Asia-Pacific textile, apparel and footwear OEM monthly tracker: order dispersion continues, Pou Sheng weaker, Goldman trims forecasts for several names

Overview

This report is Goldman Sachs' monthly tracker and 2Q26/1H26 performance outlook for the Asia-Pacific textile, apparel and footwear supply chain, covering Shenzhou, Yue Yuen, Pou Sheng, Makalot, Eclat, Feng Tay and Huali. It updates OEM-sector earnings forecasts and target prices using June operating data, brand-customer commentary, U.S. and European consumption trends, global brand sales and inventories, and raw-material cost changes. The overall conclusion is that sector order and margin trends are largely in line with, or slightly below, previously revised expectations, with sector visibility still low, but valuations for some names already relatively attractive.

Core views

Core views are: first, June OEM performance continued to diverge, with Eclat materially outpacing and footwear manufacturers Yue Yuen and Feng Tay lagging; second, Pou Sheng underperformed due to a muted 618 period, weak foot traffic, and negative same-store sales versus expectations; third, demand uncertainty, rising input costs, slow client repricing and intense manufacturer competition have led Goldman to remain cautious on the OEM sector; fourth, U.S. demand remains resilient, Europe is stable, but Nike read-through on OEM is negative while Fast Retailing and LEVI are somewhat positive toward portions of the supply chain; fifth, Shenzhou and Yue Yuen remain Buy on low valuation and dividend yield appeal.

Analysis framework

The report combines monthly operational-data tracking, 2Q26/1H26 performance preview, earnings forecast revisions, brand-customer reads, regional consumption trends and raw-material cost tracking. At the company level it focuses on revenue growth, order trends, gross margin, operating profit, net profit, target price and valuation multiples; at the industry level it tracks brand-customer inventory, sales growth, input costs, and end-demand in the U.S. and Europe.

Methodology notes

• Valuation methodsP/E target-price method

  Estimate 12-month target prices using 2026E P/E multiples

  Shenzhou target price is based on 13x 2026E P/E, Pou Sheng on 7x 2026E P/E, Eclat on 16x 2026E P/E, Feng Tay and Huali on 13x 2026E P/E, and Makalot on 14x 2026E P/E.

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  Yue Yuen target price is based on SOTP valuation, with Pou Sheng at 7x 2026E P/E and Yue Yuen OEM at 10x 2026E P/E.

• Industry trackingBrand read-through and supply chain mapping

  Infer OEM order risk from global brand sales, inventory and procurement trends

  The report maps performance of brands such as Nike, Fast Retailing and LEVI to supply-chain companies including Shenzhou, Yue Yuen and Huali, and Crystal, to assess order, margin and demand visibility.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Shenzhou International Group (2313.HK)

  Apparel and fabrics OEM/ODM, exposed to demand from customers such as adidas, Uniqlo, Nike and Puma

  Strengths

  Valuation is not high and the Buy rating is maintained; adidas momentum and jersey sales may support growth; functional product mix has improved.

  Weaknesses

  1H26 sales are expected to decline, RMB appreciation is creating FX losses, and gross margin is pressured by tariff pass-through, FX and cost inflation.

  Comparison

  Compared with some footwear OEM peers, Shenzhou benefits from a positive Fast Retailing read, but Nike-related orders still carry visibility risk.

  Risks

  Demand recovery slower than expected, weaker-than-expected cost control, slower ramp of new capacity, currency volatility.

• Yue Yuen Industrial (0551.HK)

  Footwear OEM and related Pou Sheng retail assets

  Strengths

  Dividend yield around 8% remains attractive, valuation is not high, and Buy is maintained.

  Weaknesses

  June OEM sales fell 12% year-on-year, brand replenishment intent remains weak, and both 2Q and 3Q margins are under pressure.

  Comparison

  Short-term growth is weaker than Eclat, but valuation and dividend provide support.

  Risks

  Tariff rises dampen demand, key-customer orders below expectation, slower margin recovery than expected, and declining contribution from Pou Sheng.

• Pou Sheng International Holdings (3813.HK)

  Sportswear retailer, closely tied to Nike/adidas performance in the China market

  Strengths

  Discount levels are stable year-on-year, and the Buy rating is maintained.

  Weaknesses

  June and 2Q sales were below expectations, 618 was muted, foot traffic was weak, and same-store sales turned negative.

  Comparison

  Compared with OEM manufacturers, Pou Sheng is more directly exposed to China sportswear retail demand and brand-structure headwinds.

  Risks

  Slower-than-expected recovery of Nike/adidas growth in China, higher discounting, inventory pressure and operating deleveraging.

• Eclat Textile Co. (1476.TW)

  Fabric and apparel OEM/ODM

  Strengths

  June revenue rose 14.4% year-on-year, demand visibility is around six months, and management maintains a constructive view on 2H26 shipments.

  Weaknesses

  Valuation and target price keep the rating at Neutral, with continued uncertainty around future customer contribution and cost control.

  Comparison

  June performance is clearly stronger than Yue Yuen and Feng Tay.

  Risks

  Speed of new-customer contribution, demand from existing-customer orders, cost control, industry consolidation and FX volatility.

• Makalot Industrial Co. (1477.TW)

  Apparel OEM/ODM

  Strengths

  Three straight months of year-on-year positive growth recovery, with 2Q26 revenue up about 6% year-on-year, supported by a low base.

  Weaknesses

  2Q revenue was below Goldman’s expectation; target price of NT$206 implies around 7% downside, so Sell is maintained.

  Comparison

  Although growth is improving, investment attractiveness remains weaker than the Buy-rated names.

  Risks

  Upside risks include stronger-than-expected apparel demand, tariff declines, and FX/cost-control improvement.

• Feng Tay Enterprises (9910.TW)

  Footwear OEM with higher Nike exposure

  Strengths

  Margins improved sequentially in June, and 2Q revenue was broadly in line with expectations.

  Weaknesses

  June revenue declined 3.9% year-on-year, 2026E-2028E net profit forecasts were lowered, and target price of NT$58 implies about 14% downside; Sell is maintained.

  Comparison

  Growth momentum remains materially weaker than Eclat, with OEM reads on Nike tilted negative.

  Risks

  Upside risks include stronger Nike orders, stronger cost control, faster ramp of new capacity, and currency volatility.

• Huali Industrial Group (300979.SZ)

  Footwear OEM with a more diversified customer base

  Strengths

  Customer base is broad-based, wallet share has improved, and margins are relatively stronger versus peers, so Neutral is maintained.

  Weaknesses

  2Q26 revenue is still expected to decline year-on-year; target price was cut from Rmb38 to Rmb33, and sector and key-customer valuations were reduced.

  Comparison

  Compared with some OEM peers, it has a more diversified customer base and relatively stronger margins, but remains exposed to uncertain sector demand.

  Risks

  Global demand weaker than expected, slower ramp at new factories, weaker-than-expected cost control, and tariff volatility.

Key data

• Eclat June revenue+14.4% yoyUp from about +1% in May, clearly faster, and 2Q revenue at about +4% yoy, in line with Goldman’s expectation.
• Yue Yuen June OEM sales-12% yoy2Q26 OEM sales around -4% yoy, in line with Goldman’s expectation.
• Pou Sheng June sales-9% yoy2Q26 sales around -3% yoy, below Goldman’s prior -2% expectation, and 618 read-through was muted.
• Makalot June revenue+0.5% yoy2Q26 revenue around +6% yoy, below Goldman’s +9% expectation, with the improvement largely base-effect driven.
• Feng Tay June revenue-3.9% yoy2Q26 revenue roughly flat, while EBIT margin improved sequentially to 7.3% and NPM improved sequentially to 7.0%.
• Shenzhou 2026E net profit revisioncut 9%Reflecting slower 1H26 sales growth and FX losses from RMB appreciation.
• Yue Yuen 2026E net profit revisioncut 9%Reflecting 2Q margin pressure, a weaker 3Q seasonal period and raw-material inflation.
• Pou Sheng 2026E-2028E net profit revisioncut 10%-13%Reflecting weaker-than-expected 2Q26 sales and margin trends.

Impact & implications

For portfolio construction, the implication is that the Asia-Pacific OEM sector still lacks a clear short-term upside catalyst, with order visibility and margins still pressured by demand uncertainty, client cost reduction, FX and rising input costs. By comparison, Shenzhou and Yue Yuen are relatively more defensive due to valuation support, dividend yield and stronger customer mix. Pou Sheng remains Buy but faces clearer near-term operating pressure, while Makalot and Feng Tay remain Sell because implied target-price downside is still intact; Eclat and Huali stay Neutral between stronger operating quality and demand uncertainty.

Risks

• Global apparel and sportswear demand recovers slower than expected.
• Order visibility from brand customers remains low and procurement intent is still weak.
• Tariffs, input costs and raw-material inflation continue to squeeze OEM margins.
• Cost-cutting by brand customers may transmit additional pressure to manufacturers.
• RMB, NT$, HK$ and other FX moves affect revenue and profit.
• Key customers such as Nike remain under pressure in China or global sportswear businesses.
• New-capacity or new-factory ramp is slower than expected.
• Weak in-store traffic, 618 promotions and China sports retail demand versus expectations.

What to watch

• Whether 2H26 orders improve on low-base and backfill activity from brands.
• Sales, inventory and procurement guidance from brands such as Nike, adidas, Fast Retailing and LEVI.
• Whether Pou Sheng’s in-store traffic, same-store sales and discount discipline improve.
• Whether raw-material prices alleviate 3Q26 margin pressure once they fall from elevated levels.
• Impact of USD, RMB and NT$ volatility on margins of export-oriented OEMs.
• Whether World Cup-driven traffic in the United States translates into sustained consumption demand.
• Whether European apparel-retail sales continue to stabilize.
• Capacity utilization and new-capacity ramp at companies including Shenzhou, Yue Yuen and Huali.