Guoxin Securities textile and garment industry strategy: grasp the direction of the brand boom and pay attention to manufacturing reversal signals

The Zhitong Finance App learned that Guoxin Securities released a research report saying that since the third quarter, the textile clothing index has outperformed the market, and textile manufacturing is better than branded apparel. In the first half of 2026, brands were better than manufacturing, and the industry continued a pattern of moderate recovery in domestic demand, pressure on external demand, and strong differentiation. Outdoor sports have a “boom in mass sports stock competition and professional segmentation”. Home textiles are expected to continue their growth trend as the fall and winter season enters the peak season and is accompanied by the iterative promotion of major single products in the second half of the year. A month-on-month improvement can be expected under clear tariffs, stabilization of raw materials, and downstream inventory restoration. The revenue side is expected to take the lead in recovering. Differences in customer structure are at the core of performance differentiation. Leading valuations are at the bottom of history, and are expected to usher in both fundamentals and valuations.

Guoxin Securities's main views are as follows:

The textile and clothing index is moving higher and lower, and brand fundamentals are better than manufacturing

1) Market review: Since the third quarter, the textile and clothing index has outperformed the market. Textile manufacturing is better than branded apparel. The market style changed in July. Capital flowed from major sectors such as chips in the early stages to undervalued consumer sector targets with strong fundamentals, and the stock price of textile and clothing stocks have generally risen. The August market was dominated by mid-report results, and capital allocation gradually converged from the general rise in the sector, focusing further on performance targets with strong fundamentals; 2) Industry data: zero cumulative year-on-year ratio of +5.8% in January-July. Except for the first negative growth in July, the rest of the month was better than the overall zero; footwear exports from China and Vietnam fluctuated due to tariff and geographical conflicts, but the trend of Chinese footwear exports improved in July. Tariffs are gradually stabilizing, and raw material prices have gradually stabilized, and prices of raw materials have begun to rise again.

Interim report summary: Brand resilience is stronger than manufacturing, manufacturing improved month-on-month in the second quarter

In the first half of 2026, brands were better than manufacturing, and the industry continued a pattern of moderate recovery in domestic demand, pressure on external demand, and strong differentiation. Sports outdoor has “mass sports stock competition, professional segmentation boom”, leading the multi-brand and outdoor-driven market, with high growth in professional niche brands; Anta Sports and Sanfu Outdoor have excellent performance; the internal segmentation of casual wear is obvious, and high-end and differentiated brands stand out. Compared with Yin Levin, the performance of Happy Bird and Semma clothing has been released flexibly; the volume of home textiles has risen steadily, the head is concentrated, and large sleep economy and functional single products are the core engine. Rollei leads the industry with both high revenue and profit margins. Dividend attributes; OEM manufacturing is generally dragged down by prudent brand orders, exchange rates, tariffs, and new factory climbing Under pressure, the trend of month-on-month improvement in the second quarter was clear; profits for textile materials were divided and quality standards increased due to price increases and the order boom.

Outlook for the second half of the year: brand stabilization, manufacturing inflection point nearing

The overall trend on the brand side stabilized. Although clothing consumption was weak in July, there were signs of recovery in August; internal segmentation and continued resilience in high-end consumption; home textiles entered the peak fall and winter season and the iterative promotion of major single products in the second half of the year, and it is expected that the growth trend will continue. The manufacturing side can be expected to improve month-on-month with clear tariffs, stabilized raw materials, and downstream inventory restoration. The revenue side is expected to take the lead in recovering. Differences in customer structure are at the core of performance differentiation. Leading valuations are at the bottom of history, and are expected to usher in both fundamentals and valuations.

Main line 1 - high-end apparel consumption is resilient and booming

High-end consumption has fully recovered and continued to accelerate since the second half of 2025. On the barometer side, Hang Lung's mainland shopping mall tenant sales rebounded from -18% in 24Q3 to +24% in 26Q1, and remained +9% in 26Q2. China Resources Vientiane Life's retail sales ratio in 2025 was +23.7%, the growth rate of luxury stores increased from +1.8% to +15.3%, and 2026H1 luxury stores continued to lead the way; on the luxury side, 2025Q3 was a turning point for the global LV industry. The recovery in the first half of 2026 accelerated, and the Greater China region became the core growth engine. MH and Hermes Asia Pacific maintained positive growth, while Kering recorded significant declines Light luxury brands such as Narrow, Amalfin, and Ralph Lauren are leading the way in growth. Sports outdoor clothing follows a “more expensive, more bought” pattern. The average price of 26H1 sports outdoor clothing rose 19.5% (mainly driven by the increase in the share of high-priced brands), leading brands “increased in volume and price”, and their premium capacity was prominent; most brands of sneakers cut prices, but only high-priced brands increased. Brands with strong ability to innovate mid-to-high-end pricing, segmented scenarios, and differentiated products are expected to stand out.

Main line 2 - the sleep economy drives the upgrading of home textile consumption. Home textile leaders have both growth potential and high dividends

Since 2024, the growth logic of the home textile industry has changed. Starting with Yaduo Deep Sleep Pillow, big single products have become the core growth engine of the brand, relying on sleep health needs and accurate marketing to create explosive products in the industry. Among the bedding shares of the three e-commerce platforms, Yaduo quickly increased from 0.1% in 2021 to 5.7% in 2025, and 2026H1 increased its share to 10.1% with a significantly better growth rate than the market; Mercury and Rollet's e-commerce share ranked second and third, and launched large items such as pillows, mattresses, and quilts to verify that the logic of large products worked, and the average price of leading brands continued to rise. Home textile leaders have steady performance, strong profitability, and abundant cash flow. Rollei and Fuana have dividend rates of 99%/95% in 2025, and dividend rates of about 5%-8%. They have both growth potential and high dividend defense attributes, and both offense and defense.

Main line 3: Tariffs stabilize, raw material prices rise after a pullback, and select manufacturing leaders with improved share and efficiency

Global brand customer terminal demand is stable overall, inventory pressure has eased. Most brands in North America are growing in the latest quarter, and most brands in Greater China have also maintained rapid growth. In 2026Q2, the inventory sales ratio of key overseas brands improved year-on-year, and inventories were low. The tariff side showed signs of stabilization. It is expected to decline this year, and some brands have already received tariff rebates; the price of raw materials began to recover after the price increase at the beginning of the year, but recently there has been another upward trend, and the profit stability of OEM companies is facing challenges. The Q2 growth rate of Taiwanese manufacturing companies improved compared to Q1, but their performance in July was divided. Driven by brand inventory replenishment and new product collection, most companies expect overall revenue in the second half of the year to be better than in the first half.

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.