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Earnings Grew Steadily, WatchingCapacity Deployment in Vietnam Rating (Maintain):BUYTarget price (RMB):15.84 Huatai Research Quarterly Results Review 15 May 2025│China (Mainland) Textile AnalystFAN JunhaoSAC No. S0570524050001SFC No.BDO986fanjunhao@htsc.com+(852) 3658 6000 Weixing’s1Q25 revenuewasRMB980mn, upby22.32% yoy;theattributable netprofit (NP) was RMB100mn, upby28.76% yoy. An industryleader, the companyhassignificantadvantagesinone-stopdesignservicesandfast-responsesupply-chain capabilities. We believe it is wellpositioned to further expand marketshare,supportedbycontinueddeepeningofitsoverseascapacitylayout.Meanwhile, smart production and supply chain strategies are likely to accelerateearningsbeingreleased, in our view. Maintain BUY. Key data Vietnam capacity ramp-up accelerating globalizationFollowing the commencement of operations at its Vietnam industrial park in lateMarch 2024, Weixing’s production has ramped up steadily. We expect solid ordermomentum in 1Q25 to drive a rapid release of NP. According to the disclosedconstruction schedule, Phase II of the Vietnam project is expected to be completedby 2026. Ifitprogressessmoothly, this should in our view support the company’sexpansionintotheEuropean,US,andSoutheastAsianmarkets,furtherdeepening its globalization strategy and facilitating entry into the supply chains ofleading apparel brands. In addition, Weixing continues to advance its‘smartmanufacturing’strategy, introducing advanced ERP systems, intelligent inspectionsystems, and flexible manufacturing frameworks. We expect theseefforts toaccelerate the pace of capacity ramp-up in 2025 anddrive continued improvementin profitability. Profitabilityrising; operational efficiency significantly enhancedIn 1Q25, the company’s gross profit margin (GPM) rose 0.91pp yoy to 38.8%, Source:Wind mainlyduetotheeffectivenessofitsdirectsalesmodelandpersonalizedproducts/services. On the cost side, the administrative expense ratio fell 1.6pp yoyto 11.4%, while the sales-expense ratio remained flat yoy at 9.5%. Continuedimprovement in overall expense ratios supported enhanced profitability, withthenetprofit margin (NPM) upby0.5pp yoy to 10.3%. Operationally, inventoryturnover days declined by 11 days yoy to 111 days, while accounts-receivableturnover days shortened by 2 days yoy to 46 days. At end-1Q25, cash andequivalentswereRMB1.13bn,reflectingsteadyimprovementinoperatingefficiency. Looking ahead, we expect further strengthening of profitability driven bycontinued operational efficiency gains and accelerated capacity release fromVietnam. Earnings forecasts and valuationWe maintain ourprevious earnings forecasts, with 2025 /2026/2027E attributableNPof RMB755/841/942mn. Given Weixing’s expected market-share gains and itsability to outperform the industry, we value the stock at 24.4x 2025E PE,above itspeers’average of11.2x on Windconsensus, for ourunchangedtarget price ofRMB15.84. Maintain BUY. Risks:ordergrowth,overseascapacityexpansion,anddigitalizationtransformation falling short of our expectations. Financials Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, FAN Junhao, hereby certify that the views expressed in this report accurately reflect the personal views of the analyst(s)about the subject securities or issuers; and no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly,related to the inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) Limited (hereinafter referred to as “HFHL”).The information herein is strictly confidential to the recipient. This report is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of the Company merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter“Huatai”)makes no guarantee as to the accuracy or completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. Huataimay issue research reports that contain inconsistent views, assessments and projections with those set out herein at differenttimes. The prices, values and investment returns of the securities or investment instruments referred to herein may fluctuate.Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital mayoccur.Huatai makes no warrants that the information in this report be kept up to date.The information contained in this report may bemodified without notice by Huatai, and investors shall pay attention to such updates or modifications when necessary. HFHL is not a U.S. Financial Industry Regulatory Authority(“FINRA”)memb