Guosen: Clothing retail in March continues the high prosperity trend, optimistic about the brand targets with high domestic demand prosperity and high dividends.

Guosen released a research report stating that in terms of brand apparel, they are optimistic about the rebound in brand sales in the first quarter, focusing on the booming sports and outdoor sectors and high-yield targets. In March, the clothing retail sector continued its strong trend, with the e-commerce channel maintaining a leading growth rate in sports and outdoor sectors. They continue to be optimistic about brands that have deep layouts in the high-end segments and running tracks. They are also paying attention to the increase in upstream raw material prices and the performance elasticity brought by the high order outlook. In terms of the clothing market, the textile manufacturing sector has performed better than brand apparel since April, with the textile manufacturing and brand apparel sectors up by +1.3% and +1.0% respectively. The textile manufacturing sector in the Hong Kong stock market has risen by 5.3% since April, outperforming the overall market. They are focusing on companies that have shown leading performance since April, including Zhejiang Xinao Textiles Inc. (14.3%), Texhong Textile Group (12.5%), Weifu Company (10.7%), ANTA SPORTS (10.6%), Anta (10.3%), Bros Eastern Co., Ltd (8.1%), 361 DEGREES (7.8%), CRYSTAL INTL (7.1%), ANTA for short (6.8%), STELLA HOLDINGS (5.3%), Le Coq Sportif (4.9%), YUE YUEN IND (4.4%), JNBY (3.9%), POU SHENG INT'L (3.8%), Hla Group Corp., (3.8%), and Adidas (3.4%). Key points from Guosen: Market review Since April, the A-share textile and apparel index has been weaker than the overall market, with textile manufacturing outperforming brand apparel, up by +1.3% and +1.0% respectively. The Hong Kong stock market textile and apparel index has risen by 5.3% since April, performing better than the overall market. Companies that have shown leading performance since April include Zhejiang Xinao Textiles Inc. (14.3%), Texhong International Group (12.5%), Weifu Company (10.7%), ANTA SPORTS (10.6%), Anta (10.3%), Bros Eastern Co., Ltd (8.1%), 361 DEGREES (7.8%), CRYSTAL INTL (7.1%), ANTA (6.8%), STELLA HOLDINGS (5.3%), Le Coq Sportif (4.9%), YUE YUEN IND (4.4%), JNBY (3.9%), POU SHENG INT'L (3.8%), Hla Group Corp. (3.8%), and Adidas (3.4%). Brand apparel perspective 1) Omni-channel: Clothing retail sales in March increased by 7% year-on-year. The overall clothing consumption in the first quarter has rebounded, possibly due to the extended Spring Festival holiday; 2) E-commerce: In the first quarter of 2026, e-commerce performance was mixed, with outdoor and sports maintaining rapid growth, while leisure, home textiles, and personal care were relatively under pressure. Year-on-year growth in sports apparel/outdoor apparel/leisure apparel/home textiles/personal care was +12%/+31%/-2.9%/-11.7%/-1%. Among them, Adidas (+37%), Le Coq Sportif (+34%), and FILA (+26%) led the growth in sports apparel; among outdoor brands, Camel (+40%), Decathlon (+36%), and Columbia (+37%) performed better. In leisure apparel, JNBY (+82%), Dada (+63%), and Lilang (+61%) were at the forefront of growth; in home textiles, Yaduo Planet (+34%) maintained rapid growth; in personal care, Taotao Oxygen Cotton (+41%), Vinda (+20%), and Seven Degree Space (+19%) led the growth. 3) RED: From December 2025 to February 2026, the top three sports and outdoor brands in terms of fan growth in the past three months were Adidas (44.3%), LI NING (25.6%), and Berghaus (22.5%); among leisure and fashion brands, the top three were Biem.L.Fdlkk Garment (16.6%), Haggis (14.5%), and MIUMIU (10.1%); among mother and baby personal care brands, the top three were Liberty Point (36.2%), Taotao Oxygen Cotton (20.7%), and Ness Princess (6.0%). Textile manufacturing perspective 1) Textile exports: In March, Vietnam's textile exports increased by +3.1% year-on-year, while shoe exports increased by +2.5% year-on-year, accelerating from January to February; China's textile/clothing/shoe exports in March decreased by -28.5%/-29.4%/-39.6% year-on-year, with accumulative growth rates in the first quarter being +2.8%/-0.4%/-8.0% respectively. The significant decline in exports in March was mainly due to the timing of the Spring Festival, Middle East geopolitical conflicts, and high base effects from last year; Indonesia/India/Vietnam PMI all decreased month-on-month by -3.7/-3.0/-2.5, but remained above the critical line of 50. 2) Raw material prices: Since the beginning of the year, both domestic and international cotton prices have been rising, up by +8.8%/+12.1% to 16,919 yuan/ton and 14,550 yuan/ton respectively; both have continued to rise in April, up by +0.4%/+5.1%, with the price gap between domestic and international cotton starting to narrow. Wool prices have risen by 20.9% to $12.34 per kilogram since the beginning of the year, and as of April 2nd, they were up by 56.8% compared to the same period last year. Prices of PA6 and PA66 have increased by 37.5%/61.2% to 13,933 yuan/ton and 25,100 yuan/ton respectively since the beginning of the year, and as of April 15th, they were up by 19.8%/42.1% compared to the same period last year, and have shown month-on-month changes of -1.2%/+20.3% since April. 3) Taiwanese manufacturing: Taiwanese companies' revenue has generally recovered after the Spring Festival disruption, with a mixed year-on-year performance. With the peak season and the World Cup stocking driving enhancement, the overall outlook for the year is optimistic. Looking ahead, as the 2026 World Cup approaches in North America, demand for football shoes and related sports products is expected to continue to rise from the second quarter onwards, combined with traditional strong seasons for sports shoes and outdoor products. Most companies expect revenue to improve season by season from the second quarter onwards. At the same time, companies continue to accelerate capacity layout in Southeast Asia and low-tariff regions to optimize costs and mitigate geopolitical risks. However, exchange rate fluctuations, Middle East situations, and potential pressure on raw material costs are still the main variables to be monitored going forward. Special focus: First-quarter performance outlook for textile and apparel Key companies in the brand apparel sector are expected to achieve positive growth in the first quarter of 2026, with varying growth rates. Most brands are expected to see slower profit growth compared to revenue growth, mainly due to increased marketing spending or factors related to channel structure. ROE based on channel structure and major product pushes is expected to lead the profit growth. In addition, Biem.L.Fdlkk Garment, Zhejiang Semir Garment, and Shenzhen Fuanna Bedding and Furnishing are all expected to achieve high-single to low-double digit revenue and profit growth. In terms of textile manufacturing, the order outlook for upstream manufacturing in the first quarter is expected to be better than midstream assembly, with cotton and wool products having price increase logic. Bros Eastern Co., Ltd is expected to have the highest order outlook and the fastest business growth, while Kaifeng Ruin main expects profit growth to be driven by Jiale. However, profit margins in general are affected by exchange rate losses. Risk alert: Weak macroeconomic conditions; international political and economic risks; significant fluctuations in exchange rates and raw material prices.