The Company's overseas sales was especially strong, benefiting from the restructuring of the global industrial chain and investment abroad from the Company. The Company posted overseas sales of RMB3,818 mn, representing YoY growth of 34.7% and sequential HoH growth of 20%. Revenue growth in the SEA region was especially strong at RMB1,783 mn, representing YoY growth of 90.0%, sequential HoH growth of 27.2%, and now accounting for 46.7% of the Company's overseas revenue. Benefiting from the acceleration of d ...

Investment Rating - The industry investment rating is Attractive [4] Core Insights - China exports have started to decline, with volumes down significantly year-over-year, indicating muted demand and well-stocked domestic US inventories [3][10] - The report suggests that the expected surge in imports during the 90-day tariff pause did not materialize, leading to lower US import volumes [7] - There is a potential shift in production to the US to avoid tariffs, which may support US manufacturing productivity and increase maintenance, repair, and operations (MRO) demand [7] - The report highlights risks to short-cycle production rates in the second half of 2025, particularly for companies that guided for stability or acceleration without acknowledging pre-buying [8] Summary by Sections China Exports - China maritime exports have shown a mild recovery from April lows but remain down year-over-year, reflecting a lack of urgency in US imports during the tariff pause [3][10] US Import Trends - US import volumes, particularly from LA and Long Beach, have decreased in May and June, suggesting a potential shift in supply chain strategies [12] Manufacturing and Production - The report indicates that US manufacturing capacity utilization has increased post-election, with a notable disconnect between ISM New Orders and Imports, suggesting a strategic relocation of production [7][17] - The report anticipates an extended capital expenditure upcycle in the US, benefiting from protectionist policies and resulting in strong backlogs for certain companies [8] Company-Specific Insights - Companies such as 3M, Lennox International, and Stanley Black & Decker are identified as most at risk for channel digestion in the second half of 2025 [8] - The report emphasizes a preference for US capital expenditure exposure, particularly in light of the current economic policies [8]

Core Viewpoint - The article highlights the significant impact of recent tariff increases on various industries, particularly the fashion and apparel sector, emphasizing that the consequences of these tariffs may outweigh the political drama surrounding them [1]. Group 1: Tariff Impacts - On February 1, Trump signed an executive order imposing tariffs on imports from China, Mexico, and Canada, eliminating the $800 tax exemption for low-value goods, which significantly affects daily consumer goods like clothing and toys [1]. - As of March 4, an additional 10% tariff on imports from major Asian countries was announced, bringing the total tariff to 20%, severely undermining the cost advantages previously enjoyed by businesses [1]. - For the fashion industry, the cumulative tax burden has increased from 0% to 42% for certain products, threatening the viability of fast-fashion platforms that rely on competitive pricing [1]. Group 2: Industry Dynamics - The domestic apparel industry has historically benefited from cross-border e-commerce, allowing factories to sell excess capacity overseas, but this advantage is diminishing due to increased competition and shrinking profit margins [3]. - By the second half of 2022, the average monthly production of popular items dropped significantly, from 500,000 units to below 300,000 units, indicating a decline in business performance [3]. - Fast-fashion platforms are experiencing a revenue increase of less than 20% in 2024, while profits have plummeted by 40%, leading to increased penalties for factories due to rising return rates [3]. Group 3: Supply Chain Shifts - The article discusses the potential shift of supply chains to Vietnam as a response to tariff pressures, with platforms attempting to redirect orders to manufacturers in Vietnam, which currently faces no additional tariffs [6]. - However, the article argues that this strategy may be shortsighted, as future tariff policies could expand to include Vietnam, and the existing supply chain infrastructure in regions like Guangdong is not easily replicable [6]. - Domestic initiatives, such as the development plans in Qingyuan, are aimed at upgrading the textile and apparel industry, offering incentives for businesses to remain and grow within China rather than relocating [6][7]. Group 4: Long-term Strategy - The article suggests that businesses should focus on leveraging China's established supply chain advantages rather than blindly following platforms to Vietnam, as this could jeopardize their long-term competitiveness [7].