Core Viewpoint - The report from 首创证券 emphasizes the need to focus on two investment themes in the brand apparel sector amidst a backdrop of consumption structure upgrades and economic pressures, highlighting the importance of companies that meet "quality-price ratio" consumer demands and those aligned with "emotional" consumption trends [1] Group 1: Market Overview - The textile and apparel sector has outperformed the market, with a 5.5% increase since the beginning of the year, surpassing the Shanghai and Shenzhen 300 Index by 7.3 percentage points [1] - As of June 13, the price-to-earnings ratio (TTM) for the textile and apparel sector stands at 25.54, slightly above the historical average since January 2020 [1] - The apparel and home textile segment has a TTM price-to-earnings ratio of 26.54, slightly below its historical average, while the textile manufacturing segment has a TTM price-to-earnings ratio of 20.12, which is below its historical average [1] Group 2: Textile Manufacturing Insights - Raw material prices for cotton and chemical fibers are at historical lows, improving cost conditions for textile companies, although upstream pricing remains under pressure [2] - Domestic demand is benefiting from national subsidies and new consumption trends, leading to steady growth in domestic sales [2] - The textile manufacturing sector faces fluctuating export data due to tariff negotiations, but U.S. demand remains resilient, and the competitive landscape varies among brands [2] - Long-term, Southeast Asia is expected to absorb the textile supply chain from China, with leading textile manufacturers having established significant barriers in terms of delivery, customer relationships, and responsiveness [2] Group 3: Brand Apparel Trends - As income levels rise, domestic consumers are expected to increasingly seek out spiritual and emotional consumption, despite economic pressures and low consumer confidence [3] - The coexistence of "quality-price ratio" and "emotional" consumption demands is noted, with outlet stores thriving on the "big brand + small price" model, showcasing resilience during economic cycles [3] - The IP derivative products sector reflects "emotional" consumption trends, with rapid growth in China and Southeast Asia, indicating significant future potential as the industry is still in its early development stages [3] - The outdoor sports sector is showing high growth potential, evolving towards specialization and segmentation, with leading companies expanding their brand portfolios [3]

Investment Rating - The report maintains a "Positive" investment rating for the industry [5] Core Insights - The report emphasizes the importance of quality-price ratio in consumer behavior, indicating a shift from brand premium to value-driven purchases [58][65] - The outdoor segment is highlighted as a growing opportunity, driven by increasing consumer interest in health and wellness [65][68] - The report identifies a significant potential in discount retail and urban outlet formats, particularly in lower-tier cities where consumer demand is rising [81] Summary by Sections International Perspective on Apparel Opportunities - The report discusses the evolution of consumer phases, particularly the transition to Consumption 3.0, where opportunities arise from structural factors such as high GDP per capita and low marriage and birth rates, leading to increased leisure time and outdoor activities [18][20] - It highlights the success of brands like Uniqlo in Japan, which capitalized on quality-price ratio and innovative fabric technology to dominate the market [26][31] Domestic Market Focus - The report outlines the shift in consumer preferences towards quality-price ratio, with consumers increasingly seeking better value for their purchases [58][60] - It details the transformation paths for domestic apparel brands, focusing on supply chain and channel innovations to enhance operational efficiency [62][63] - The report notes the rising popularity of urban outlet formats, which combine brand offerings with discount pricing, particularly appealing to consumers in lower-tier cities [81]

Core Insights - The trend of consumers pursuing high cost-performance ratio is rapidly developing, with discount retail potentially becoming a mainstream consumption channel in the future [2][3] - The focus on discount luxury goods has significantly increased, and the company is enhancing its efforts in luxury goods flash sales to meet new consumer demands in the high-end market [3] Group 1: Consumer Trends - Consumers are increasingly seeking high-quality products at lower prices, aiming for a balance between quality and affordability [2] - The growth of discount retail companies like TJmaxx in the US and Don Quijote in Japan indicates a strong resilience and faster growth compared to traditional retail, suggesting a similar trend may emerge in China [2] Group 2: Company Strategy - The company is leveraging its global network of buyers to source authorized luxury goods at the lowest prices, while also providing subsidies to enhance consumer pricing [3] - A strategic partnership with China Inspection ensures product authenticity, addressing consumer concerns about quality [3] Group 3: Customer Experience - High repurchase rates are driven by quality, price, and service, with the company focusing on enhancing user experience through exclusive collaborations and a diverse range of products [3] - The introduction of over 1,500 new brands, including notable Nordic designer brands, aims to attract high-value users [3] Group 4: AI Integration - The company is exploring AI applications, with its self-developed "Zhao Che" model being utilized for intelligent generation of product descriptions to improve user shopping experience [4] - Plans for Q1 2025 include further development of AI marketing platforms and operational efficiency enhancements through the "Zhao Che" model [4]

Core Viewpoint - The new consumption sector is gaining traction in the capital market, driven by trends such as emotional value and self-consumption, leading to significant stock performance and the emergence of multiple tenfold stocks [1][5]. New Consumption Trends - New consumption is characterized by supply-driven demand, focusing on opportunities that emerge from economic development and changing consumer preferences, particularly in emotional and quality-price ratio consumption [3][6]. - The rise of new consumption is attributed to younger consumers, particularly Generation Z, who prioritize individual experiences and quality over mere affordability [6][10]. Market Performance - The new consumption sector has shown strong performance, with notable stocks like Pop Mart reaching new highs and others like Old Puhuang and Mixue Ice City experiencing significant gains after their Hong Kong listings [5][8]. - The current market interest in new consumption is fueled by strong fundamentals and rapid earnings growth of related companies, attracting both traditional and new capital [9]. Investment Strategies - Investment in the consumption sector requires a balanced approach, focusing on both traditional and emerging consumption opportunities, with an emphasis on identifying alpha opportunities in niche markets [11][12]. - A "barbell strategy" is recommended, targeting high-growth areas in emotional and spiritual consumption while also securing stable cash flow from essential consumer goods [12][13]. Future Outlook - The new consumption sector is expected to continue benefiting from policy support, consumption upgrades, and technological innovations, with a potential for valuation recovery as the macroeconomic environment stabilizes [9][10]. - There is a recognition that while emotional and self-consumption trends will persist, their forms will evolve with generational changes, necessitating ongoing exploration and adaptation [10].

Investment Rating - The report initiates coverage on Nanji E-commerce with a "Buy" rating and a target price of 6.00 RMB, corresponding to a 26x PE for 2026 [1][9]. Core Views - The company is undergoing a significant brand transformation, shifting from an open authorization model to a self-sourcing and invitation-based franchise model, aiming to enhance product quality and restore brand image [1][2]. - The company is expected to achieve positive revenue growth in 2024, with a focus on expanding product SKUs and enhancing both online and offline sales channels [1][20]. - The report highlights the company's strategic pivot towards a "quality-price ratio" consumer demand, positioning itself as a provider of high-quality products at competitive prices [2][19]. Summary by Sections Company Overview - Nanji E-commerce, established in 1998, operates under national brand Nanji Ren and international brands such as Cardin Crocodile and Baijiahao, focusing on e-commerce and brand authorization services [1][25]. Brand Transformation - The company is implementing a dual-track operation model combining self-sourcing and franchise, enhancing product capabilities through collaboration with high-quality suppliers and luxury design teams [3][19]. - The introduction of a light luxury product line in September 2024 has significantly improved brand perception, with daily sales increasing from approximately 200,000 RMB to 20 million RMB by the end of December [2][20]. Supply Chain Reform - The company is reforming its supply chain by adopting a SPA model, which includes self-sourcing and a whitelist invitation system for franchises, thereby creating industry barriers [3][19]. - The focus on high-quality materials and advanced production techniques is expected to enhance product competitiveness and meet consumer demands [3][19]. Sales Channels - The company is leveraging both online platforms like Douyin and traditional e-commerce channels to drive sales, with Douyin's GMV showing a year-on-year increase of 103% in December 2024 [4][20]. - Offline, the company is testing self-operated retail through pop-up stores, with plans to open fixed stores in 2025, which could become a future growth driver [4][20]. Financial Projections - The report forecasts the company's net profit for 2025-2027 to be 331 million RMB, 575 million RMB, and 796 million RMB respectively, with a significant turnaround expected in 2025 [6][21]. - Revenue is projected to grow from 3.995 billion RMB in 2025 to 5.605 billion RMB in 2027, reflecting a compound annual growth rate of approximately 18.9% [6][21]. Market Positioning - The report contrasts its views with the market, asserting that despite previous challenges, the brand's strong recognition and strategic repositioning towards quality-price ratio will enable it to regain growth momentum [5][24]. - The company aims to continuously enrich its product offerings and expand its market presence, particularly in the homewear and bedding categories through its Baijiahao brand [20][23].

Core Viewpoint - The article discusses the rise of discount supermarkets like "万客来" and their impact on urban retail, highlighting their unique business strategies that attract a diverse customer base and generate high foot traffic. Group 1: Market Presence and Growth - Discount supermarkets like 万客来 have rapidly expanded across major cities in China, including Beijing, with stores often spanning thousands of square meters and attracting large crowds, especially on weekends [4][18][20]. - These stores have become local favorites, with 万客来 opening in 20 provinces and 潮衣库 reportedly generating nearly 10 billion in annual sales [4][5]. Group 2: Business Model and Customer Engagement - The business model of these discount supermarkets focuses on low prices and high volume, with products often displayed in a chaotic manner to create a sense of urgency and excitement among shoppers [11][12][27]. - Strategies such as offering free shopping bags and hosting promotional events help attract customers and encourage repeat visits, effectively turning these stores into community hubs [32][33][50]. Group 3: Consumer Trends and Preferences - There is a noticeable shift among younger consumers away from brand loyalty towards value-driven purchases, with many willing to buy non-branded or lower-cost items as long as they meet basic quality standards [41][43][47]. - The article emphasizes that the success of these discount stores is not solely based on low prices but also on providing a satisfactory shopping experience and customer service, including return policies and alterations [52][53][54].