Comments on social zero data: the impact of the epidemic was lower than expected in March, and the optional consumption remained stable

Event description:

On April 18, the National Bureau of statistics released the total retail sales of social consumer goods in the first quarter of 2022.

Event comments:

In the first quarter of 2022, social zero increased by 3.3% year-on-year, and the growth rate of consumer market in March was lower than expected. In the first quarter of 2022, China’s total retail sales of social consumer goods reached 10.87 trillion yuan, a year-on-year increase of + 3.3%; Among them, the retail sales of consumer goods other than automobiles were 9.79 trillion yuan / + 3.6%. Excluding price factors, the total retail sales of social consumer goods in the first quarter actually increased by 1.3% year-on-year. In March, the total retail sales of social consumer goods was 3.42 trillion yuan, a year-on-year increase of – 3.5%. Affected by the multi-point spread of China’s epidemic, the overall scale of the consumer market decreased year-on-year in March, and the growth rate was lower than expected.

In terms of channels, online sales continued to grow, penetration improved, the epidemic disturbed, and offline physical store consumption was under pressure. Online sales continued to grow, but affected by the high base and the forward movement of pre-sale consumption, the online sales promotion was relatively flat in March, but the online penetration increased. In the first quarter, the national online retail sales reached 3.01 trillion yuan, a year-on-year increase of + 6.6%; Among them, the online retail sales of physical goods are 2.53 trillion yuan / + 8.8%, which continues to grow on the basis of a high base, accounting for 23.2% of the total retail sales of social consumer goods, up 1.2pct from January to February. Since this year, the online penetration has continued to increase. Among the online retail sales of physical goods, food, clothing and consumer goods increased by 13.5%, 0.9% and 10.6% respectively. Offline, the offline retail sales of physical goods in the first quarter was about 727 million yuan, a year-on-year increase of + 1.66%, of which the offline retail sales of physical goods in March was about 2.24 trillion yuan, a year-on-year increase of – 3.92% and + 4.74% last month. Affected by the disturbing factors of China’s epidemic in the short term, the social aggregation consumption of physical stores continues to be under pressure. According to the retail formats, in the first quarter, the retail sales of supermarkets, convenience stores, specialty stores and specialty stores in retail units above the quota increased by 3.2%, 10.1%, 6.6% and 1.0% respectively year-on-year, and the department stores decreased by 3.3% year-on-year. Convenience stores continued to give full play to the advantages of proximity and the growth rate was better than that of other physical stores.

By category, the growth of mandatory consumer goods is steady, which is better than optional consumer goods. In the first quarter, the retail sales of goods reached 9.8 trillion yuan, a year-on-year increase of + 3.6%; In March, the retail sales of goods reached 3.13 trillion yuan, a year-on-year increase of – 2.1%. By category, basic living commodities maintained steady growth under a high base, partly affected by the hoarding effect brought about by the closure of the epidemic. In Q1, grain, oil, food and beverages were +9.3%/+11.8% year-on-year, of which +12.5%/+12.6% year-on-year in March and +4.6pct/1.2pct month on month; The Q1 of daily necessities was + 6.6% year-on-year and – 0.8% year-on-year in March. The growth rate of consumption upgrading commodities mostly decreased in the current month, which was mainly affected by the high base + epidemic situation. Among them, clothing / gold, silver and jewelry were – 12.7% / – 17.9% year-on-year in March. In addition, the fluctuation of gold price also brought some negative effects; Cosmetics and home appliance speakers were – 6.3% / – 4.3% year-on-year respectively, with a relatively narrow decline.

Investment suggestion: affected by the multi-point spread of the epidemic in China, the epidemic prevention and control situation in major cities such as Beijing, Shanghai and Shenzhen has not been stable, and consumption, travel and logistics are limited. Due to the superposition of base effect, social gathering consumption is expected to be under pressure in April, and online consumption will also slow down. Under the continuous impact of the epidemic, the performance of mandatory consumption is stronger than optional consumption. It is suggested to pay attention to the new retail mode of extended coverage in multiple scenarios such as community group purchase and real-time retail. At the same time, April is in the centralized disclosure period of annual report and first quarter report. It is suggested to pay attention to the undervalued leaders who can still maintain stable annual performance and good Q1 terminal retail performance under the impact of the epidemic, and focus on the beauty and gold jewelry sectors, focusing on the following main lines: 1) domestic brands are close to local consumer demand and accelerate the sinking and penetration, and leading enterprises continue to improve their market share through new media marketing: Proya Cosmetics Co.Ltd(603605) , Yunnan Botanee Bio-Technology Group Co.Ltd(300957) Shanghai Jahwa United Co.Ltd(600315) ; 2) Jewelry consumption tends to be daily, the demand of low-level cities rises and channels are encrypted: Chow Tai Seng Jewellery Company Limited(002867) ; 3) The value of offline channels has been reshaped, and real-time retail has been overweight. The current valuation is close to the bottom: Yonghui Superstores Co.Ltd(601933) .

Risk tip: macroeconomic growth slows down; The effect of consumption upgrading is less than expected; Diversion of new business forms and intensification of market competition; The epidemic situation in China spreads in many places, affecting consumer confidence and willingness.

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