Investment Rating - The report recommends a focus on strong alpha investment opportunities, particularly in quality leaders with marginal performance improvement and light luxury structural demand [2][35]. Core Insights - The luxury goods industry in Q3 2025 exceeded expectations, with North America leading growth and slight improvement in consumption in Mainland China. Major brands like LVMH, Hermès, KERING, and PRADA reported revenue growth of +1.0%, +9.6%, -5.0%, and +8.5% respectively, all improving from Q2 and exceeding consensus expectations [2][35]. - Adidas and Deckers provided annual revenue guidance that fell short of consensus expectations, with Deckers anticipating more tariff impacts in the second half of the fiscal year [3][35]. - In September, China's textile and apparel retail sales grew by 4.7%, showing acceleration from August, while Swiss watch exports improved, indicating a positive trend in consumption [2][5][35]. Summary by Sections Investment Recommendations - Focus on quality leaders with marginal performance improvement, recommending brands such as Shuixing Home Textile, Luolai Lifestyle, HLA Group, and Ellassay Fashion. Additionally, light luxury brands like Prada and Samsonite are highlighted for structural demand opportunities [2][35]. - On the manufacturing side, the report suggests seeking strong alpha manufacturing leaders like Bros Eastern and Anhui Korrun amidst tariff disturbances [2][35]. Industry Performance - The luxury goods sector showed significant improvement in Q3 2025, with most categories and regions experiencing revenue growth. Notably, Miu Miu's revenue surged by 29%, while Hermès and KERING's brands also reported positive growth [2][35]. - The report notes that while there is a slight improvement in consumption in Mainland China, no fundamental changes in the retail environment have been observed [2][35]. Retail and Export Data - In September, China's retail sales of consumer goods and clothing, shoes, hats, and textiles increased by 3.0% and 4.7% year-on-year, respectively, indicating a positive trend in consumer spending [5][17]. - The report highlights that Swiss watch exports to China grew by 17.8% year-on-year, recovering from a low base [5][35].