Soochow Securities·2025-12-11 14:22Core Insights - The report is optimistic about the recovery of upstream orders and emphasizes the importance of brands that can adapt and innovate in response to consumer needs [2][19]. Brand Apparel - The domestic brand apparel industry has entered a phase of stock competition, with limited growth opportunities. The performance of leading brands is increasingly reliant on their ability to attract consumers rather than on channel expansion [2][19]. - Three key areas for growth are identified: new home textiles, functional apparel, and strongly differentiated brands. Notable recommendations include: - New Home Textiles: Driven by the sleep economy and self-care consumption, brands like Mercury Home Textiles and Luolai Life are expected to perform well [2]. - Functional Apparel: Brands such as Anta Sports, Li Ning, and Bosideng are positioned to benefit from the growing health and outdoor lifestyle trends [2]. - Strongly Differentiated Brands: Companies like Cotton Era, focusing on 100% cotton products, are experiencing rapid growth [2]. - High dividend stocks recommended include Hailan Home, Luolai Life, and Semir Apparel [2]. Textile Manufacturing - The report notes a decrease in uncertainty regarding tariff policies, stabilization in European and American retail, and low inventory levels among international brands, suggesting a potential recovery in upstream orders [2][19]. - Recommendations for textile manufacturing companies include Shenzhou International, Weixing Co., and Huali Group, with a focus on high dividend stocks like Yuyuan Group and Jingyuan International [2]. Market Performance Review - The textile and apparel sector has seen a slight underperformance compared to the broader market, with a year-to-date increase of 12.45% as of December 9, 2025, compared to a 16.84% increase in the CSI 300 index [7][10]. - The apparel and home textile segments have shown similar performance, while the accessories segment has outperformed, with a 17.1% increase [13][14]. Consumer Environment - The domestic consumption environment remains weak, with apparel retail performance lagging behind overall retail growth. For instance, the cumulative year-on-year growth for apparel retail was only 2.9% from January to October 2025 [27][23]. - The consumer confidence index has shown a slight recovery but remains at historical low levels, indicating ongoing challenges in consumer spending [25][27]. Company Performance - The report highlights that many key apparel companies have experienced revenue declines, while a few have maintained growth. For example, companies like Anta, Li Ning, and Bosideng have shown consistent revenue expansion [30][32]. - The profitability of the brand apparel sector has been under pressure, with net profits not keeping pace with revenue growth in many cases [28][32].