Consumer stocks in the Hong Kong market are rebounding, with Old Shop Gold rising over 6%, and MINISO, POP MART, Bruker Corp, and NONGFU SPRING also seeing gains.
POP MART's share price hit a new intraday high, with its Market Cap approaching HKD 400 billion. Morgan Stanley recently issued a Research Report stating that POP MART's platform value may be undervalued. The company currently sells products in four regions, but its proprietary IPs mainly originate from Greater China, with exceptions being Crybaby from Thailand and Peach Riot from the United States. POP MART has significant potential to tap into the rich artistic resources of the U.S., Europe, Japan, and Southeast Asia. Therefore, the bank expects that over the next 3-5 years, POP MART's IP and product portfolio will become more culturally diverse.
In terms of ETFs, the CSI Cons Stap ETF and the Consumption 50 ETF rose by more than 1.8%; the Consumption 50 ETF, Hang Seng Consumer ETF, and Hua Tai-PB Hang Seng Consumer ETF increased by over 1.2%.
The CSI Cons Stap ETF and the Consumption 50 ETF closely follow the CSI Hong Kong Stock Connect Consumer Theme Index, providing one-click access to 50 leading consumer stocks in the Hong Kong market, with deep coverage of trendy toys, medical aesthetics, and domestic beauty brands, which are scarce in the A-share market.
The Hang Seng Consumer ETF and Hua Tai-PB Hang Seng Consumer ETF invest in trendy blind boxes, affordable bubble tea, and traditional Gold, among other sectors catering to the lifestyle preferences of Generation Z.
Since the beginning of the year, the Hong Kong consumer Sector has outperformed the A-share market. HAITONG SEC believes this is due to the advantages of the new consumption Sector in the Hong Kong market compared to the A-share market:
The Hong Kong consumer Sector has a higher concentration of new consumption. Comparing the composition of the consumer Sectors in the Hong Kong and A-share markets, the A-share market is dominated by traditional consumption such as liquor and home appliances, which account for over 70%. In contrast, the Hong Kong consumer Sector has a more balanced distribution across sub-industries, with discretionary retail, consumer services, and textiles and apparel, among other new consumption Sectors, accounting for over 60% of the total market value. This includes hot new consumption stocks such as POP MART, Old Shop Gold, and MEOXIN Group. This indicates that the Hong Kong consumer Sector is more aligned with the current trend of pursuing self-gratification and value for money in the consumer Industry.
The Hong Kong stock market's consumer sector aligns more closely with the current new consumption trends, and its growth potential is evident. As previously discussed, the consumption patterns of Chinese residents are shifting from mass consumption to personalized and rational consumption. Consumers are generally more willing to pay for emotional and self-indulgent consumption, and this trend is reflected in the financial data of the new consumption stocks listed on the Hong Kong Stock Exchange.
① In terms of revenue growth, the Hang Seng Consumer Sector's year-over-year (YoY) revenue growth rate for 2024 is 4.3%, which is higher than the -1.7% YoY revenue growth rate of A-share consumer companies. Representative new consumption stocks listed in Hong Kong, such as Mxue Group, Old Shop Gold, POP MART, MAO GEPING, and Bruker Corp, are expected to achieve a revenue growth rate of 54% in 2024.
② In terms of gross margin, the new consumption stocks listed in Hong Kong are expected to have a gross margin of 55% in 2024, while the Hang Seng Consumer Sector's gross margin is 40%. Both are higher than the 28% gross margin of A-share consumer companies.
Furthermore, from a capital flow perspective, the new consumption stocks in Hong Kong, with their scarcity, remain favored by public funds. Active public funds have increased their holdings in new consumption stocks in Hong Kong this year. Looking ahead, there is still significant room for further investment. It is estimated that the total inflow of public funds into Hong Kong through the Stock Connect program could reach RMB 300-450 billion in 2025. The attractiveness of these scarce assets is expected to drive further inflows into the new consumption sector in Hong Kong.
HAITONG SEC points out that, overall, as new consumption trends accelerate, the new consumption sector in Hong Kong is likely to continue its upward trajectory.
