Haitong: China's textile and garment retail sales and exports both improved month-on-month in August, with textiles outperforming clothing.

Haitong released a research report stating that in August, China's total social consumption goods retail sales / clothing, shoes, hats and textile retail sales increased by +2.1% / -1.6% year-on-year (July +2.7% / -5.2%). Although the year-on-year growth rate of the retail industry has decreased compared to the previous month, the year-on-year growth rate of textile clothing retail sales has improved significantly by +3.6 percentage points. In August, China's textile and clothing exports improved compared to the previous month, with textiles outperforming clothing. The year-on-year export amount of Chinese textiles / clothing was +5.1% / -2.0% (in July, it was +4.0% / -3.6%). Although there is currently uncertainty in tariff policy, Haitong still sees potential in high-quality textile manufacturing companies that have the logic of expanding high-quality customers, increasing supplier shares, and improving profitability. In August, the year-on-year growth rate of textile clothing retail sales in China improved significantly. In August, China's total social consumption goods retail sales / clothing, shoes, hats and textile retail sales increased by +2.1% / -1.6% year-on-year (July +2.7% / -5.2%). Although the year-on-year growth rate of the retail industry has decreased compared to the previous month, the year-on-year growth rate of textile clothing retail sales has improved significantly by +3.6 percentage points. From January to August, the year-on-year retail sales of department stores in China above the quota decreased by -3.3% year-on-year (compared to -3.8% from January to July), and the retail sales of department stores improved slightly in August. From January to August, the year-on-year online retail sales of physical goods / clothing goods were +8.1% / +5.0% (compared to +8.7% / +6.3% from January to July), and the growth rate of online consumption slowed down. In August, China's textile clothing exports improved compared to the previous month, with textiles outperforming clothing. In August, the year-on-year export amount of Chinese textiles / clothing was +5.1% / -2.0% (in July, it was +4.0% / -3.6%). The export performance of various categories improved compared to the previous month. In August, the year-on-year export amount of textiles / shoes from Vietnam was +22.6% / +12.3% (compared to +4.7% / +13.5% in July), indicating a significant improvement in the export of Vietnamese textiles compared to July, and the export growth rate of shoes has maintained double digits for three consecutive months. Overall, in August, both China and Vietnam performed well in the export of textiles and clothing, with textiles outperforming clothing. Manufacturing Taiwanese companies achieved high growth in August compared to the same period last year due to a low base last year, specifically: Footwear manufacturing companies Yuyuan (manufacturing caliber) achieved a revenue of 3.75 billion yuan in August, an increase of 21.1% year-on-year (compared to +22.0% in July and -19.8% year-on-year); Fengtai achieved a revenue of 1.74 billion yuan in August, a decrease of 8.0% year-on-year (compared to +3.2% in July and -2.6% year-on-year); Laiyi achieved a revenue of 760 million yuan in August, an increase of 40.0% year-on-year (compared to +36.9% in July and -16.1% year-on-year); Zhiqiang achieved a revenue of 350 million yuan in August, an increase of 64.3% year-on-year (compared to +38.6% in July and -51.2% year-on-year); Yuqi achieved a revenue of 240 million yuan in August, an increase of 12.6% year-on-year (compared to -9.2% in July and -63.3% year-on-year). In clothing and fabric manufacturing companies, Ruhong achieved a revenue of 0.82 billion yuan in August, an increase of 37.1% year-on-year (compared to +8.6% in July and -30.9% year-on-year). Guangyue achieved a revenue of 0.52 billion yuan in August, an increase of 7.2% year-on-year (compared to +6.2% in July and -14.4% year-on-year). Manufacturing Taiwanese companies achieved high growth in August compared to the same period last year, with Zhiqiang, Laiyi, Ruhong, and Yuyuan performing well. Investment advice. Haitong believes that the textile and clothing sector should focus on three main lines: 1) Although there is currently uncertainty in tariff policy, it is still optimistic about high-quality textile manufacturing companies with the logic of expanding high-quality customers, increasing supplier shares, and improving profitability. It is recommended to pay attention to Huali Industrial Group (300979.SZ), STELLA HOLDINGS (01836), SHENZHOU INTL (02313), Zhejiang Weixing Industrial Development (002003.SZ), Zhejiang Xinao Textiles Inc. (603889.SH). 2) The State Council issued the "Opinions of the State Council on Promoting High-Quality Development of Service Consumption", which clearly pointed out the need to stimulate the vitality of improving consumption, focusing on promoting tourism consumption, sports consumption, etc., which benefits high-quality sports brands and global luggage leaders. It is recommended to pay attention to ANTA SPORTS (02020), LI NING (02331), XTEP INT'L (01368), SAMSONITE (01910). 3) Haitong believes that the market continues to favor the investment theme of low valuation + high dividend certainty. It is recommended to pay attention to Shenzhen Fuanna Bedding and Furnishing (002327.SZ), JNBY (03306), Hla Group Corp., (600398.SH). Risk warning. Consumer preferences change, industry competition intensifies, and the retail environment weakens due to economic downturn.