Guoxin Securities: Brand Apparel Seizes High-End Consumer Resilience and High Dividend Manufacturing Sectors Focus on Leading Growth and Fundamental Restoration Targets

The Zhitong Finance App learned that Guoxin Securities released a research report saying that the brand side preferred high-end sports outdoor and differentiated leisure leaders had excessive growth rates and strong performance certainty; the manufacturing side preferred leaders with high order visibility and high profit recovery flexibility, taking into account the margin of valuation safety; and the key points for follow-up tracking were Double Eleven stream and ranking, October net sales and export data. 1) Brand clothing: Terminal marginal improvement, high-end sports and outdoor, differentiated leisure, and high-end home textiles continued to be relatively popular. The year-on-year growth rate of clothing companies in September was +1.2%, and the growth rate changed to positive. The cumulative growth rate in January-September was +4.6%. The growth rate in September was significantly restored from -1.0%/-0.5% in July-August. 2) Textile manufacturing: export acceleration, verification of external demand restoration, and order inflection points resonate with profit improvements. In September, clothing exports were +17.8% and textile yarn exports were +25.2%. The growth rate was significantly higher than in July-August; the profit inflection point of Q3 foundry was initially confirmed, upstream manufacturing prices rose smoothly, and Q4 is expected to continue the month-on-month improvement trend.

Guoxin Securities's main views are as follows:

2026 third quarter review

Brand retail sales recovered in September, and manufacturing exports improved quarterly. 1) Brand retail: Zero cumulative year-on-year ratio for clothing companies in January-September, continuous negative growth in July and August (-1.0%/-0.5%), and positive to +1.2% in September; cumulative sales online +3.8%, which is basically consistent with omni-channel. On the e-commerce side, sports and outdoor activities declined deeply in July-August, and recovered in September (sports +4%, outdoor +5%). Asics, Adidas, Kelvin, Bosch, and Decathlon performed, and casual wear and home textiles were still under pressure (-8% and -18% in September, respectively); on the social media side, Adidas ranked first in all four categories, with Li Ning, Uniqlo, and MIUMIU leading the way in increasing fans and interactions. 2) Manufacturing exports: Demand for US apparel terminals is still resilient. Retail sales in August were +4.5%, channel inventory continued to decline; China's textile and garment exports have been trending since July, +23.8%/+20.2% in September, cumulative textiles/garments/footwear +5.4%/+4.8%/-2.5% in January-September, and Vietnamese textiles/footwear +4.4%/+7.7%, growth rate accelerated; Taiwanese foundry companies' revenue decline in Q3 narrowed quarterly in September, with Yuyuan/Ruyang/Juhong/Juhong/Juyang/Juhong/ 100 million YoY +5.6%/+8.3% /+ 24.1%/+14.0%. Ruhong's orders have seen that Q4 was superior to Q3 at the beginning of the second quarter of 2027. 3) Raw materials and inventory: Year-to-date cotton/outer cotton +7.8%/+15.2%, nylon yarn and polyester filament increased by 30%-45%. After the May pullback, internal and external cotton differentiation and price differences narrowed in October; overall inventory sales of key overseas brands increased year-on-year but were still manageable; Adidas, Puma, Deckers, and VF stock sales declined month-on-month and were basically stable year-on-year.

Summary of the three quarterly reports

High-end brands lead the way, OEM profits improve, and upstream manufacturing price increases are realized. The 2026Q3 industry continues the pattern of “weak and stable domestic demand, recovery in external demand, and strong sector differentiation”. Brand-side differentiation has further increased: high-end and differentiated brands have continued to grow rapidly with pricing power and channel quality, while Sanfu Outdoor maintained a double-digit growth rate of revenue and profit, driven by professional outdoor activities, and home textile leader Rollei Life maintained a relatively rapid growth rate; popular brands were generally under pressure, and the growth rate of Semma Apparel fell back to the same level. The revenue and profits of Hailan Home Textiles and Fuana continued to weaken at the same time; Hailan Home's main brand and online channels maintained a relatively rapid growth rate, and group buying investment income declined relatively rapidly. Fluctuations have dragged down apparent performance. The manufacturing side presents two main lines of “midstream repair and upstream price increase”: foundry revenue is still declining but the decline continues to narrow, and profit inflection points were initially established, Huali Group's gross margin increased year-on-month, and Kairun Co., Ltd.'s profit recovered positive growth in a single quarter; upstream materials benefited from rising prices and smooth prices of raw materials such as cotton, wool, nylon, etc.; Weixing Co., Ltd. and Xinao shares increased volume and price increases, profits accelerated. Blum Oriental's revenue growth increased and cost dividends were released. The flexibility to deduct non-profit margins has increased significantly.

Fourth quarter outlook

Brand-side structural differentiation continues, and manufacturing-side orders and profit restoration is imminent. On the brand side, terminals have improved sequentially since September, and the restoration trend continues during the National Day Golden Week. The Q4 brand is expected to maintain a weak recovery and strong differentiation, and the leading high-end outdoor, differentiated leisure and home textile leaders are more decisive. Accelerated exports on the manufacturing side, implementation of tariffs, and customer inventory replenishment jointly promoted an increase in order visibility. Joint restoration on the revenue side and profit side is imminent. Leading valuations are at a historically low level, and there is a foundation for both fundamentals and valuations.

Risk warning: weak macroeconomics and consumer demand; international political and economic risks; large fluctuations in exchange rates and raw material prices; deterioration in the brand competition pattern.