According to reports, Shenwan Hongyuan has released a research report indicating that from January to August this year, retail sales of clothing, shoes, hats, and textiles in China reached 940 billion yuan (up 2.9% year-on-year). In July and August, they increased by 1.8% and 3.1% respectively, showing a mild recovery trend. The essential nature of sports consumption, combined with the outdoor boom, has created structural opportunities to support a high level of prosperity in the sports sector. There is significant K-shaped differentiation within the sector, as high-end and value-for-money markets demonstrate better growth performance due to differing demands. Improvement in domestic demand is a key bullish cue for 2025, with quality domestic brands beginning to reverse their difficulties. Short-term impacts on textile manufacturing have been caused by America's "reciprocal tariffs," leading to a notable depreciation in the share prices of quality blue-chip stocks; therefore, it is advisable to embrace proactive mid-to-long-term factors in pricing. Key points from Shenwan Hongyuan's report include: 1) Resilient domestic recovery, with textile exports better than clothing and footwear, highlighting the competitive edges of overseas production capacity in Vietnam. 1-8 months: Retail sales of clothing, footwear, hats, and textiles in China reached 940 billion yuan (up 2.9% year-on-year), with July and August showing year-on-year growth of 1.8% and 3.1%, respectively. 2) External demand: From January to August, China’s textile and clothing exports amounted to $197.3 billion (down 0.3% year-on-year), including textiles at $94.5 billion (up 1.6% year-on-year) and clothing and accessories at $102.8 billion (down 1.7% year-on-year). In contrast, from January to September, Vietnam's textile exports were $29.7 billion (up 8.6% year-on-year) and footwear exports were $17.8 billion (up 7.4% year-on-year). The export growth in Vietnam exceeds that of China, reflecting regional order differentiation amid shifts in the textile supply chain. Shenwan Hongyuan believes that U.S. tariff policies are creating tariff disparities across production regions, which will further intensify differentiation and accelerate transfers, presenting medium-to-long-term advantages for companies capable of mature overseas operations and global capacity allocation. Hong Kong Stock Market Outlook: Policy boosts sector prosperity, outdoor boom cultivates structural opportunities. The essential need for sports consumption, alongside the outdoor enthusiasm, has together supported a prosperous sports sector. There is a notable K-shaped differentiation within the sector, as the high-end and value-for-money markets perform better due to meeting different needs. Anta, FILA, and outdoor brands are expected to see revenues increase year-on-year by mid-single digits; outdoor brand groups will continue their rapid growth, with 361 Degrees reporting a 10% year-on-year revenue growth in offline sales and Xtep's main brand showing low single-digit revenue growth. In children's clothing: Most brands are still in the recovery phase. Men's clothing: Expected revenue/net profit growth for Hailan Home in Q3 2025 is +5%/+20%, with its main brand's offline channels maintaining positive growth, showing resilience in its fundamentals, while JD.com continues to open stores, potentially contributing more gradually. In contrast, high-end men's clothing is expected to remain under profit pressure in Q3 2025. Women's clothing: The domestic recovery is ongoing, with expected revenue growth for Xinhe (7%), Ge Lisi (flat), and Di Su (flat), and net profit is projected to turn losses into profits or see a 20% growth. Children's clothing: Expected slight revenue growth for Semir and Jiaman, with profits remaining flat, showing recovery compared to Q2 2025, driven by childbirth policy promoting maternal and infant consumption. Brand home textiles: National subsidies boost short-term retail sales, focusing on resilient stocks with alpha. Luo Lai focuses on high-frequency e-commerce data review and refined retail operations, expecting bright performance in Q3 2025 with revenue/net profit year-on-year growth of 8%/40%, surpassing market expectations. Mercury is expected to maintain high growth online, turning offline sales positive, with revenue/net profit up 15%/17% year-on-year. Fuanna is still undergoing an operational adjustment, with expectations for revenue and net profit to decline in Q3 2025. Personal care and household cleaning products: Currently benefiting from a quality upgrade and demand expansion opportunity, with volume and pricing growth stabilizing performance. Expected year-on-year revenue growth for Steady, Yanjiang, and Nuobang in Q3 2025 is +28%/+15%/+20%, with net profit year-on-year changes of +48%/+250%/+18%, continuing the high growth trend from Q2 2025. Among them, Yanjiang benefits from smooth capacity ramp-up, with profit margins expected to improve sequentially, leading to potentially outperforming revenue. Nuobang benefits from branded personal care and household cleaning products and has successfully entered Yonghui's favorite wet wipe supply chain, rapidly expanding production. Higher distribution bonus and effective tax rates have somewhat suppressed profit growth. Steady's apparent profit growth is relatively high due to acquisition consolidation. Textile manufacturing: Ongoing U.S.-China tariff negotiations highlight the value of global capacity layout companies. Midstream: Expected revenue/net profit year-on-year growth for Huali Group in Q3 2025 is +8%/-15%, with short-term margins impacted by several new factories ramping up; outlook for Q4 2025 shows promising margin recovery. In the medium term, Huali is expected to benefit from Nike's supply chain recovery. Upstream: Domestic capacity exposure is more impacted by tariff shocks, emphasizing the value of overseas capacity. Expected year-on-year revenue for Bailong and New Austral in Q3 2025 is +8%/flat, with net profit growth of +20%/+5%, where New Austral benefits from surging Australian wool prices, which are expected to gradually translate into revenue elasticity. Investment Considerations: Improvement in domestic demand is a key bullish cue for 2025, with quality domestic brands starting to reverse difficulties; textile manufacturing is disrupted by U.S. "reciprocal tariffs," and notable depreciation of quality blue-chip stock prices suggests embracing proactive mid-to-long-term factors in pricing. Recommended targets: Sports Outdoor: ANTA SPORTS (02020), BOSIDENG (03998), LI NING (02331), TOPSPORTS (06110), 361 DEGREES (01361), with a focus on Xtep (01368) and Beihai (IPO submitted); Discount Retail: Hailan Home (600398.SH) (including JD.com outlets); Personal Care and Household Cleaning: Yanjiang Holdings (300658.SZ), Nuobang Holdings (603238.SH), Steady Medical (300888.SZ), and Jieya Holdings (301108.SZ). Sleep Economy: Luo Lai Life (002293.SZ), Mercury Home Textiles (603365.SH); IP Economy: focus on Jin Hong Group (603518.SH); Sports Manufacturing: New Austral Holdings (603889.SH), SHENZHOU INTL (02313), Huali Group (300979.SZ), Bailong Dongfang (601339.SH), Weixing Holdings (002003.SZ), with attention to Zhejiang Nature (605080.SH). Risk Warning: Recovery in consumption may fall short of expectations; market competition intensifies; tariff risks; exchange rate fluctuations; raw material price volatility.