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<Research>CMBI Keeps Equalweight Rating on CN Discretionary Consumption Sector w/ Cautious Outlook
Recommend 13 Positive 22 Negative 6 |
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CMBI has issued a research report giving China's 2026 discretionary consumption sector an Equalweight rating. The broker expects overall retail sales to grow by around 3.5%, slightly slower than the around 4% in 2025. It also holds a cautious outlook as tailwinds were markedly overweighed by headwinds like the retreat of national subsidies and delivery subsidies, a slowdown in export momentum, and job reductions due to the widespread application of AI. However, the delayed Spring Festival, extended holidays, potential recovery in the real estate sector, and a thriving stock market are among the few positive factors. It is anticipated that the discretionary consumption sector's stock prices will be under pressure in 1H26 and see relatively larger rebound potential in 2H26. Under basic scenarios, CMBI suggests investment can be categorized by different types of consumption. The broker prefers 1) survival consumption (frugality, low unit price, high cost-effectiveness), with related companies including: LEPU BIO-B (02157.HK), YUM CHINA (09987.HK), Luckin Coffee (LKNCY.US), DPC DASH (01405.HK), and BOSIDENG (03998.HK); 2) compensatory consumption (small happiness, cheap entertainment, emotional value, experiential); and 3) hedging and defensive consumption (gold, silver, high dividends), with related companies including: BOSIDENG (03998.HK), JNBY (03306.HK), CHINA LILANG (01234.HK), and TOPSPORTS (06110.HK). All of these companies have been rated Buy. In contrast, CMBI is less optimistic about large-scale consumption (durables, real estate-related, luxury goods, high-end tourism), though optimistic and bull market scenarios (assuming a strong wealth effect with a thriving stock market and gradually stabilizing real estate market) will be conducive to large-scale consumption. The related companies include HAIER SMARTHOME (06690.HK) (600690.SH), MIDEA GROUP (00300.HK) (000300.SH), HAIDILAO (06862.HK), ANTA SPORTS (02020.HK). All of them have been rated Buy. AAStocks Financial News |
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