Investment Rating - The report maintains a positive outlook on the textile and apparel industry, highlighting the potential for recovery and growth in domestic demand in 2025 [5][12]. Core Insights - The textile and apparel sector has underperformed the market recently, with the SW textile and apparel index dropping by 5.7% from April 7 to April 11, lagging behind the SW All A index by 1.3 percentage points [6]. - Anta's acquisition of the German brand Jack Wolfskin is seen as a strategic move to enhance its outdoor segment, with the brand expected to complement Anta's existing portfolio [11]. - The report emphasizes the importance of domestic demand recovery as a key investment theme for 2025, particularly in light of changing international trade dynamics [12]. Summary by Sections Market Performance - The textile and apparel sector has shown weakness, with significant declines in both the apparel and textile manufacturing indices [6][9]. - Recent data indicates a 3.3% year-on-year increase in retail sales for clothing and textiles, totaling 262.4 billion yuan in January and February [30]. Company Developments - Anta's Q1 performance exceeded expectations, with a notable increase in sales across its brands, including a 70% increase in other brands [11]. - The report highlights the strong financial performance of Huayi Group, which reported a 19.35% increase in revenue for 2024, reaching 24 billion yuan [11]. Industry Trends - The report discusses the impact of U.S. tariff policies on the textile supply chain, noting a significant imbalance in global tariff structures, particularly affecting Chinese exports [13][14]. - The cross-border e-commerce sector is adapting to tariff challenges, with companies focusing on diversifying supply chains and reducing costs [16]. Investment Recommendations - The report recommends investing in quality domestic brands that are poised for recovery, particularly in the sports and outdoor segments, as well as in home textiles and children's clothing [5][12]. - Specific companies highlighted for potential investment include Anta Sports, Bosideng, and Huayi Group, among others [5].

Group 1 - The core viewpoint is that the target price for Li Ning (02331.HK) has been raised to HKD 16.25 while maintaining a "Neutral" rating due to a lack of significant catalysts in the short term [1] - The report indicates that foot traffic has not shown a noticeable recovery, reflecting a cautious outlook for the future [1] - The conservative financial guidance provided by the company suggests a careful approach to future performance [1]

Investment Rating - The investment rating for the company is Neutral [3][12]. Core Insights - The company is expected to maintain stable revenue and gross margin performance in 2025, with a target price set at HKD 16.25, indicating a potential upside of 11.9% from the current closing price of HKD 14.52 [2][8]. - The company achieved a revenue of RMB 28.68 billion in 2024, reflecting a year-on-year growth of 3.9%, primarily driven by a 7% increase in footwear sales [8][14]. - The gross margin improved by 1 percentage point to 49.4%, attributed to better discount management in e-commerce channels and enhanced efficiency in direct sales channels [8][14]. - The management announced a dividend of RMB 0.5848 per share, increasing the payout ratio to 50% [8][14]. Financial Overview - Revenue projections for the company are as follows: RMB 29.08 billion in 2025, RMB 30.81 billion in 2026, and RMB 32.86 billion in 2027, with corresponding year-on-year growth rates of 1.4%, 5.9%, and 6.6% respectively [5][14]. - Net profit is expected to decline slightly to RMB 2.97 billion in 2025, with a net profit margin of 10.2% [5][14]. - The company plans to optimize its product mix and maintain or slightly improve gross margins despite external uncertainties [8][14]. Performance Metrics - The company’s earnings per share (EPS) are projected to be RMB 1.15 in 2025, with a price-to-earnings (P/E) ratio of 11.9 [5][14]. - The dividend yield is expected to be around 4.2% in 2025, increasing to 5.5% by 2027 [5][14]. - The company’s cash and cash equivalents are projected to grow from RMB 5.44 billion in 2023 to RMB 10.65 billion in 2027 [14][15].

Core Viewpoint - The recent escalation of tariffs and countermeasures has put unprecedented pressure on import and export companies, but it also presents new opportunities for domestic brands as the focus shifts towards local consumption [1][2]. Group 1: Impact of Tariffs on International Brands - The introduction of tariffs has significantly affected international brands like Nike, which has seen its production costs in Vietnam, Indonesia, and China rise by over 30% [14][17]. - Nike's production in Vietnam has increased from 12% in 2019 to 51% currently, indicating a heavy reliance on this region for manufacturing [8]. - Adidas has experienced a decline in revenue in China, dropping from 45.46 billion yuan in 2018 to 30.97 billion yuan in 2024, with its market share decreasing from 20.74% to 13.08% [18]. Group 2: Opportunities for Domestic Brands - The shrinking market share of international brands due to tariffs creates opportunities for domestic companies to capture this market [23]. - Since 2018, domestic brands have gained traction, with 78.2% of consumers frequently purchasing local products [29]. - Li Ning has seen significant growth, with a revenue increase of 31.85% to 138.80 billion yuan in 2019, and its stock price surged nearly 20 times from 5 HKD to 102 HKD [31][33]. Group 3: Future Market Dynamics - The Chinese sports market is expected to grow, with the government aiming for the sports industry to reach a total scale of 5 trillion yuan by 2025 [41]. - The focus on domestic demand and innovation will likely become the main development line for companies in the face of international trade tensions [50]. - Investors are encouraged to focus on companies with high localization of revenue and competitive advantages in the domestic market [51].

Investment Rating - The investment rating for the company is Neutral with a target price of HKD 16.25, indicating a potential upside of 11.9% from the current closing price of HKD 14.52 [2][7]. Core Insights - The company is expected to maintain stable revenue and gross margin performance in 2025, with a projected revenue of RMB 29,080 million, reflecting a year-on-year growth of 1.4% [3][6]. - The management anticipates that the gross margin will remain stable or slightly improve, supported by product mix optimization and operational cost management [7][8]. - The running category has shown significant growth, with retail sales increasing by 25% and total sales of the three core IPs exceeding 10.6 million pairs [7][8]. Financial Overview - Revenue for 2024 is projected at RMB 28,676 million, a 3.9% increase from 2023, with footwear sales contributing RMB 14,300 million, up 7% [6][8]. - The net profit for 2024 is expected to be RMB 3,013 million, with a net profit margin of 10.5% [6][8]. - The company plans to maintain a dividend payout ratio of 50%, increasing the dividend per share to RMB 0.5848 [7][8]. Operational Performance - The company has successfully optimized its channels, closing 83 inefficient stores while increasing the number of Li Ning YOUNG stores by 40 [7][8]. - E-commerce revenue has increased, now accounting for 31% of total revenue, highlighting its role as a key growth driver [7][8]. - The company aims to strengthen its leading position in the running category while nurturing emerging categories such as outdoor and tennis [7][8]. Financial Projections - The projected financials for the next few years include: - Revenue: RMB 29,080 million in 2025, RMB 30,809 million in 2026, and RMB 32,855 million in 2027 [6][13]. - Net profit: RMB 2,971 million in 2025, RMB 3,375 million in 2026, and RMB 3,871 million in 2027 [6][13]. - The company’s gross margin is expected to be 49.5% in 2025, with a slight increase to 50% by 2027 [14].

Group 1 - FIL Limited's stake in Li Ning decreased from 5.27% to 4.97% as of April 7 [1] - The average share price during this period was 15.5828 HKD [1]

Core Viewpoint - Li Ning's 2024 financial report shows stable revenue growth but a decline in net profit, raising concerns among investors about its competitive position in the market [1][5]. Financial Performance - Total revenue for 2024 reached 28.676 billion RMB, a year-on-year increase of 3.9% [2][5]. - Gross profit margin improved by 1 percentage point to 49.4% [5]. - Net profit decreased by 5.5% to 3.013 billion RMB, marking the second consecutive year of decline [1][6]. - The company reported a net cash inflow from operations of 5.268 billion RMB, up 12.4% year-on-year [5]. Market Position and Competition - Compared to competitors like Anta and Xtep, which reported double-digit growth in net profit, Li Ning's performance appears lagging [1][6]. - Anta's revenue grew by 13.6% to 70.826 billion RMB, with net profit increasing over 50% to 15.596 billion RMB [6]. - Xtep and 361 Degrees also showed stronger revenue growth rates of 6.5% and 19.6%, respectively [6]. Product Performance - Li Ning's footwear segment remains a significant revenue contributor, generating 14.3 billion RMB, a 6.8% increase [7]. - The running category saw a retail sales increase of 25%, driven by the growth of marathon events [7]. - However, basketball and lifestyle segments experienced declines of 21% and 6%, respectively, indicating challenges in product competitiveness [8]. Operational Challenges - The company faced challenges with a reduction of 201 direct stores and an increase in inventory turnover days to 64 days, reflecting ongoing inventory pressure [8]. - Inventory levels increased by 4% to 2.598 billion RMB, indicating a need for better inventory management [8]. Strategic Focus - Li Ning's management emphasizes a strategy of "steady operation" while focusing on core areas such as running and training, and exploring new categories like outdoor and tennis [9]. - The company aims to enhance operational efficiency and brand building, with a focus on a single brand strategy that may need clearer differentiation among its sub-brands [9]. - Recently, Li Ning regained the official partnership with the Chinese Olympic Committee, which could enhance its brand visibility and market positioning [9]. Industry Context - The competitive landscape in the sportswear market is intensifying, with each brand facing unique challenges [10]. - Li Ning's ability to innovate in research and development, refine brand positioning, and expand globally will be crucial for its future success [10].

Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Insights - The report indicates that major US consumer companies are cautious about future fiscal year expectations, primarily due to tariff pressures and consumer downgrading trends in the US market. However, companies like Walmart and Lululemon express a more optimistic outlook for the Chinese market [3][23] - Recommendations include buying leading sportswear brand Anta Sports (02020), and considering Li Ning (02331), Xtep International (01368), and Tabo (06110) for buying or holding. Additionally, long-term prospects are favorable for resilient leading manufacturers such as Shenzhou International (02313), Weixing Co., Ltd. (002003), and Huali Group (300979) [3][23] Summary by Sections US Consumer Giants Performance - Walmart's FY26 revenue growth guidance is 3-4%, with a same-store sales increase of 23.1% in FY25Q4, driven by strong e-commerce and new store openings [10][13] - Target expects FY25 revenue growth of about 1%, with same-store sales remaining flat, facing pressure from tariffs and operational costs [14][15] - Dollar General anticipates FY25 revenue growth of 3.4-4.4%, with core consumers facing economic challenges and a notable trend of consumer downgrading [17][18] - Nike projects a mid-double-digit revenue decline for FY25Q4, with significant inventory issues and a 15% revenue drop in the Greater China region [19][20] - Lululemon expects FY25 revenue growth of 5-7%, with a strong growth forecast of 25-30% in the Greater China region [21][22] Investment Recommendations - The report suggests a cautious approach towards US consumer giants due to tariff pressures and consumer behavior changes, while highlighting positive growth prospects in China for certain brands [3][23]

Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Insights - The company reported a strong performance in its 2024 financial results, with total revenue of 28.68 billion, a year-on-year increase of 3.9%, and a net profit attributable to shareholders of 3.01 billion, a year-on-year decrease of 5.5%. The overall performance met the upper expectations, and after accounting for a new impairment of investment properties of 0.33 billion, the performance was considered to be above expectations [2][6] Summary by Relevant Sections Financial Performance - The gross profit margin improved steadily, with an operating profit margin (OPM) performance exceeding expectations. In 2024, the gross margin increased by 1 percentage point to 49.4%, driven by improvements in e-commerce and direct sales discounts [9] - The OPM for the second half of the year increased by 0.9 percentage points to 8.9%, and when excluding the impairment of investment properties, the OPM increased by 3.3 percentage points to 11.2% [9] Revenue and Growth - The company maintained a healthy growth in channels, with revenue growth aligning closely with sales growth across all channels. The offline new retail accounted for 85% of total sales, and the inventory turnover ratio was stable at four months [9] - The revenue growth trend appears positive, although increased expenses are anticipated. The company expects to see growth in bulk sales, but the divestment of overseas business, which accounts for 2% of total sales, has caused some drag [9] Future Outlook - Short-term revenue growth may be challenging due to significant expense increases related to Olympic sponsorship and associated marketing costs. The company is expected to balance expenses with growth, but short-term revenue growth may not be evident [9] - In the medium to long term, the company is focusing on optimizing operational quality and seeking growth opportunities amid intensified competition. The management has been working on improving operational efficiency, which may lead to a healthier growth trajectory in the future [9]

Investment Rating - The industry investment rating is "Positive" and maintained [8] Core Insights - The brand sector shows steady recovery in Q1 under consumer promotion policies, with most companies achieving positive growth, outperforming expectations. The performance varies across sub-sectors, with mid-to-high-end menswear showing strong growth, sports retail maintaining steady growth, and mass brands also experiencing a rebound. Profitability varies due to differentiated cost control and operational leverage [2][4][16] - The manufacturing sector faces short-term pressure as downstream inventory has reached healthy levels, but demand from major export countries is weakening. In Q1, demand from the US and Japan shows marginal weakening. Most brands and retailers have returned to healthy inventory levels, but weak overseas demand is expected to limit replenishment momentum, affecting order elasticity in the related supply chain [2][4][17] Summary by Relevant Sections Brand Sector - Q1 retail sales of clothing and textiles increased by 3.3% year-on-year, with a month-on-month increase of 3.6 percentage points [20] - Mid-to-high-end menswear brands are leading in retail growth, while the sports sector continues to show steady growth. Mass apparel brands are also experiencing a recovery [20][27] Manufacturing Sector - The manufacturing sector is under short-term pressure due to weak demand from major export markets and healthy inventory levels. The overall order placement is cautious, with expectations of further pressure from tariff forecasts [4][28] Key Company Performance - **Wanjian Medical**: Expected Q1 revenue growth of 30%-40%, driven by non-woven products and strong brand power in sanitary napkins [5][40] - **Zhejiang Natural**: Anticipated Q1 revenue growth of 25%-35%, with net profit expected to increase by 50%-100% [5][40] - **Weixing Co.**: Expected Q1 revenue growth of 10%-15% and double-digit net profit growth [5][40] - **Anta Sports**: Expected Q1 revenue growth in the high single digits, with FILA brand showing mid-to-low single-digit growth [6][20] - **361 Degrees**: Anticipated Q1 revenue growth of 10%-15% for adult apparel and around 15% for children's clothing, with e-commerce growth of about 20% [6][20] Inventory and Demand Trends - The inventory levels of most brands and retailers have returned to a healthy state, with the wholesale inventory destocking nearing completion. However, weak overseas demand is expected to limit replenishment momentum [4][28]