Consumption is expected to be low before and high after. We are optimistic about the recovery of offline consumer services and the rise of domestic brands
Scattered recurrence of the epidemic + strong supervision in some industries led to “high before low after” industry fundamentals. With the meeting of the Political Bureau of the CPC Central Committee in December again emphasizing the “implementation of the strategy of expanding domestic demand and promoting the sustainable recovery of consumption”, and the continuous implementation of vaccination + covid-19 specific drug R & D, we believe that China’s consumer industry is expected to show a marginal improvement trend of “low before high” in 2022. In the medium and long term, the long-term logic of China’s consumer industry remains unchanged, the population size and the rise of new consumer groups under intergenerational changes, and the trend of branding will drive the evolution of the long-term pattern of the industry.
The marginal improvement expectation of offline consumer service industry is clear, and the long-term logic remains unchanged
Tax exemption: the leading growth attribute remains unchanged, and attention is paid to the expected improvement. The long-term growth space of the industry is determined, the competition pattern is stable, and the policy dividend drives the industry to have a CAGR of more than 30% in three years. In the short term, due to the impact of the epidemic, the leading fundamentals are damaged. Next year’s peak season passenger flow recovery + leading property expansion is expected to push the industry boom back on track.
Chain hotels & Catering: select hotels and catering pay attention to brand potential energy. In 2022, under the expectation of deregulation, the repair effort is the largest. From within the sector, the supply and demand structure and competition pattern of the chain hotel industry are improving, and the profitability and space of the leading companies are determined. Catering brands show differentiation. In 2022, we need to focus on companies with upward brand potential.
The penetration rate of emerging consumer areas has changed from low to high, and domestic goods have reshaped the pattern
Cosmetics medical beauty: under the iteration of the three elements of “people, goods and field”, the rise of domestic products is expected to reshape the pattern. The growth of residents’ income + the rise of new consumers determine that the penetration rate of the industry will continue to increase, and there is a large space for the substitution of domestic goods. Combined with the current background of reshaping the channel pattern and tightening policy supervision, we believe that the R & D innovation and fine operation ability of enterprises are the key to victory, and the head brands with scale and R & D advantages will benefit more.
Jewelry and gold: Diamond cultivation is in the ascendant, and the investment rhythm is transmitted from upstream to downstream. The overseas penetration rate of cultivated diamonds has increased rapidly, and villa China cultivated diamond brand is expected to rise while promoting the negotiation price of Chinese cultivated diamond rough factories.
Investment suggestions:
Considering the short-term fundamental changes, long-term spatial pattern evolution and valuation rationality, the offline consumer service sector recommends China Tourism Group Duty Free Corporation Limited(601888) , Shanghai Jin Jiang International Hotels Co.Ltd(600754) , Btg Hotels (Group) Co.Ltd(600258) , and it is recommended to pay attention to Helens and jiumaojiu; In the new consumption track, the cosmetics industry recommends functional skin care products track quality companies Yunnan Botanee Bio-Technology Group Co.Ltd(300957) , Lushang Health Industry Development Co.Ltd(600223) , and the upstream suggests paying attention to Nanjing Cosmos Chemical Co.Ltd(300856) with reversal expectation of fundamentals. Under the background of strict supervision of the medical and beauty industry, it is recommended to pay attention to the upstream leader Imeik Technology Development Co.Ltd(300896) . Cultivating diamond recommends Mclon Jewellery Co.Ltd(300945) with the prospect of remote expansion + cultivating diamond brand, and upstream manufacturers suggest paying attention to Henan Liliang Diamond Co.Ltd(301071) , North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) .
Risk statement
Macroeconomic growth slowdown risk; The relaxation progress of travel control policy is lower than expected; Under the background of strong supervision of medical and beauty cosmetics industry, the progress of penetration improvement is lower than expected; The improvement progress of drilling permeability was lower than expected.
