Core view:
“Common prosperity” boosts consumption capacity and confidence and promotes consumption upgrading. The 10th meeting Xi Jinping of the central financial and Economic Commission pointed out that we should grasp the principles and paths to promote common prosperity. The meeting opened the curtain of high-quality development and building common prosperity. At present, the disposable income of residents continues to increase, the income structure continues to improve, and the importance of consumption in the troika will continue to strengthen, which will bring benefits to the consumer industry.
Along the general direction of common prosperity, the margin of large consumer industries has improved. (1) The required consumption field benefiting from the overall improvement of residents’ demand; (2) Optional consumption areas benefiting from the optimization of expenditure structure. From the supply and demand side, cost side and policy side, all links show signs of marginal improvement, supporting the continued recovery of consumption in 2022. In the process of post epidemic consumption restoration, the recovery of compulsory consumption is slow, but relatively stable; Optional consumption is strong first and then weak.
In the post epidemic era, the potential for consumption recovery remains, and investment revolves around three main lines. Since 2021, most consumer stocks have been in the adjustment stage, and many fine-grained industries have been callback to relatively low valuation range. Combined with the current valuation level and the large consumption investment strategy in 2022, we are optimistic about the following three main lines: first, the leisure tourism and cultural media industries with low valuation and continued recovery of performance, which are expected to undertake the improvement of valuation space; Two, medium and long term, the most promising consumer goods are high-end Baijiu, Baijiu, duty-free products, luxury goods, new energy vehicles, specialist medical services, etc. Third, beer and smart appliances that are expected to improve marginally after improving quality and price.
Risk warning. The outbreak of the epidemic exceeded expectations, the policy strength of various industries did not meet expectations, the cost of upstream raw materials increased, and the investment risk of valuation adjustment.
