Shenwan Hongyuan Securities·2025-08-17 14:15Investment Rating - The report maintains a "Positive" outlook on the textile and apparel industry, highlighting potential growth opportunities in the domestic market and specific companies [2]. Core Insights - The textile and apparel sector underperformed the market, with the SW textile and apparel index declining by 1.4% from August 8 to 15, lagging behind the SW All A index by 4.5 percentage points [3][4]. - Key industry data indicates that from January to July, the total retail sales of clothing, shoes, and textiles reached 837.1 billion yuan, reflecting a year-on-year growth of 2.9% [3][25]. - Exports of textiles and apparel totaled 170.74 billion USD from January to July, showing a slight increase of 0.6% year-on-year, with textile exports rising by 1.6% and apparel exports declining by 0.3% [3][30]. Summary by Sections Textile Sector - Bylon Oriental's H1 2025 profits exceeded expectations, with revenue of 3.59 billion yuan (down 10% year-on-year) and a net profit of 390 million yuan (up 67.5% year-on-year) [9]. - The USDA's August report significantly reduced the global cotton production forecast for 2025/26, indicating a contraction in supply that may support cotton prices [9][10]. - The report continues to recommend Nobon Co., which operates in the non-woven cleaning products sector, highlighting its growth potential due to partnerships with major clients [10]. Apparel Sector - 361 Degrees reported a 11% year-on-year revenue increase to 5.7 billion yuan in H1 2025, with a net profit growth of 9% to 860 million yuan [11][22]. - The company improved its operating cash flow by 227% year-on-year to 520 million yuan, attributed to reduced inventory and slower growth in accounts receivable [11]. - The report emphasizes the resilience of the sportswear segment in domestic demand and suggests monitoring future performance catalysts [11]. Market Dynamics - The report notes that the domestic market is showing signs of recovery, with quality domestic brands beginning to reverse their previous downturns [3]. - It highlights the importance of the U.S. tariff situation and its impact on textile manufacturing, suggesting that companies with strong supply chain positions may benefit from a favorable trade environment [10]. - The report also points out the ongoing challenges in the apparel sector, particularly with brands like Adidas and Nike facing declining sales in the Chinese market [12][20].