Overall consumption was weak in 21 years and expected to be better in 22 years
Looking back on 2021, the consumer market was weak as a whole due to sporadic and multi-point outbreaks and natural disasters every month. Among them, commodity retail is better than catering consumption, optional consumption is better than mandatory consumption, and the prosperity of optional consumption plates such as gold jewelry, beverages, tobacco and alcohol, cosmetics is high. Looking forward to next year, the effective control of the epidemic is expected to promote the recovery of offline consumption scenarios. The transmission of PPI to CPI is expected to benefit first. The “common prosperity” and monetary easing environment are expected to drive the sustained growth of consumption. In terms of investment strategy, we believe that we should actively layout the high prosperity segments of consumption, including beauty care and gold jewelry, and pay attention to the investment opportunities brought by the recovery of offline consumption scenes.
Cosmetics: as the industry enters the “brand era”, local beauty groups rise
In the second half of this year, the short-term growth rate of the cosmetics industry has been adjusted. We believe that it is mainly affected by multiple factors such as the low and high base before and after last year, the new regulations of cosmetics, the decline in the growth rate of cosmetics under the repeated epidemic situation, and the diversification of channels. However, the dual logic of improving the overall category penetration and the growth of per capita consumption remains unchanged, and there is no worry about the long-term prosperity. Looking forward to 2022, cutting-edge brands will accelerate into the “brand era”, and cutting-edge brands that are highly dependent on traffic and marketing and lack product power and re purchase may be eliminated; Local large-scale beauty groups have significantly increased R & D investment and actively adjusted product structure. With the help of capital, the trend of multi brand layout is gradually clear, and local beauty groups rise.
Gold jewelry: the channel is the spear and the brand is the shield, focusing on the leading and emerging diamond tracks
Since this year, the prosperity of gold jewelry consumption has rebounded significantly. The consumption of gold jewelry has ushered in structural growth due to the postposition of wedding demand, the progress of gold technology, the decline of gold price and the resonance of investment demand. In terms of diamond accessories, China’s imports of finished diamonds rebounded strongly in the first three quarters, and the annual import volume is expected to reach a new high. The concentration of China’s jewelry industry is relatively low. In recent years, head jewelry brands have achieved rapid expansion through channel sinking. With the blessing of the provincial generation model, the channel expansion speed has accelerated. In addition, with the rise of diamond cultivation track, technological progress + head enterprise consumer education + supporting appraisal services have been gradually improved, which has promoted the gradual rise of diamond cultivation downstream market, and emerging brands and old jewelry retailers have entered the market one after another. We believe that cultivating diamonds is expected to open up the demand of price sensitive people and diamond jewelry, strengthen the penetration of diamond categories with different price bands and different values, and have good growth prospects.
Investment advice
Cosmetics sector: (1) brands: focus on Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Bloomage Biotechnology Corporation Limited(688363) ; (2) midstream processing plants: the cost pressure is expected to be relieved with the launch of new products, the profit side is expected to be repaired, and focus on Fujian Green Pine Co.Ltd(300132) , Jahen Household Products Co.Ltd(300955) ; (3) beauty agent operation: the decentralized online pattern provides new channel opportunities for agent operation, focusing on Shanghai Lily&Beauty Cosmetics Co.Ltd(605136) , Hangzhou Onechance Tech Corp(300792) ； Jewelry sector: actively pay attention to head jewelry brands with strong channel, scale and capital advantages and subdivided track brands, focusing on Chow Tai Seng Jewellery Company Limited(002867) and DEA shares. Social services: with the recovery of the epidemic, catering, offline management education and other sectors are expected to benefit next year. Pay attention to the leading banquet chain leader Tongqinglou Catering Co.Ltd(605108) and management education training leader Shanghai Action Education Technology Co.Ltd(605098) .
Risk statement
The epidemic situation is repeated, brand competition intensifies, channel transformation is less than expected, and the incubation of new brands and new projects is less than expected
