Shenwan Hongyuan Securities·2025-09-14 11:12Investment Rating - The report maintains a "Positive" outlook on the textile and apparel industry, highlighting potential investment opportunities in specific segments such as non-woven fabrics and sportswear [2][9]. Core Insights - The textile and apparel sector underperformed the market, with the SW textile and apparel index rising by 0.7%, lagging behind the SW All A index by 1.5 percentage points [4][6]. - Recent industry data indicates a 2.9% year-on-year increase in retail sales for clothing, shoes, and textiles, totaling 837.1 billion yuan from January to July [30]. - Exports of textiles and apparel decreased by 0.3% year-on-year, amounting to 197.27 billion USD from January to August, with a notable 5.0% decline in August alone [30][31]. Summary by Sections Textile Sector - Focus on investment opportunities in the entire non-woven fabric supply chain, with a significant weekly increase of 26% for Yanjiang Co. The production of non-woven fabrics has been declining since its peak in 2020, but the pandemic has heightened hygiene awareness, maintaining a large market scale [9][12]. - Yanjiang Co. has a global production footprint in China, Egypt, the USA, and India, with major clients including Procter & Gamble and Kimberly-Clark, contributing significantly to its revenue [9][12]. - The report recommends Nobon Co. for its growth potential in personal care and new tobacco products, highlighting its strong market position and technological capabilities [10][12]. Apparel Sector - Jiangnan Buyi reported a stable growth in its latest annual report, with a 4.6% increase in revenue to 5.55 billion yuan and a 6.0% rise in net profit to 900 million yuan for FY25 [12][19]. - The sportswear segment shows resilience, with brands like Anta and Li Ning demonstrating strong performance despite market challenges, with Anta's revenue increasing by 14% year-on-year [13][19]. - The report emphasizes the importance of domestic demand recovery in 2025, suggesting that high-quality domestic brands are poised for a turnaround [10][12]. Market Trends - The report notes a K-shaped recovery in retail, with high-end and cost-effective brands performing better. Innovations in retail formats are accelerating, with plans for significant store expansions in the coming year [13][19]. - The textile manufacturing sector is expected to benefit from favorable trade conditions, particularly for manufacturers with strong supply chain capabilities [10][12].