Core Viewpoint - In October, Swiss watch exports to China increased by 12.6% year-on-year, marking two consecutive months of double-digit growth. The export value of watches priced between 200-500 Swiss francs has seen a significant decline, while high-end price segments have been relatively less affected [1][2]. Export Data Summary - In October, the year-on-year changes in Swiss watch exports were as follows: global exports decreased by 4.4%, exports to China increased by 12.6%, exports to the US decreased by 46.8%, exports to Japan decreased by 5.6%, exports to Europe increased by 3.3%, exports to Hong Kong increased by 2.4%, and exports to Singapore increased by 5.6%. Month-on-month changes were -1.3%, -5.2%, +8.8%, +2.3%, +0.1%, -18.2%, and -2.7 percentage points respectively [2]. - Cumulatively from January to October, global exports decreased by 1.6%, exports to China decreased by 13.5%, exports to the US increased by 3.7%, exports to Japan decreased by 6.4%, exports to Europe decreased by 0.9%, exports to Hong Kong decreased by 7.4%, and exports to Singapore decreased by 0.8% [2]. - The exports to China in September and October showed significant growth of 17.8% and 12.6% respectively, attributed to a low base from the previous year [2]. Price Segment Analysis - The export values for Swiss watches in October by price segment were as follows: under 200 Swiss francs increased by 8.2%, 200-500 Swiss francs decreased by 0.7%, 500-3000 Swiss francs increased by 9.4%, and over 3000 Swiss francs decreased by 7.1%. Cumulatively from January to October, the export values were down by 2.7% for under 200 Swiss francs, down by 8.7% for 200-500 Swiss francs, up by 0.1% for 500-3000 Swiss francs, and up by 1.6% for over 3000 Swiss francs [3]. - The 200-500 Swiss francs segment experienced the most significant decline, while higher-end segments were less impacted [3]. Future Outlook - Short-term outlook indicates pressure on October export data, with Q4 overseas consumption needing further observation. Looking ahead to 2026, the recovery logic for the export manufacturing sector appears clearer, driven by three main factors: the implementation of US tariff policies, reduced tariff pressure shared with brands, and ongoing improvements in production line allocation and capacity [1]. - The North American consumer market remains supported by expectations of interest rate cuts, with recent luxury brand earnings reports indicating that the North American market is leading in growth and accelerating compared to Q2. However, attention should be paid to the resilience of performance in Q4 against a high base and consumer reactions following price increases in Q3 [1].

Investment Rating - Investment advice is to outperform the market, with a focus on specific companies such as Huali Industrial Group, Stella International Holdings, Shenzhou International, and Best Pacific International [40][16]. Core Insights - October Swiss watch exports to China increased by 12.6% year-on-year, marking two consecutive months of double-digit growth. The overall Swiss watch exports showed a global decline of 4.4% [40][4]. - The report highlights a clearer recovery logic for the export manufacturing sector in 2026, driven by three main factors: clarity in US tariff policies, reduced tariff pressure with brands, and improved production efficiency [40][4]. - The North American luxury market is showing leading growth, supported by expectations of interest rate cuts, although Q4 performance needs to be monitored due to high base effects [40][4]. Industry Data Tracking - In October 2025, China's retail sales of clothing increased by 6.8%, while textile and apparel exports fell by 12.6% [17][19]. - Cumulative textile and apparel exports from January to October 2025 amounted to approximately $243.94 billion, reflecting a year-on-year decline of 1.79% [19][19]. - The report notes that the export of textiles and clothing in October 2025 was approximately $22.26 billion, down 12.64% year-on-year [19][19]. Recommended Stocks and Valuation - Recommended stocks include Huali Group, Stella International, Shenzhou International, and Best Pacific International, all rated as outperforming the market [16][40]. - The report provides earnings forecasts for these companies, indicating a positive outlook for their performance in the coming years [16][40].

Group 1: Textile and Apparel Industry Insights - Cathay Pacific Haitong's report highlights strong stock performance in the Hong Kong textile and apparel sector during the interim report disclosure period, suggesting a focus on quality stocks with cautious or clear interim expectations and stable full-year performance [1] - Notable stock price increases post-interim report include: Yue Yuen Industrial (+10.25%), Samsonite (+0.18%), Crystal International (+13.49%), Xtep International (+16.75%), and Li Ning (+8.78%), attributed to meeting or slightly exceeding market expectations and stable performance forecasts for 2025 [1] - Valuation metrics indicate potential for recovery, with projected P/E ratios and dividend yields for 2025/26 as follows: Yue Yuen (7.3X/6.5X, 10%/11%), Samsonite (11X/10X, 4%/5%), Crystal International (10X/9X, 5.8%/6.4%), Xtep International (12X/11X, 4.0%/4.4%), and Li Ning (18.6X/17.8X, 2.7%/2.8%) [1] Group 2: Swiss Watch Export Trends - In July, Swiss watch exports (excluding the U.S.) showed a month-on-month improvement, with Singapore and Hong Kong leading the growth [2] - Year-on-year export figures for July indicate a global increase of 6.9%, with specific changes for China (-6.5%), the U.S. (+45.0%), Japan (-10.1%), Europe (-2.8%), Hong Kong (+4.6%), and Singapore (+14.8%) [2] - Cumulative export data from January to July shows a year-on-year increase of 1.0% globally, while China experienced a decline of 17.0% [2]