According to Zhitong Finance APP, Guosen released a Research Report stating that in December, the A-share Textile Manufacturing Sector declined by 1.5%, underperforming against the Large Cap, while the Hong Kong stock Textile Manufacturing Sector was basically flat with the Large Cap. Among them, the sales growth rate of Clothing brands in the fourth quarter improved significantly compared to the third quarter, and the annual expectations after the sector's third-quarter report were adjusted relatively sufficiently, with the fourth quarter basically meeting those expectations. The Textile Manufacturing sector maintained a high level of prosperity in the fourth quarter, with high performance completion for the year, and the fundamentals are expected to continue to catalyze. Additionally, the depreciation of the Renminbi in the fourth quarter exceeded expectations, and some companies are expected to benefit from product unit prices and exchange rate earnings.

Guosen Securities' main points are as follows:

Market Review: In December, the A-share Textile Manufacturing Sector declined by 1.5%, underperforming against the Large Cap, while the Hong Kong stock Textile Manufacturing Sector was basically flat with the Large Cap. Among the key companies in A-shares and Hong Kong stocks, Hla Group Corp., Winner Medical, and TOPSPORTS saw an increase exceeding 20%, while Biem.L.Fdlkk Garment, JNBY, PRADA, STELLA HOLDINGS, and PACIFICTEXTILES rose over 10%.

Clothing Outlook: The year-on-year growth rate of Apparel Retail in October-November was 1.1%, showing significant improvement compared to the third quarter.

In October-November, e-commerce platforms maintained rapid growth in outdoor products, with women's wear and home textiles growing by double digits. In December, the sales growth rate of each brand further improved compared to the cumulative growth rate of October-November, and performance in the Clothing sector in the fourth quarter is expected to stabilize; with the Spring Festival holiday coming earlier in January, this is expected to further stimulate clothing consumption demand.

Textile Manufacturing Outlook: In December, the PMI in Vietnam fell month-on-month, while the PMIs in China and Indonesia increased.

In November, Vietnam's textile and footwear exports experienced high growth, increasing by 17.4% and 19.9% year-on-year, respectively; while China's textile exports grew by 9.3% year-on-year. In November, the Keqiao textile prosperity index improved year-on-year but decreased month-on-month; the weaving machine operating rate in the Shengze area was 75.4%, slightly declining compared to the previous month. Among the commissioned **** companies, most reported year-on-year revenue growth in November, with a 17% growth rate for footwear OEM Yuanyuan; Juyang saw a rebound in revenue in December. Due to policy uncertainties, clients placed orders cautiously, but the willingness to purchase in the first quarter remains relatively good.

Fourth Quarter Performance Outlook:

1) Clothing: The growth rate of brand revenue in the fourth quarter has improved significantly compared to the third quarter. The quarterly reports of each brand were released in late October, and indications of a recovery in the fourth quarter were already evident at that time, with adjustments to the full-year performance expectations being relatively sufficient; revenue from brands in the fourth quarter has generally met previous expectations.

2) Textile Manufacturing: In the fourth quarter, textile manufacturing enterprises continue to experience high order volumes, with high fulfillment of annual performance. Most companies maintained double-digit growth for the full year. Additionally, the depreciation of the Chinese Yuan in the fourth quarter exceeded expectations, and most manufacturing enterprises are likely to benefit from product price increases or exchange gains.

Investment Suggestions: Pay attention to new highlights of brands and opportunities for undervalued Hong Kong stock allocations.

1) Clothing: Revenue growth rates of each brand in the fourth quarter have shown a significant improvement compared to the third quarter, and the sector has adjusted its full-year expectations relatively sufficiently after the quarterly reports.

Key recommendations for companies with new highlights in 2025 include Winner Medical (300888.SZ), which is gaining momentum with the All Cotton Era brand; Hla Group Corp. (600398.SH), which is expanding new growth curves through JD.com's outlet; Zhejiang Semir Garment (002563.SZ), which is actively expanding channels; and leading sports brands with high cost-performance ratios on the Hong Kong stock market with good medium-term growth potential, such as ANTA SPORTS (02020), LI NING (02331), and TOPSPORTS (06110), as well as high-dividend home textile leader Shenzhen Fuanna Bedding and Furnishing (002327.SZ).

2) Textile Manufacturing: The sector is expected to maintain a high level of prosperity in the fourth quarter, with fundamentals likely to continue driving catalysis.

At the same time, the depreciation of the renminbi in the fourth quarter exceeded expectations, and some companies are expected to benefit from product unit prices and exchange rate gains; from the perspective of sustainable growth, it is recommended to focus on enterprises with the ability to increase market share and strong medium to long-term growth sustainability. Key recommendations include the leading sports manufacturing company Shenzhou International Group Holdings Limited Unsponsored ADR (02313), Huali Group (300979.SZ), as well as leading companies in segmented manufacturing sectors such as Zhejiang Weixing Industrial Development (002003.SZ), Zhejiang Jasan Holding Group (603558.SH), and Anhui Korrun (300577.SZ).

Risk warning: Weak macroeconomic environment; international political and economic risks; significant fluctuations in exchange rates and raw material prices.