According to the Zhitong Finance APP, Ping An Securities published a Research Report stating that based on the logic of gradually recovering terminal consumer options, outdoor sports apparel brands and sports apparel manufacturing enterprises possess the strength and experience to endure through cycles. After valuation adjustments, leading apparel brands and manufacturing enterprises may usher in a new round of market trends. Additionally, due to the expectation of continued old-for-new exchange and subsidy policies in home goods, leading home goods enterprises are likely to continue to benefit, with their market share expected to increase further.

Main Line One: Focus on leading enterprises in segmented tracks with improved market share and cost-effective valuation. In particular, investment opportunities in apparel manufacturing and home manufacturing enterprises are recommended. Suggested attention: Shenzhou International Group Holdings Limited Unsponsored ADR (02313), Huayi Group (300979.SZ), Oppein Home Group Inc. (603833.SH), Jason Furniture (603816.SH), etc.

Main Line Two: Focus on Hakuba Stocks with strong performance certainty and relatively high dividend yields. In particular, it is recommended to pay close attention to apparel brand enterprises with marginal improvements and leading home enterprises with stable dividends. Suggested attention: ANTA SPORTS (02020), BOSIDENG (03998), etc.

The main points of Ping An Securities are as follows:

Market Review: The industry's year-on-year gain and loss ranking is lower.

From the beginning of 2024 to now (December 13, 2024), the fluctuation of the textile and apparel sector is +2.32%, the fluctuation of the light industry sector is +3.89%, while the fluctuation of the CSI 300 Index during the same period is +14.63%; among the 31 primary sub-industries in Shenwan, the textile and apparel sector ranks 25th, and the light manufacturing sector ranks 24th.

From a valuation perspective, since the beginning of 2024 until now (December 13, 2024), the PE (TTM) of the Apparel Sector is 24.9 times, at a central valuation level; the PE (TTM) of the Light Industry Sector is 27.5 times, at the 75th percentile of valuation. In terms of the Apparel Sector, the industry is at a low valuation level with an upward trend; regarding the Light Industry Sector, the overall valuation level is slightly high, mainly due to bullish real estate policies driving the valuation recovery of the home furnishings sector.

Ping An Securities believes that the current valuation of the textile and apparel sector is in a low oscillation period, and the market's pessimistic expectations for downstream have been fully priced in. With the stimulus of consumer policies, the Apparel Sector is expected to迎来 valuation recovery. Currently, the valuation recovery of the Light Industry Sector is positive, and with the continuous effectiveness of real estate policies and the support of home furnishing subsidy policies, the valuation of the Light Industry Sector is expected to maintain an upward trend.

Sports and Outdoor: Valuation bottom layout, industry prosperity upward.

Sports shoes and apparel will continue to be an outstanding sub-industry within the apparel sector. The demand for sports and outdoor products is better, and terminal retail sales are recovering faster. According to Wind data, in October 2024, the retail sales of sports and leisure apparel increased by 48.4% year-on-year, far surpassing men's clothing (up 15.4% year-on-year) and women's clothing (up 15.5% year-on-year).

Stable demand and discounted prices stabilize. National policies will continue to support the sports and outdoor industry, which will drive growth in industry consumer demand. At the same time, it is expected that next year, the discount rates of sports brands will remain stable, which is bullish for brand company performance. Leading companies in the industry are expected to weather the business cycle with a strong safety margin. On one hand, leading companies have relatively low valuations, that is, the PE corresponding to the performance of outdoor sports listed companies in 2025 is at the historical valuation center level. On the other hand, leading companies have high dividend yields, that is, the dividend yield calculated based on the 2023 dividend payout ratio generally ranges around 4%-5%.

Home Furnishing Sector: Valuation recovery improves, expectations for performance improvement.

The valuation of the home furnishing sector is recovering, and the overall industry prosperity is improving. Since the beginning of 2024 until now (December 13, 2024), the PE (TTM) of the home furnishing sector is 22.3 times, above the 75th percentile level of valuation. The overall industry valuation level is slightly high, mainly due to national bullish real estate policies driving the upward recovery of the home furnishing sector's valuation.

Ping An Securities believes that if the home furnishing old-for-new subsidy policy continues to be implemented, the home furnishing sector is expected to maintain a high prosperity level and possess both short-term and long-term investment logic. Leading companies in the industry will benefit fully from the policies, and it is recommended to pay attention to the performance and valuation release rhythm of leading companies. Home furnishing leading enterprises, relying on their brand advantages and operational management, are expected to gain a broader market share and continuously improve brand market share as home furnishing subsidy policies are gradually released. From the perspective of home furnishing brands, select leading companies with improved market share and relatively certain performance.

Risk warning:

Changes in consumer preferences. China's apparel products include a wide variety of categories and brands, with intense competition in each segment. Brand reputation and sales are easily influenced by social opinion, brand promotion efforts, and consumer purchasing power, leading to shifts in consumer preferences for apparel brands and styles. Additionally, changes in fashion trends can occur rapidly, and if apparel brands fail to enhance their interaction with end consumers in a timely manner, it may result in decreased consumer-brand loyalty, subsequently leading to a loss of customer traffic and a decline in performance.

The risk of inventory backlog in brand channels. The consumption environment remains uncertain. If the transaction rate of products for the current season is insufficient, it may lead to inventory backlog in end channels, posing a certain operational risk to the company's healthy development.

Uncertainty in overseas demand. Although the products of apparel export companies have a high cost-performance ratio, the overseas market remains uncertain, which may bring some uncertainty to the performance of light industry and textile export enterprises.

Impact of raw material price fluctuations. If raw material prices rise significantly, and the listed company's product costs cannot smoothly be passed down to downstream, it may negatively impact the profitability of the listed company.

Lower-than-expected downstream demand in home furnishings. Home furnishing and decoration subsidies will bring forward some consumer demand. If the consumption growth slows down in the later stages of the policy, it may pressure the orders of listed companies in stages.