[Caihua News] BOCOM International issued a consumer industry report. The bank handed over investment suggestions: Although the growth rate of the sporting goods industry slowed in the 3rd quarter, given healthy fundamentals, we are still optimistic and recommend buying Baosheng (03813-HK), Anta (02020-HK), Li Ning (02331-HK) and Taobo (06110-HK).

The bank conducted a study on the winners and losers in the consumer industry in the first half of this year: they analyzed the performance of 63 consumer companies in 15 sub-industries in the first half of this year and found that the performance of the mandatory consumer industry far exceeded that of the optional consumer industry. The total sales/net profit of mandatory consumption increased 7.5%/8.5% year over year, while optional consumption fell 12.2%/56.2% year over year.

According to the net profit growth ranking, consumer companies must have taken the top seven positions, and the stock price also reflects the same situation.

The outlook for the second half of the year is bleak, but policies that promote “internal circulation” may boost consumption: most companies rebounded strongly in the second quarter, but signs of weakness in the third quarter led to lower guidance for the second half of the year. However, the government's recent introduction of a series of policies to stimulate domestic consumption may have a boosting effect, including 1) the Ministry of Commerce's “National Consumption Promotion Month”, 2) the export to domestic sales initiative, and 3) more tax reduction measures.
The main observations of the first half of the year were: 1) air travel was restricted and overseas consumption was transferred back to domestic consumption; 2) contactless consumption (WeChat sales, food delivery) will continue to grow after the pandemic; 3) in the OEM industry, the performance of clothing (strong) and footwear (weak) is differentiated.