Investment Rating - The report maintains an investment rating of "Synchronize with the market" for the textile and apparel industry [1]. Core Viewpoints - The textile and apparel industry has shown a steady market performance over the past year, with notable growth in specific segments such as sports and entertainment products, which saw a year-on-year increase of 25.7% from January to May 2025 [14]. - The report highlights the successful IPO of Zhou Li Fu on June 26, 2025, raising approximately HKD 12.92 billion, with a first-day market capitalization of around HKD 130 billion [13][68]. - 361 Degrees has rapidly expanded its retail presence, opening 49 new stores in 2025, establishing itself as a new landmark for urban sports consumption [13][73]. Summary by Sections Company Overview - Zhou Li Fu, established in 2004, has grown significantly, with over 4,125 stores by the end of 2024, and has been recognized as one of China's top 500 most valuable brands for nine consecutive years [20][68]. - The management team includes experienced individuals with over 20 years in the gold and jewelry industry, focusing on overall business strategy and supply chain management [4][20]. Product and Revenue Breakdown - In 2024, gold jewelry products accounted for 91.0% of Zhou Li Fu's revenue, while diamond-inlaid jewelry and other products contributed 9.0% [21]. - The company has seen a compound annual growth rate (CAGR) of 35.8% in revenue from 2022 to 2024, increasing from CNY 3.102 billion to CNY 5.718 billion [23][69]. Channel Distribution - As of 2024, revenue contributions from franchise stores, self-operated stores, online channels, and other businesses were 50.5%, 8.0%, 40.0%, and 1.5%, respectively [22]. - Online sales have experienced a CAGR of 46.1% from 2022 to 2024, with online revenue making up 40.0% of total revenue in 2024 [22][70]. Financial Performance - Zhou Li Fu's net profit grew from CNY 575 million in 2022 to CNY 706 million in 2024, with a CAGR of 10.8% [23][69]. - The company's gross profit margin has shown a decline, attributed to a decrease in high-margin service fee income from franchise channels and competitive pricing strategies in online sales [23]. Market Dynamics - The SW textile and apparel sector saw a 1.36% increase in the week of June 30 to July 4, 2025, while the SW light industry manufacturing sector rose by 0.58% [10][24]. - The report notes that the textile manufacturing sub-sector has a PE-TTM of 20.09, while the apparel and home textiles sub-sector has a PE-TTM of 27.21, indicating varying levels of market valuation [31]. Industry News - Anta is set to open its first retail store in Beverly Hills, California, marking a significant step in its international expansion strategy [7][65]. - Zhou Li Fu's successful market entry and rapid growth in the jewelry sector highlight the potential for recovery and growth in traditional jewelry companies as consumer demand rebounds [14][68].