From January to October 2024, retail sales of goods increased by 3.2% year on year, and online retail sales of physical goods increased by 8.3% year on year, which is better than the overall retail sales of products.
The Zhitong Finance App learned that Shanxi Securities released a research report saying that in October, China's zero year-on-year increase was 4.8%, and the growth rate exceeded market expectations. Among them, the performance of online channels continues to outperform the retail market. The “Double Eleven” promotion period was extended and the trade-in subsidy was impressive, while the “Double Eleven” promotion ahead of schedule also led to a high increase in cosmetics sales, and the sports and entertainment industry continued. According to this, downstream core customers of textile manufacturing companies have returned to normal with inventory levels returning to normal, and subsequent sales prospects are cautiously optimistic; sports clubs have performed better than other optional consumer categories since this year, fully demonstrating demand resilience. We continue to be optimistic about the resilience of sportswear demand, but it is expected that gold and jewelry terminal sales will continue to be under pressure in the 3rd quarter.
The main views of Shanxi Securities are as follows:
Domestic social zero increased 4.8% year-on-year in October, exceeding market expectations.
In October 2024, the country achieved a total of 4.54 trillion yuan, up 4.8% year on year and 1.6 pct month-on-month. The performance was superior to the market's consensus expectations (according to Wind, the average predicted year-on-year growth rate for the month of Social Zero in October 2024 was +3.9%). By type of consumption, the year-on-year growth rates of food and beverage revenue and retail sales in October 2024 were 3.2% and 5.0%, respectively. Since the beginning of the year, China's consumer confidence index changed from a continuous increase in the first quarter to a continuous decline for five consecutive months starting in the second quarter. The latest September was 85.7, down 0.1 month on month.
By channel, the performance of online channels continues to outperform the retail market. The “Double Eleven” promotion period was extended and the trade-in subsidy was excellent.
Online channels. From January to October 2024, retail sales of products increased by 3.2% year on year, and online retail sales of physical products increased by 8.3% year on year, which was better than overall retail sales of products; among online retail sales of physical goods, food, clothing, and consumer goods increased 17.7%, 4.7%, and 7.7%, respectively. This year, the “Double Eleven” promotion campaign on various e-commerce platforms was launched early, and the cycle was lengthened, and during the campaign period, along with trade-in subsidies for home appliances, home furnishings, etc., the bank expects the overall performance of the promotion to be impressive.
Offline channels, according to retail formats, from January to October 2024, retail sales of convenience stores, specialty stores, and supermarkets increased 4.7%, 3.9%, and 2.6% year-on-year, respectively; retail sales of department stores and brand specialty stores decreased by 3.0% and 1.1%, respectively. According to the All-China Business Information Center, in October 2024, retail sales of the country's 50 major retail enterprises (mainly department stores) fell 1.4% year on year, and the decline narrowed by 4.4 pcts month on month. Among them, the decline in clothing, cosmetics, and gold, silver and jewelry narrowed by 9.3 pct, 10.5 pct, and 5.4 pct, respectively; household appliances achieved rapid growth driven by policy, and retail sales increased 51.4% year on year.
By category, the “Double Eleven” promotion period led to a high increase in cosmetics sales ahead of schedule, and the sports and entertainment goods boom continued.
In October 2024, Limited Cosmetics increased by 40.1% year on year, up 44.6 pct; Limited Gold and Silver Jewelry decreased 2.7% year on year, and the decline narrowed by 5.1 pcts. Among them, the average closing price of the AU9999 price of the Shanghai Stock Exchange rose 32.3% year on year, up 5.6% month on month; Limited textile and clothing increased 8.0% year on year, up 8.4 pct month over month. It is expected that the growth rate of online channels from January to October is superior to offline channels; Limited sports/entertainment products increased 26.7% year on year, and the growth rate increased by 3.0 pcts month on month. From January to October 2024, the cumulative growth rate of limited cosmetics, gold and silver jewelry, textiles and clothing, sports and entertainment products was 3.0%/-3.0%/1.1%/11.5%, respectively. According to Qingyan intelligence, the GMV of the Tmall and Douyin skincare categories in October were 19.649 and 18.684 billion yuan respectively, up 208.8% and 45.51% year on year; in January-October, JD's sales in the beauty and skincare category were 33.956 billion yuan, up 17.8% year on year.
Investment advice:
(1) Textile manufacturing sector: According to the financial report for the third quarter of 2024 disclosed by International Sportswear, Deckers, Adidas, and Asics raised their annual revenue guidelines. Vans' quarterly decline narrowed month-on-month, and Under Armour and Puma maintained their annual revenue guidelines. The downstream core customers of textile manufacturing companies have returned to normal with inventory levels returning to normal, and the outlook for subsequent sales is cautiously optimistic. In October 2024, the growth rate of China's textile and garment exports improved sequentially; Vietnam's textile, garment and footwear exports continued to increase rapidly.
On a medium- to long-term perspective, we continue to recommend Huali Group (300979.SZ), which has excellent growth in downstream customers and a continuous influx of new customers; Weixing Co., Ltd. (002003.SZ), which has a clear logic of increasing customer share with production; and Shenzhou International (02313), which has the advantage of vertically integrated production of finished fabrics and garments, and continuously deepens cooperation with core customers. It is recommended to actively pay attention to Zhejiang Nature (605080.SH), which has a steady core business of inflatable mattresses and continues to expand new categories of incubators/water products; Nanshan Zhishang (300918.SZ) (300918.SZ), where ultra-high molecular weight polyethylene products are at an inflection point and the nylon business is expected to be released next year; and Jiansheng Group (603558.SH), which has room to improve the profit margin of stable and seamless cotton socks products.
(2) Sportswear sector: In October 2024, sports and entertainment companies had zero year-on-year growth of 26.7%, with a cumulative year-on-year increase of 11.5% in January-October. Since this year, their performance has outperformed other optional consumer categories, fully demonstrating the resilience of demand. Continuing to be optimistic about the resilience of sportswear demand, we recommend Anta Sports (02020), which has a multi-brand matrix and steady management, leading the popular sportswear brand 361 degrees (01361) in retail sales performance, and Bosideng (03998), which continues to innovate products and has steady single-store operations.
(3) Gold and jewelry sector: In October 2024, the zero monthly decline of the Gold and Silver Jewelry Club continued to narrow month-on-month. The bank expects that terminal sales of gold and jewelry will continue to be under pressure for the 3rd quarter. Starting in September, terminal sales will continue to improve month-on-month. If gold prices stabilize again, demand for gold and jewelry is expected to be released smoothly along with the peak sales season at the end of the year.
Continue to track changes in gold prices and terminal gold and jewelry sales in the short term, focusing on the peak season sales of traditional gold and jewelry companies at the end of the year. We recommend the old store Gold (06181), which has continued to perform well in terminal sales since the second half of the year. We are optimistic about leading gold and jewelry company's brand potential growth and channel development capabilities in the medium to long term. It is recommended to focus on Zhou Dasheng (002867.SZ), Chao Hongji (002345.SZ), Lao Fengxiang (600612.SH), and Caibai Co., Ltd. (605599.SH).
Risk warning: Domestic terminal consumption performance falls short of expectations; industry competition intensifies; raw material prices fluctuate greatly; gold prices fluctuate greatly.
