Core Viewpoint - The company has signed a strategic cooperation agreement with Suzhou Nengsida Electronic Technology Co., Ltd. to jointly develop flexible electronic skin based on natural leather and bio-based materials [1] Group 1: Company Overview - The company focuses on the entire industry chain of natural leather, high-bio-based regenerated leather, and the development and application of environmentally friendly materials [1] - The collaboration aims to incubate flexible electronic skin products, enhancing the company's development in high-end new energy vehicle interior components, footwear, and luggage sectors [1] Group 2: Industry Implications - The partnership is expected to drive material innovation, providing downstream customers with more functional products [1] - The agreement is a framework document and will not have a significant impact on the company's current performance, but it is anticipated to positively influence the company's operating results in future years [1]

Group 1 - The textile manufacturing sector saw a slight increase of 0.07% on September 17, with Lianfa Co., Ltd. leading the gains [1] - The Shanghai Composite Index closed at 3876.34, up 0.37%, while the Shenzhen Component Index closed at 13215.46, up 1.16% [1] - Key stocks in the textile manufacturing sector included Lianfa Co., Ltd. with a closing price of 11.14, up 5.09%, and Huayi Group with a closing price of 54.66, up 3.72% [1] Group 2 - The textile manufacturing sector experienced a net outflow of 108 million yuan from main funds, while retail investors saw a net inflow of approximately 90.79 million yuan [2] - Notable stocks with significant fund flows included Lianfa Co., Ltd. with a main fund net inflow of 29.73 million yuan, and Wanshili with a net outflow of 29.57 million yuan from speculative funds [3] - The overall market sentiment showed a mixed trend, with some stocks like Lianfa Co., Ltd. attracting main fund interest while others faced outflows [3]

Market Overview - The textile manufacturing sector experienced a decline of 0.55% on September 12, with Xingye Technology leading the drop [1] - The Shanghai Composite Index closed at 3883.69, up 0.22%, while the Shenzhen Component Index closed at 12996.38, up 0.13% [1] Stock Performance - Notable gainers in the textile manufacturing sector included: - Baosheng Fashion (002042) with a closing price of 5.58, up 10.06% and a trading volume of 1.1243 million shares, totaling 610 million yuan [1] - Lixing Youxin (605189) closed at 15.25, up 4.17% with a trading volume of 54,600 shares, totaling 82.2744 million yuan [1] - Other stocks with minor gains included Xinlong Holdings (000955) at 4.90, up 1.45%, and Jiangnan High Fiber (600527) at 2.29, up 1.33% [1] Capital Flow - The textile manufacturing sector saw a net outflow of 42.4332 million yuan from institutional investors, while retail investors contributed a net inflow of 65.4528 million yuan [2] - The overall capital flow indicates a mixed sentiment, with institutional investors withdrawing funds while retail investors increased their positions [2] Individual Stock Capital Flow - Baosheng Fashion (002042) had a net inflow of 122 million yuan from institutional investors, while it faced a net outflow of 63.3103 million yuan from speculative funds [3] - Other stocks like Bailong Oriental (601339) and Weixing Co. (002003) also experienced varying degrees of net inflows and outflows from different investor categories [3]

Group 1 - The core viewpoint of the article highlights that Xingye Technology's subsidiary, Hongxing Automotive Leather, is currently a supplier for several major car manufacturers including Ideal, NIO, Jianghuai, and Chery [1] - With the arrival of the peak sales season for automobiles in the second half of the year, an increase in sales volume for multiple designated supply vehicle models is anticipated [1] - New designated supply vehicle models such as the Zun Jie S800 and the new NIO ES8 are expected to maintain strong market interest, which will likely lead to an increase in orders for Hongxing Automotive [1]

Group 1 - The core viewpoint is that the automotive sector is expected to perform well in the third and fourth quarters, driven by increased sales during the peak season [2] - The subsidiary, Hongxing Automotive Leather, is currently a supplier for several car manufacturers including Ideal, NIO, Jianghuai, and Chery, indicating a strong market presence [2] - The introduction of new designated supply models such as the Zun Jie S800 and the new NIO ES8 is anticipated to maintain market interest and contribute to sales growth [2] Group 2 - The increase in sales of designated supply models is expected to lead to a rise in orders for Hongxing Automotive [2]

Market Performance - The textile manufacturing sector increased by 1.86% on September 5, with Xingye Technology leading the gains [1] - The Shanghai Composite Index closed at 3812.51, up 1.24%, while the Shenzhen Component Index closed at 12590.56, up 3.89% [1] Key Stocks in Textile Manufacturing - Xingye Technology (002674) closed at 13.49, up 10.03% with a trading volume of 128,000 shares and a turnover of 167 million yuan [1] - Yeguangming (873527) closed at 22.20, up 4.87% with a trading volume of 60,800 shares and a turnover of 141 million yuan [1] - Nanshan Zhishang (300918) closed at 21.31, up 4.21% with a trading volume of 187,500 shares and a turnover of 39.5 million yuan [1] - Huazhong Fashion (002042) closed at 5.25, up 4.17% with a trading volume of 595,800 shares and a turnover of 308 million yuan [1] Capital Flow Analysis - The textile manufacturing sector saw a net inflow of 37.76 million yuan from institutional investors, while retail investors experienced a net outflow of 13.20 million yuan [2] - The main stocks with significant net inflows included Huazhong Fashion (2885.24 million yuan) and Xingye Technology (2417.08 million yuan) [3] Individual Stock Performance - Huazhong Fashion had a net inflow of 2885.24 million yuan, accounting for 9.37% of the total [3] - Xingye Technology experienced a net inflow of 2417.08 million yuan, representing 14.46% of the total [3] - Jin Chun Co. (300877) had a net inflow of 1786.58 million yuan, making up 11.36% of the total [3]

Market Overview - The textile manufacturing sector rose by 0.19% on September 4, while the Shanghai Composite Index fell by 1.25% to close at 3765.88 [1] - The Shenzhen Component Index decreased by 2.83% to close at 12118.7 [1] Top Performers - Night Light (夜光明) led the gains with a closing price of 21.17, up by 3.72% with a trading volume of 19,600 lots and a transaction value of 41.14 million [1] - Jin Chun Co., Ltd. (金春股份) followed closely with a closing price of 26.88, up by 3.70% and a trading volume of 52,000 lots, totaling a transaction value of 139 million [1] - Gu Mo Rong Material (古膜绒材) also performed well, closing at 26.64, up by 3.06% with a trading volume of 108,700 lots and a transaction value of 285 million [1] Underperformers - Yingfeng Co., Ltd. (迎丰股份) saw the largest decline, closing at 7.54, down by 9.59% with a trading volume of 331,100 lots and a transaction value of 252 million [2] - Nanshan Zhishang (南山智尚) decreased by 5.93%, closing at 20.45 with a trading volume of 199,800 lots and a transaction value of 425 million [2] - Ju Jie Microfiber (聚杰微纤) fell by 3.81%, closing at 24.24 with a trading volume of 40,700 lots and a transaction value of 102 million [2] Capital Flow - The textile manufacturing sector experienced a net outflow of 179 million from institutional investors, while retail investors saw a net inflow of 105 million [2] - Speculative funds had a net inflow of 73.85 million into the sector [2] Individual Stock Capital Flow - Gu Mo Rong Material (古膜绒材) had a net inflow of 8.63 million from institutional investors, while it faced a net outflow of 852.23 million from retail investors [3] - Jin Chun Co., Ltd. (金春股份) saw a net inflow of 6.17 million from institutional investors but a net outflow of 626.66 million from retail investors [3] - Notably, Nobon Co., Ltd. (诺邦股份) had a net inflow of 15.52 million from institutional investors, but retail investors experienced a net outflow of 1.50 million [3]

Investment Rating - The investment rating for the company is "Buy" with a target of outperforming the industry index by more than 15% over the next six months [4][17]. Core Viewpoints - The automotive interior leather business continues to grow rapidly, with a nearly 30% increase in the first half of the year. The company achieved a revenue of 1.339 billion yuan in the first half of 2025, representing a year-on-year growth of 6.16%, while the net profit attributable to the parent company was 31 million yuan, a decline of 45.32% [1][2]. - The company has established partnerships with several domestic automotive brands, including Li Auto, NIO, Chery, Geely, and Jianghuai, supplying various models [8]. - The company is leveraging opportunities in the new energy vehicle sector, with expectations for rapid growth in its automotive interior leather segment, which is anticipated to become a second growth curve for the company [8]. Financial Summary - Revenue is projected to grow from 2.7 billion yuan in 2023 to 3.738 billion yuan in 2027, with a compound annual growth rate (CAGR) of approximately 10.4% [1]. - The net profit attributable to the parent company is expected to decline from 186 million yuan in 2023 to 216 million yuan in 2027, with a notable drop in 2024 and 2025 [1]. - The company's return on equity (ROE) is forecasted to improve from 8.9% in 2023 to 9.6% in 2027 [1]. - The earnings per share (EPS) is expected to increase from 0.63 yuan in 2023 to 0.73 yuan in 2027 [1]. Margin and Cost Analysis - The gross margin for the company was stable at 20.49% in the first half of 2025, with a slight year-on-year increase of 0.13 percentage points. However, the net profit margin decreased to 4.76%, down 1.61 percentage points year-on-year due to rising expense ratios [2]. - The automotive interior leather segment showed a gross margin of 34.63%, an increase of 3.22 percentage points year-on-year, while the leather for shoes and bags had a gross margin of 15.68%, a decrease of 2.19 percentage points [2]. Production Capacity and Competitive Advantage - The company has a well-established production capacity with multiple manufacturing bases, including subsidiaries and joint ventures, which allows for effective resource integration and cost control [3]. - The diversified product matrix and sales channels enable the company to maintain a competitive edge in the leather industry, ensuring balanced consumption of raw materials and reducing fixed costs [3].

Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [10]. Core Views - The company's automotive leather business shows strong performance, with a significant increase in orders from new clients and overseas markets, particularly in the electric vehicle sector [2][4]. - Despite a decline in net profit, the overall revenue growth indicates resilience, driven by the automotive segment [2][3]. Summary by Sections Financial Performance - In H1 2025, the company's revenue increased by 6.2% year-on-year to 1.34 billion yuan, while net profit dropped by 45.3% to 30 million yuan [1][2]. - Q2 2025 revenue grew by 7.2% year-on-year to 710 million yuan, with net profit also declining by 45.3% to 10 million yuan [1]. Business Segments - The leather business for shoes and bags saw a slight revenue decline of 0.1% to 850 million yuan due to weak domestic orders, while the automotive interior leather segment experienced a robust growth of 29.5% to 380 million yuan, driven by increased orders from brands like Li Auto and NIO [2]. - The company is expanding its overseas production capacity with ongoing construction in Indonesia and Vietnam, which will support future order fulfillment [2]. Profitability and Costs - The gross margin for H1 2025 increased by 0.1 percentage points to 20.5%, with the automotive leather segment improving its margin by 3.2 percentage points to 34.6%, while the margin for the shoe and bag leather segment decreased by 2.2 percentage points to 15.7% [3]. - Selling and administrative expense ratios increased by 0.3 and 0.7 percentage points, respectively, leading to a decline in net profit margin by 2.2 percentage points to 2.3% [3]. Future Projections - The company is expected to achieve revenue growth of 6%, 9.8%, and 8.4% for the years 2025 to 2027, reaching 3.13 billion, 3.43 billion, and 3.72 billion yuan, respectively [4]. - Net profit forecasts show a decline of 13.5% in 2025, followed by growth of 30% and 19.9% in 2026 and 2027, respectively [4].

Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Views - In the short term, the company's performance is expected to be resilient due to the release of overseas production capacity and the growth of new customers in the automotive leather segment. In the long term, the expansion into the sports industry supply chain, having entered global brands like Adidas and VF, is anticipated to unlock growth and valuation potential. New businesses such as Hongxing and Baotai are positioned for high growth due to industry prosperity, contributing to the company's expected growth [2][5]. Financial Performance Summary - For the first half of 2025, the company achieved revenue of 1.34 billion yuan, a year-on-year increase of 6%, but the net profit attributable to the parent company decreased by 45% to 31 million yuan. In Q2 alone, revenue was 710 million yuan, with a similar year-on-year growth of 7%, while net profit dropped by 45% to 12 million yuan [4][5]. - By business segment, the main domestic sales were a drag on revenue, while automotive leather continued to show impressive growth. The shoe and bag segment saw a slight revenue decline of 0.1% to 850 million yuan, primarily due to weak domestic orders. In contrast, the automotive leather segment reported a 30% increase in revenue to 380 million yuan, driven by strong sales from core customers [5]. Profitability Insights - The overall gross margin in Q2 slightly decreased by 0.2 percentage points to 20.3%. The increase in management expenses and inventory impairment losses negatively impacted profits, with the net profit margin dropping by 1.7 percentage points to 1.7% [5]. Future Profit Forecast - The company forecasts net profits attributable to the parent company for 2025 to 2027 at 120 million, 160 million, and 190 million yuan, respectively, with year-on-year changes of -14%, +34%, and +19%. The corresponding price-to-earnings ratios are projected to be 32, 24, and 20 times [2][5].