Jin Wu Finance News | Guoyuan International issued a Research Report pointing out that the consumer market will be sluggish in 2024, and the fundamentals of the Sector are generally under pressure. After the government's package of policies was introduced at the end of September, the market briefly rebounded before falling back. From the beginning of the year to now, the Hang Seng consumer sector has fallen by 13.39%, underperforming the Large Cap; the Hong Kong Shenwan Food & Beverage sector index has cumulatively fallen by 3.79%, ranking 27th among the 31 Shenwan first-level industries. In terms of sub-sectors, from the beginning of the year to now, seasoning and fermentation products, baked goods, soft drinks, snacks, and meat products have achieved positive growth, while other sub-sectors have performed poorly.
The report continues to state that on December 9, the Central Political Bureau meeting will be held to analyze and study the economic work for 2025, providing more positive wording regarding overall requirements and macro policies. The meeting proposed to "vigorously boost consumption, increase investment returns, and comprehensively expand domestic demand." The report indicates that there is a lag in the transmission of policies to boost consumer confidence, and the sustainability of consumption recovery remains to be observed. According to Boston Consulting, although policy stimulation has somewhat boosted consumption in the short term, consumers still have concerns about their income expectations for the next six months, and savings continue to occupy an important position in consumer spending structure, with the expectation of continuing to rise.
Given that the sustainability of consumption recovery remains to be observed, the report recommends focusing on two main lines: 1) Leading companies with strong performance certainty and excellent dividend yields: HAIDILAO (06862), YUM CHINA (09987), TINGYI (00322). 2) Leading companies whose operational performance is relatively affected by the consumer environment, with the potential for performance recovery and value-for-money valuations: CHINA RES BEER (00291), MENGNIU DAIRY (02319).
