Core view
Optional consumer industry is the third largest industry in U.S. stocks, accounting for 12.7% of the market value in S & P500, and the market value is concentrated in retail and automobile sectors (accounting for 74%). Its industry performance is partly covered up by the top large market value companies. Amazon and Tesla account for about 50% of the market value in the S & P500 optional consumer industry index‘
Share price performance of the optional consumer industry in 2021: as of December 23, 2021, the S & P500 optional consumer industry index has increased by about 26% this year, which is basically consistent with the S & P500. At the end of October, it began to catch up with the market due to the rise of the automobile plate. From the perspective of segments, the share price of consumer service segment is under pressure, and the overall performance of automobile and parts segment / retail segment is better. Compared with other industries, the valuation level of optional consumer industries is basically the same as that in recent five years. Excluding Amazon and Tesla, the valuation of optional consumer industries will be more reasonable, and the forward P / E ratio will be reduced to 21x. Growth expectations will lower valuations. In most of the sub industries in the optional consumption field, the peg of half of the industries is lower than its five-year average.
Looking forward to the optional consumer industry in 2022, inflation and supply chain disruption will disturb the optional consumer industry for a period of time. The CPI of the United States rose again in November, with a year-on-year increase of 6.8%. The prices of gasoline, housing, food, second-hand cars and new cars increased significantly. Inflation eroded consumers’ purchasing power to a certain extent, forcing a greater proportion of spending to point to mandatory consumption such as energy and food. However, higher wages and the increase of savings rate during the epidemic have a certain supporting effect on consumer spending.
We believe that the three investment themes of the optional consumer industry in 2022 are as follows: (1) investment theme 1: global supply chain problem mitigation theme. At present, affected by the interruption of the supply chain, Shenzhen Agricultural Products Group Co.Ltd(000061) , packaging materials, transportation, energy prices and labor costs are generally rising, and the profit margin of some consumer enterprises is under pressure. Although the cost of shipping is still high, the global supply chain crisis has shown signs of easing. Although transportation costs will not be normalized in the short term, for enterprises currently trapped in supply chain problems, resulting in insufficient supply of goods and increased costs, the mitigation of supply chain problems will bring varying degrees of profit margin recovery. (2) Investment theme 2: the theme of global reopening. In the post epidemic era, with the lifting of the ban, the bottom of the low base will reverse the target. Although the performance of most consumer enterprises has returned to the pre epidemic level, the epidemic continues to exert pressure on tourism and travel stocks such as airlines, online booking websites and hotels, luxury and high-end cosmetics enterprises and retailers with high contribution to tourism shopping, as well as catering enterprises dominated by opening stores. It is suggested to pay attention to the post epidemic era. With the lifting of the travel ban and the return of cross-border tourists, enterprises with relatively improved fundamentals are expected to usher in next year. (3) Investment theme 3: focus on the subject with strong pricing power and the ability to raise prices under the background of rising costs. Many companies with strong bargaining power in the industry have passed on the rising costs of labor and raw materials to consumers through price increase. They are expected to pass on the cost pressure through price increase, discount reduction and product structure upgrading, so as to improve the gross profit margin and accelerate the share promotion trend. (4) It is suggested that investors avoid relevant companies sensitive to labor costs. Due to labor shortage, labor costs continue to rise. They should avoid enterprises that are sensitive to labor costs and have low profit margins. At the same time, it is difficult to transfer costs to consumers due to lack of sufficient pricing power.
Investment advice
It is recommended that investors pay attention to the subject matter of investment related to optional consumer industries in the US stock market.
Risk statement
Macroeconomic risks, repeated epidemics, supply chain recovery less than expected, and insufficient consumer confidence
