Guolian Minsheng Securities: Choose the global supply chain leader in textile and clothing, seize the structural opportunities of the brand.

Guolian Minsheng Securities released a research report stating that looking ahead to 2026, if there is a turnaround in global demand for textile and clothing retail, clothing brands are expected to enter a passive replenishment phase. In addition, global sports brand leader Nike is at a crucial stage of operational transition, and if the recovery trend strengthens, manufacturers deeply bound to leading brands are expected to achieve order and valuation recovery. On the brand side, the firm is optimistic about the direction of high prosperity brought by structural changes in demand. In terms of personal care and cleaning, consumers' demand for high-quality living continues to grow, offering vast opportunities for the penetration improvement of wet wipes and dry wipes. The main points of Guolian Minsheng Securities are as follows: Retail Review: Retail prosperity is flat, with weakening exports throughout the year In the retail sector, from January to October 2025, China's retail sales of clothing, shoes, hats, and knitting and textile products of large-scale units increased by 3.5% year-on-year, maintaining low single-digit growth. In October, textile and clothing retail sales increased by 6.3% year-on-year, with growth higher than the market, possibly influenced by seasonal consumption trends; since the beginning of 2025, the difference between Wuxi Online Offline Communication Information Technology Co., Ltd. channels has gradually narrowed. In terms of exports, from January to November 2025, the cumulative year-on-year export amount of textiles, clothing, and footwear in China decreased by 3.3% to $305.5 billion, showing a decreasing trend since March; upstream textile exports grew faster than midstream clothing and footwear; in November, the textile export amount turned into positive growth year-on-year, while the decrease in clothing and footwear export amount decreased. Vietnam's textile and clothing exports in 2025 have a relatively superior year-on-year growth rate but have shown a trend of declining after peaking. In terms of sector earnings, from January to November 2025, the Citic Textile and Clothing Index grew by 15.1%, underperforming the Shanghai Composite Index by 0.9pct, and with a growth similar to the Shanghai and Shenzhen 300 Index. In industry horizontal comparison, the change in the textile and clothing index from January to November was ranked 18th out of 30 industries in the first level of the Citic index. From Q1 to Q3 of 2025, the proportion of public funds holding textile and clothing stocks continued to decline, dropping to 0.16% by the end of Q3, indicating a deeper underweight for the sector. Manufacturing: Focus on the Nike chain, leading manufacturers expand global share The performance of global clothing retail is varied, with moderate growth in the US and UK clothing retail and continued pressure in Japan. The current stabilization of US clothing retail inventories and a narrowing decline in wholesale inventories. Although there are differentiated short-term revenue guidance for various brands, with the trend of stabilized inventories, upstream manufacturing orders are expected to recover. At the company level, as of the end of August 2025 in the Nike group FY2026Q1 financial quarter, under fixed exchange rates, the year-on-year revenue decline narrowed to -1%, indicating a shift in business conditions; there are initial signs of recovery in North America and distribution channels in the short term, with the core category of running warming up, leading to manufacturers deeply associated with the brand to achieve order and valuation recovery. Looking ahead to 2026, the temporary easing of US-China trade relations, along with relief from tariff policies, may enhance the certainty of manufacturing orders. In the medium to long term, the trend of globalized positioning of textile and clothing manufacturers continues, and manufacturers meeting the demand for risk diversification in downstream brand supply chains are expected to continually gain share. Brand: Continuously optimistic about the sports and outdoor track, new consumer high-quality growth From Q1 to Q3 of 2025, the growth rates of domestic sports brands showed a downward trend quarterly, but most sports companies still achieved positive revenue growth, demonstrating resilience amid pressured consumption trends. Brands such as Descente, KOLON, Saucony, etc., experienced rapid revenue growth. The multi-level and multi-scenario sports and outdoor market has vast space, with the number of participants in marathon events, as well as the number of domestic off-road events and participants, growing rapidly; the compound growth rate of China's high-performance outdoor clothing market from 2019 to 2024 was approximately 13.8%, reaching a market size of about 102.7 billion yuan in 2024, with a compound growth rate of Chinese brands of about 17.8% over five years. Looking ahead to 2026, the Milan Winter Olympics is expected to stimulate the vitality of ice and snow sports, with sports brands continuously expanding their channels to meet the demands of various market levels. On the other hand, products such as soft wipes and sanitary pads are entering a stage of high-quality growth, with brands that meet consumer safety and comfort needs expected to continue gaining market share. Risks: Fluctuations in tariff policies, recovery of terminal consumer demand falling short of expectations, intensification of industry competition, fluctuations in raw material prices.