Report released this week
Depth: artificial diamond is not just a diamond for Cultivation — it is expected to see a double rise in price and volume under the resonance of supply and demand
Industry view this week (this week refers to January 3 to January 9, 2022, the same below)
Looking back on 2021: from the three main lines of brand, channel and supply chain, ① on the brand side, under the catalysis of Xinjiang cotton and other events in the first half of the year, the general trend of the rise of domestic goods has been further established. ② On the channel side, the overall prosperity of macro consumption is general, and the gross profit space is squeezed when the purchase price of goods generally rises; Offline consumption has been affected by the rebound of the epidemic for many times. ③ In terms of upstream supply chain, several “invisible champions” have emerged. These enterprises cover the supply chain of consumer goods such as clothing, jewelry and cosmetics. In the future, the upstream supply chain may become an important investment direction.
Outlook 2022: focus on high-quality brands and supply chain targets. After the Xinjiang cotton incident, the rising trend of national brand was further established. Taking the sportswear industry as an example, according to Taobao data, in the “double 11” promotion activity of tmall in 2021, the sales of Li Ning and Anta flagship stores exceeded that of Adidas flagship stores, breaking the industry pattern of Adidas and Nike taking the top two in one fell swoop. China’s consumer goods supply chain showed strong resilience and stability during the epidemic, and leading companies are expected to take the lead in benefiting from the recovery of consumption in the future.
Brand: the differentiation is becoming more and more obvious, the operating capacity of high-quality companies continues to be fulfilled, and we are optimistic about the general trend of the rise of national brands. With the overall slowdown of channel growth, brands are constantly differentiating. We need to focus on the outstanding high-quality brands, especially high-quality domestic brands. These brands show significant advantages in insight into consumer demand, grasp of product upgrading direction, and understanding of new channels such as Internet e-commerce. In the future, these brands with outstanding ability are expected to continue to cash in their performance.
Supply chain: focus on the upstream “invisible champions” with growth attributes. With the continuous normalization of epidemic prevention and control and the recovery of downstream consumer demand and industrial supply chain, the business fundamentals of consumer goods supply chain companies are expected to recover in the future. We recommend focusing on the “invisible champion” of the upstream supply chain with reasonable valuation and certain growth attributes, which is expected to usher in a “double-click” with the growth of demand and the improvement of business environment.
Channel: the e-commerce platform has entered the undervalued range, with high cost performance, and pays attention to the marginal change of organization & policy. After a series of in-depth adjustments caused by antitrust penalties, mainstream e-commerce platforms are entering a range with relatively low valuation in history and have high cost performance. It is suggested to continue to pay attention to the positive impact of marginal changes such as policy improvement and organizational reform (such as the organizational structure reform of Taobao tmall on January 6).
Recommended targets: Zhejiang Natural Outdoor Goods Inc(605080) , Henan Liliang Diamond Co.Ltd(301071) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) . It is suggested to pay attention to: Nanjing Cosmos Chemical Co.Ltd(300856) , North Industries Group Red Arrow Co.Ltd(000519) , etc.
Risk tips: intensified industry competition, less than expected consumption, international trade situation, rising raw material prices, etc.
