The UBS report indicates that listed consumer goods companies are performing better than overall consumption in the economy
On April 23, the Ministry of Culture and Tourism launched the 2024 National Culture and Tourism Consumption Promotion Campaign in Zhuhai, Guangdong.
The 2024 National Culture and Tourism Consumption Promotion Campaign is based on the theme of “Cultural Tourism Benefits People and People Share a Better Life”. The event period is from April 2024 to February 2025. It is divided into sections such as National “May 1st” Culture and Tourism Consumption Week, Summer Culture and Tourism Consumption Season, National Day Culture and Tourism Consumption Month, Spring Festival Culture and Tourism Consumption Month, and Thematic Consumption Promotion Activities.
Since this year, China's main consumption data has been rising steadily. As the popularity of offline consumption rises, rental demand in Beijing's major business districts is gradually picking up. Among the many newly opened and upgraded stores, businesses such as outdoor sports, restaurants, and new energy vehicles performed the most. Sales for the first quarter were generally higher than expected.
The director of investment promotion and operation of a shopping center in Chaoyang District of Beijing said that in the first quarter, the occupancy rate reached more than 99%, and sales performance increased by more than 30% over the same period last year. Among the many newly opened and upgraded stores, businesses such as outdoor sports, restaurants, and new energy vehicles performed the most.
Sales for the first quarter were generally higher than expected.
The annual reports of the four major domestic sports brands have all been disclosed. Overall, the performance of Anta, Li Ning (02331.HK), TEP (01368.HK), and 361 degrees (01361.HK) has recovered and grown, and the sports footwear market is picking up at an accelerated pace, ushering in the first “Xiaoyangchun” after the epidemic.
According to China Merchants Securities, retail sales of food and beverage revenue in China increased 6.9% year on year in March, and retail sales of food and beverage sales still achieved a high growth rate against the backdrop of an increase in the same period last year. The national service industry production index increased 5.0% year on year in March. As the May Day holiday approaches, hotel dining is expected to continue to be strong.
UBS upgraded the rating of Chinese stocks to overrated, saying that among the constituent stocks of the MSCI China Index, the consumer and internet industries account for a high share. As consumption shows initial signs of recovery, their performance is expected to perform better.
UBS pointed out in the report that China's holiday consumption data has been strong since the beginning of the year. The performance of listed consumer goods companies is better than overall consumption in the economy. Any rebound in consumer confidence means that household savings may flow to consumption and the market, making UBS more optimistic about corporate profits.
Companies related to the big consumer sector:
Li Ning (02331): Li Ning announced the latest operating conditions for the first quarter of 2024. As of the first quarter ending March 31, 2024, the retail sales volume of Li Ning's sales outlets (excluding Li Ning YOUNG) across the platform increased by low unit volume year on year. As far as channels are concerned, offline channels (including retail and wholesale) recorded a decline in the number of units received by retail (direct management) channels, an increase in the number of units received by the wholesale (authorized dealer) channel, and a decline in the number of units received by the wholesale (authorized dealer) channel; and the e-commerce virtual store business received a low growth of 20%-30%.
Anta Sports (02020): With annual revenue of 62.36 billion yuan in 2023, surpassing Nike China's revenue of 52.16 billion yuan and Adidas China's revenue of 24.38 billion yuan, Anta steadily ranked first in the sports footwear market in China. Compared horizontally with domestic sports brands, Anta's revenue is equivalent to 2.3 Li Ning, 4.3 special steps, and 7.4 361 degrees, which is widening the gap with domestic peers.
Yihai International (01579): With the liberalization of epidemic control, demand for catering picked up, and revenue achieved strong restorative growth. Third-party demand is under pressure due to weak demand and declining consumption. In particular, convenient fast food has declined significantly. In the future, as the company actively launches cost-effective products and strengthens third-party B-side customers, it is expected to achieve healthy growth.