In Q3 2025, the A-share apparel sector saw a turnaround in revenue growth, with net profits posting significant gains, primarily due to a lower base in Q3 2024. Among sub-sectors, home textiles performed notably well. Meanwhile, the textile manufacturing segment reported a narrowing decline in both revenue and profits.

Looking ahead, the short-term impact of tariff burdens is expected to conclude by year-end, with future order momentum being the key variable. Most overseas brands completed price hikes in Q3, making Q4 consumption trends (particularly in the U.S., given its high base) a critical indicator. With further clarity on U.S. export tariff policies, midstream OEMs with mature overseas production capacity will likely see heightened order concentration and production advantages.

**Key Industry Insights:** 1) **Demand Trends:** - **Domestic Demand:** From January to September, China’s online retail sales of apparel and related goods rose 2.8% YoY, accelerating from the January-August period. - **U.S. Apparel Retail:** In August, U.S. clothing and accessory store sales grew 8.3% YoY, up from July. Since May, U.S. textile and apparel retail growth has accelerated for four consecutive months.

2) **Export Performance:** - **China’s Exports:** September saw a 1.5% YoY decline in China’s textile and apparel exports, with textiles up 6% and garments down 8%. - **Vietnam’s Exports:** Vietnam’s textile and footwear exports both rose 9% YoY in September, outpacing August.

**Brand Apparel Q3 2025 Recap:** 1) **Performance Review:** A-share apparel sector revenue turned positive (Q2/Q3: -3.0%/0.9%), while net profits surged (Q2/Q3: -22.0%/+10.6%), aided by the low base effect. Home textiles stood out, with Luolai and Shuixing posting robust growth in revenue and profits. 2) **Operational Efficiency:** Most brands saw higher inventory turnover days YoY in Q3, except for Ellassay, Youngor, Luolai, and Shuixing. 3) **Hong Kong Sportswear:** Weak domestic demand and weather factors pressured Q3 sales, with some brands slowing versus Q2.

**Textile Manufacturing Q3 2025 Recap:** 1) **Performance Review:** Revenue declines narrowed (Q2/Q3: -1.9%/-0.4%), led by Yashan, Fuchun, and Kanglongda. Profit declines also eased (Q2/Q3: -20.4%/-11.2%), with Huafu, Lutai, Kairun, and Jasan Group leading gains. 2) **Outlook:** - Tariff burdens will phase out by year-end, with order momentum as the key variable. - Overseas brands’ Q3 price hikes make Q4 U.S. consumption trends pivotal. - Shorter order cycles may lower visibility, impacting OEM valuations. - Overseas production advantages will become more pronounced under clarified U.S. tariff policies. - New capacity ramp-ups and efficiency gains remain under watch, with balanced production allocation being critical.

**Investment Recommendations:** For 2026, export manufacturing’s recovery thesis is clearer, driven by: 1) Finalized U.S. tariff policies, improving visibility. 2) Reduced tariff-sharing pressures with brands. 3) Optimized production lines and efficiency gains. North American consumption remains supported by rate-cut expectations, though Q4’s high base and post-hike consumer reactions warrant monitoring. Top picks: **Huali Group (300979.SZ), STELLA HOLDINGS (01836), Shenzhou International (02313), and Chaoyang International (02111)**.

For brands, focus on: 1) **Home Textiles:** Strong product strategies may spur demand, with low dealer inventories aiding orders. Recommended: **Luolai (002293.SZ), Shuixing (603365.SH), and Fuanna (002327.SZ)**. 2) **Affordable Luxury:** Structural growth opportunities from shifting demographics and product innovation. Recommended: **PRADA (01913) and Samsonite (01910)**. 3) **High-Dividend, Low-Valuation Stocks:** Firms with stable earnings and operational strength, such as **BOSIDENG (03998), JNBY (03306), and Topsports (06110)**.

**Risks:** Weak consumer sentiment, raw material volatility, and intensifying competition.