a relatively stable demand outlook. Since Q4 2023, overseas brand owners have gradually entered a restocking phase after experiencing a year of high growth. Starting from Q4 2024, most manufacturing leaders will enter a high base phase for orders, but benefiting from the positive confidence that most overseas brand apparel companies have in growth for 2025, the order intake of the vast majority of manufacturing leaders remains relatively stable
From the perspective of leading manufacturers in the A-share market, companies such as Huali Group, Kairun Co., Ltd., and Taihua New Materials are expected to maintain double-digit revenue growth in Q1 2025. Weixing Co., Ltd., Jiansheng Group, Xin'ao Co., Ltd., and Bailong Dongfang are expected to maintain single-digit revenue growth in Q1 2025. Profit performance shows slight differentiation; leading companies with more new plants coming online in Q1 2025 may experience a year-on-year decline in net profit margins, but most leading companies still maintain stable or slightly improved net profit margins.
Risk Warning: 1) Brand apparel companies: Consumer recovery is not as expected, weather affects consumer motivation; 2) Textile manufacturing companies: Trade frictions lead to a decline in export demand, fluctuations in commodity prices cause raw material cost volatility, unexpected exchange rate fluctuations

002563

ZheShang Securities released a research report, predicting that under a stable domestic demand environment, the revenue and profit growth rates of most leading apparel brands will improve quarter-on-quarter in the first quarter of 2025. The report pointed out that policies are boosting consumer confidence, with clothing retail sales expected to grow in 2024 and early 2025. Brand apparel such as HaiLan and SEMIR are driving growth through channel innovation and new retail strategies, while sports fashion brands are also expected to perform well. The home textile industry is expected to achieve dual growth in revenue and profit

Zhitong

SEMIR

Weixing

HLIG

TOPSPORTS

BROS

XINAO TEXTILE

MERCURY

ANTA SPORTS

Jasan Group

KORRUN

Luolai

XTEP INT'L

JD-SW

JH Group

LI NING

Taihua New Material

BOSIDENG

BIEM

Fuanna

Zheshang Securities

Winner Medical

HLA GROUP

SAINT ANGELO

ZheShang Securities: It is expected that the performance of leading apparel companies will improve in Q1 2025, with increased attention to domestic demand