The Zhitong Finance App learned that CITIC Construction Investment announced the 2027 investment strategy for textile and garment light industry education. Looking ahead to 27 years, the agency believes more attention should be paid to the potential impact of policy changes. Overseas, the US Democratic Party won the midterm elections in both houses. The agency understood that it was essentially a victory for America's livelihood needs. Subsequent suggestions were to focus on US policy changes in tariffs (mass goods), the US-Iran conflict (oil prices), and US dollar interest rates. On the domestic side, the main focus is on policy support to boost domestic demand and real estate. On the alpha side, targets with strong supply innovation capabilities+going overseas are still the best choice.
Textile and clothing ODM: Upstream is superior to midstream in '26, and the mid-stream is expected to gradually recover in '27, focusing on overseas terminal demand and capacity utilization recovery. Downstream brands carefully placed orders in '26, and the revenue and profits of midstream manufacturing companies were under pressure due to tariff allocations, RMB appreciation, and rising raw material and labor costs. For upstream cotton spinning and wool spinning companies, the increase in cotton and wool prices has encouraged customers to place orders. Orders and revenue have been good in 26 years, increased capacity utilization, and low cost raw material inventories have brought profit elasticity. Looking ahead to 27 years, total external demand for textiles and apparel is expected to be resilient. The downstream brand side will continue to differentiate. Some brands, such as Adidas, have positive express sales guidelines. As the effects of tariffs, exchange rates, raw materials, etc. ease marginally, it is expected that midstream manufacturing companies will gradually recover in terms of orders and profits under the base effect, and companies with high-quality customer structures, global capacity layout, and mature management experience are expected to surpass their peers.
Light industry exports: Optimistic about external demand resilience, profits are expected to recover. The revenue side of 26Q3 light industry export companies generally continued the good growth trend, while profits were generally under pressure, mainly due to RMB appreciation and rising raw material prices. Looking ahead to 26Q4, the revenue side is expected to maintain good growth, supported by the peak demand season, base effect, and prices, while profits are still being suppressed by factors such as exchange rates and raw materials. Looking ahead to 27 years, external demand is expected to be resilient, with high order boom in some categories, benefiting from mandatory attributes, rational consumption trends, and equal tax reduction policies between China and the US; profit suppression factors such as exchange rates and raw materials are expected to be marginally mitigated. It is recommended to select leading export chain enterprises with smooth category logic, complete overseas production capacity, and outstanding competitive strength. Durable goods consumption related to the post-real estate cycle will wait to be repaired after interest rate cuts are restarted.
Branded clothing: Sportswear weakened month-on-month, and high-end brands and home textile brands performed well. The division of the 26Q3 sector intensified, and the growth rate of sportswear declined month-on-month due to weather, weak passenger flow, and increased competition; high-end brands performed better by controlling product strength and price bands, and home textiles were superior to the overall sector by being supported by new products and channel development. Looking ahead to 26Q4, the revenue side of Double Eleven and the winter season is expected to improve month-on-month. Sportswear still needs to absorb inventory and discounts, the resilience of high-end brands is expected to continue. Home textiles are driven by big promotions and new products, and the overall profit side is still being suppressed by the pace of discounts and cost investment. Looking ahead to 27 years, internal segmentation is expected to continue. The core variables of sportswear are the new product cycle and structural growth in professional categories (outdoor, running, yoga, etc.), while home textiles benefit from the volume of large single products; it is recommended to select leaders with outstanding brand strength and leading channel efficiency, focusing on new product drivers and online channel profit quality.
Gold jewellery: High price fluctuations in 26 gold prices affect demand, focusing on product differentiation and channel efficiency. High fluctuations in gold prices in 26Q3 curbed terminal wishes. Franchisees tend to be cautious in stocking up. Fluctuations in gold prices also disrupted gross margin and hedging income, and profits were generally under pressure. Looking ahead to 26Q4, weddings just need to be supported seasonally by preparing goods before the Spring Festival. If gold prices stabilize, it is expected to drive a recovery in demand, and profits will still depend on product structure and gold leasing and hedging management capabilities. Looking ahead to 27 years, the driving force of the industry is still mainly products and channels. Product-side high-value-added categories such as ancient gold and cultural IP are expected to attract consumers and contribute to increased gross profit; store closures are expected to come to an end, and improving store efficiency is an important means. It is recommended to select leaders with clear product differentiation, healthy franchise systems, and leading channel efficiency.
Papermaking and packaging: Cultural paper is polished, box board corrugated improvement, and waiting for supply and demand to be rebalanced. Prices of 26Q3 cultural paper and white cardboard continued to bottom out. The price of corrugated cardboard fell after rising above expectations in the 26Q2 off-season. Prices of specialty paper and household paper were relatively stable. The revenue growth of some listed paper companies was mainly driven by volume increases released from new production capacity, and profitability generally weakened month-on-month. Looking ahead to 27 years, it is expected that cultural paper will continue to decline, the supply and demand pattern of boxboard corrugated paper will be optimized, and the profit center is expected to improve; on the policy side, focusing on the inclusion of the paper industry in the national carbon emissions trading market process, small and medium-sized production capacity is expected to gradually clear up under cost and environmental pressure, and leading paper companies with diversified paper structures and an integrated layout of forest pulp and paper are more resilient. The concentration of the metal packaging industry has increased, and industry price collaboration has improved in 26 years; looking forward to the future, leading companies will relocate some production lines overseas one after another, and domestic supply and demand are expected to be rebalanced.
Education manpower: Education leaders are growing steadily and profit margins are rising, waiting for the recovery of manpower demand. The 26Q3 education sector achieved positive revenue growth. K12 education and training leaders maintained double-digit growth under pattern optimization. AI reduced costs and improved efficiency in teaching, research and correction, driving the profitability of the main education industry to continue to improve. The human resources sector was hampered by a weak recovery in macroeconomic demand. Recruitment, headhunting, and flexible employment all weakened, putting pressure on performance. Looking ahead to 26Q4, the education sector is concerned about the pace of fall school renewal and winter vacation enrollment. On the human side, the fall recruitment season is marginally driving corporate customer turnover and platform activity, but companies' recruitment intentions are still cautious. Looking ahead to 27 years, the education sector is a segment in the domestic demand sector where demand is still steady. The high school segment is expected to be superior to the K9 stage. The core focus is on increasing the share of leaders and the continuous implementation of AI efficiency, while manpower needs to wait for corporate recruitment needs to recover.
Medical and aesthetic personal care: The downstream medical and aesthetic care is better than the upstream. Overall, personal care is stable, and attention is paid to new products and channel efficiency. 26Q3 Medical and Aesthetic presented “downstream is better than upstream”. Upstream is affected by increased registration of similar products, pressure on the price system, and advance costs of new product promotion. The pressure on factory price and gross margin is obvious; downstream institutions are gradually recovering their profitability due to relatively steady customer base operations and falling upstream prices. The overall performance of the personal care sector is steady. New product iteration and content e-commerce operation capabilities have become core variables in growth differentiation, and differences in marketing efficiency have led to uneven profit performance. Looking ahead to 26Q4, demand for Double Eleven and New Year's Day gifts will be released centrally. Personal care has peak season flexibility, promotional discounts and marketing expenses, or suppression of single-season profits. Looking ahead to 27 years, upstream medicine and aesthetics look at differentiation (new materials, compound plans) and overseas routes, downstream medical and aesthetic customer base quality and single-store models, and personal care and new product cycle and marketing efficiency improvements. It is recommended to choose the “product power+channel efficiency” two-wheel drive target.
Domestic furniture sales: Continued to decline in 26 years, performance pressure is obvious, and fundamentals are expected to stabilize and improve. Demand for 26Q3 real estate continued to bottom out, and the weakening of new home sales and completed sales gradually spread to home retail. Terminal passenger flow and customer unit prices were under double pressure. The revenue side of customization and software categories generally operated at a low level. The profit side was affected by structural dilution and cost rigidity caused by deepening terminal discounts and increased share of packaging and online channels. Profit margins were clearly pressured, and the industry showed a differentiation of “leading resiliency superior to small and medium-sized brands”. Looking ahead to 26Q4, the large promotion combined with the peak delivery season at the end of the year has a low base effect. The revenue side is expected to improve month-on-month but is still expected to be under year-on-year pressure, and profits will continue to be pressured by discounts and fluctuations in raw material prices. Looking ahead to 27 years, the key to stabilizing the industry is to stop falling in real estate sales and completion, and the continuous release of demand for stock housing renewal, old renovation, and partial renovation. Leading companies are expected to continue to increase their share through the integration of large households, integration of multiple categories, and integrated online and offline operations.
Risk Alerts
1) Risk of fluctuations in raw material prices: Some companies in the industry are in the upper middle of the industrial chain and need to purchase various commodities as raw materials for processing and manufacturing. Direct material procurement costs account for a high proportion of the company's total costs. Fluctuations in raw material prices will directly affect the company's profitability.
2) Increased industry competition: If market competition in various segments intensifies, it may lead to a decline in the average profit margin of the industry, which will have an uncertain impact on the company's operating performance.
3) Consumer demand falls short of expectations: The current business environment and supply chain in domestic and foreign markets will also face uncertainty, causing uncertainty in achieving the company's production and operation goals.
4) Risk of damage to brand image: Brand strength is an important source of premium for most companies in this article, and is also one of the core competitiveness of enterprises. If the brand has misconduct or negative incidents in marketing activities, product design, or quality, it will damage the brand and adversely affect the company's operations.