Group 1: Market Performance - The A+H apparel stocks have underperformed the market since the beginning of the year, with A-share textile and apparel sector rising by 11.1%, lagging behind the CSI 300 index by 8.8 percentage points [14][16]. - The Hong Kong textile and apparel sector has seen a significant increase of 59.9%, outperforming the Hang Seng Index, which rose by 29.1% [15][16]. - The performance of overseas apparel stocks has been mixed, with luxury brands leading the market [17]. Group 2: Industry Analysis - From January to September 2025, the retail sales growth of clothing, shoes, and textiles in China was 3.1%, below the overall retail sales growth of 4.5% [22][23]. - The export growth of textiles and apparel from China was 2.1% and -2.5% respectively, while Vietnam's textile and footwear exports grew by 12.0% and 7.4% [25][27]. - Cotton prices have remained stable, while wool prices have surged since July, and goose down prices have fluctuated [28][31]. Group 3: Company Fundamentals - In Q3 2025, A-share brands showed a sequential improvement in performance, particularly in the home textile sector, with companies like Luolai Life and Mercury Home Textiles performing well [42][48]. - The Hong Kong sports brands faced pressure in Q3, but niche outdoor segments maintained high growth rates [45][47]. - The net profit consensus for most brands has been revised downward, with home textiles and outdoor sports experiencing relatively smaller adjustments [48][49]. Group 4: Trend Outlook - The textile manufacturing sector is expected to recover in 2026 due to tariff reductions, improved visibility, and enhanced operational efficiency [4]. - The Chinese sports market is viewed positively, particularly for growth brands in niche segments, while the luxury sector is expected to benefit from changes in customer demographics and innovative mid-range brands [4][48]. - The sleep economy presents significant growth potential, with leading home textile brands leveraging technology to drive growth [4].

Core Viewpoint - The report from Guotai Junan indicates a slowdown in China's textile and apparel retail growth in July, while online sales are accelerating. In contrast, U.S. textile and apparel retail has seen two consecutive months of acceleration in growth [1][2]. Group 1: China Textile and Apparel Retail - In July, China's retail sales of clothing, shoes, and knitted goods increased by 1.8% year-on-year, showing a slowdown compared to June's growth of 1.9%. Cumulatively, from January to July, the retail sales grew by 2.9% year-on-year, compared to a mere 0.5% in the same period last year [2]. - Online retail sales of clothing in China from January to July grew by 1.7% year-on-year, accelerating from 1.4% in the first half of the year, but down from 6.3% in the same period last year [2]. Group 2: U.S. Textile and Apparel Retail - In July, U.S. retail sales for clothing and accessories increased by 5.0% year-on-year, accelerating from June's growth of 4.7%. Cumulatively, from January to July, the growth was 4.4% year-on-year, compared to 2.0% in the same period last year [2]. Group 3: Performance of Taiwanese Manufacturers - In July, several Taiwanese manufacturers reported a slowdown in revenue growth compared to June. For instance, Yu Yuan's revenue growth was +0.5%, Feng Tai's was -8.8%, and Yu Qi's was +5.2%, contrasting with June's growth rates of +9.4%, -3.1%, and +23.3% respectively [3]. - The latest quarter saw strong brand momentum for On and Coach, with On managing to offset tariff impacts through price increases. Coach anticipates a $160 million impact on gross profit due to tariffs in FY26 [3]. Group 4: Company-Specific Insights - Tapestry reported FY25 revenue of $7.01 billion, a 5% year-on-year increase, with a gross margin rise of 2.1 percentage points to 75.4%. The net profit attributable to the parent company was $180 million, affected by an $850 million loss provision for Kate Spade, but showing a 25.6% growth when adjusted [3]. - Coach's performance was strong, with a neutral growth rate of 10% for the year. In FY25 Q4, Coach's growth accelerated to 13%, with core markets like North America, China, and Europe growing by 16%, 22%, and 12% respectively [3]. - On reported FY25 Q2 revenue of 750 million Swiss francs, a 32.0% year-on-year increase, with a gross margin increase of 1.6 percentage points to 61.5%. The company raised its full-year guidance for revenue growth to at least 31% [4].