According to the Zhitong Finance APP, CITIC Construction Investment has released a research report stating that the industry fundamentals will continue to be under pressure in 2024. Most industries and companies are still significantly affected by macroeconomic factors; however, a number of companies that break through the trend of consumption downgrade have emerged. To embrace this new wave of consumption, the core is to achieve upgrades from categories to quality and then to brands. Achieving unique service or product features in the hotel and catering industry, demonstrating product matrix and innovation capabilities in cosmetics, reflecting quality-price ratio in supermarkets and department stores, and capturing the combination of craftsmanship and fashion in gold and jewelry are all successful paths to forming brands at present. It is expected that by 2025, such companies will better reflect growth potential and brand valuation.
<h2>The main points of CITIC Construction Investment are as follows:</h2>
Summary
Since 2024, the recovery of consumption still faces certain pressures. Except for home appliances, which have a clear logic for overseas expansion, other consumption sectors primarily based on domestic consumption remain lagging. As the transition from cost-performance ratio to quality-price ratio occurs, companies with strong brand attributes are expected to continue outperforming.
Duty-Free Sector
In Q1 2025, offshore duty-free sales gradually stabilized year-on-year. The promotion of Hainan's closure policy is expected to continue benefiting the duty-free industry, and the city duty-free policy is expected to gradually cultivate. The airport ports have seen some recovery, and the leading position in Hainan is improving. The richness of product categories in the duty-free sector and the strengthening of channel and supply chain capabilities are expected to stabilize profitability. The number of inbound and outbound tourists continues to recover, and attention should be paid to sales marginal trends. It is recommended to continue focusing on: CTG DUTY-FREE, Wangfujing.
Tourism and Gambling
Tourism demand remains resilient this year and is an important lever for promoting domestic demand. The recovery of inbound and outbound tourism is highly elastic, and the performance of leading companies is resilient, highlighting the essential nature of spiritual consumption. Attention should be paid to new consumption scenarios such as low-altitude tourism, quality asset injections, development in sinking markets, and the silver-haired tourism market. The flow of tourists and consumption power in Macau is steadily recovering, and the market share of leading gambling licenses is stabilizing, with property increments and shareholder returns expected to gradually be released. The competitive landscape in the OTA sector is favorable, benefiting from travel beta and self-empowerment through technology optimization. It is recommended to focus on: Jiuhua Tourism, Lingnan Holdings, Xiyu Tourism, Xiangyuan Cultural Tourism, Sands China, Galaxy Entertainment, Tongcheng Travel.
Hotels
Since the beginning of this year, the demand for business travel has remained weak, putting pressure on the overall RevPAR; however, leisure demand is resilient, and industry supply is gradually stabilizing. Leading companies continue to strengthen profitability and alpha through mid-to-high-end brand matrices and supply chain optimization, and the industry landscape is gradually becoming clearer. The hotel sector, which has strong pro-cyclical attributes, awaits a market-driven improvement in overall macro expectations to boost valuations. There is still room for improvement in the chain rate in the long term. It is recommended to focus on: Huazhu Group-S, Atour, ShouLai Hotel, JinJiang Hotel, Junting Hotel.
Catering
Leading catering companies have highlighted their advantages in supply chain bargaining power and profitability, with increased flexibility. The overall supply optimization and cost-performance competition trend in the catering industry remain fierce. Some newly listed companies in freshly made tea drinks and innovative catering models have superior comprehensive capabilities and ample expansion space. Future attention should still be paid to the comprehensive operation and refined cost management capabilities of these companies. In Q1 2025, the same-store performance of leading companies remains strong, with supply chain construction, overseas expansion, multi-brand operations, and operational innovation as key themes. It is recommended to focus on: Mixue Ice City, Guming, Yum China, Tongqing Building, Haidilao
Medical Aesthetics
With relatively weak demand and intensified competition, there is a trend of shortening the lifecycle of single products. This places higher demands on companies in terms of product matrix construction, solution provision, and expansion into other regional businesses. The growth potential of individual stocks is directly related to their pipelines and niche markets, and the cycles of individual stocks are also more identifiable. Jinbo Biotech and other new materials continue to experience high growth and are in a rapid harvesting phase, with relatively higher valuations and profit margins, making them worthy of attention. Recommended stocks: Jinbo Biotech, Longzi Co., Ltd.
Cosmetics
Beauty companies are increasingly focusing on profitability as channel dividends slow down. Product and brand drive gross margins, while operational efficiency determines expense ratios. Some companies have entered a period of adjustment and reform or have restructured and planned their products/channels. Growth-stage brands are likely to achieve a trend of rising both revenue and profits, which will simultaneously drive market expectations and valuations upward. The number of companies with high growth rates in Q1 2025 is expected to further decrease, and scarce high-quality performance stocks are still expected to achieve excess returns. Recommended stocks: Juzhi Biotech, Shangmei Co., Ltd., Mao Ge Ping, Proya, Runben Co., Ltd., Marubi.
General Retail
The adjustment of Pang Donglai remains a core theme in the industry, with corresponding opportunities in digital upgrades and store operations. Recommended stocks: Duodian Shuzhi, Yonghui Supermarket, Huijia Times; stable essential demand and business models lead to a reassessment of continuous cash flow, recommended focus: agricultural products.
Foreign Trade and Cross-Border
The prosperity of the coal and shipbuilding industries continues, and the proportion of exports to the U.S. is small. It is recommended to continue focusing on Sumeida, which has high dividends and low valuations for long-term growth. From category exports to brand exports, obtaining pricing power to fully respond to trade dispute risks is advised. Recommended stocks: Ugreen Technology, Anker Innovations.
Gold and Jewelry
The creation of gold brands comes from the continuous iteration of design and trends, and investment products are also a rigid demand for consumers seeking risk aversion and value preservation. Recommended stocks: Caibai Co., Ltd., Chaohongji

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CITIC Construction Investment released a research report indicating that the fundamentals of the social service industry will continue to be under pressure in 2024, with companies that have strong brand attributes expected to continue to outperform. Despite the pressure on consumer recovery, some enterprises have successfully broken through against the trend, achieving an upgrade from category to brand. The duty-free sector and tourism demand have shown resilience, and it is recommended to pay attention to related companies such as CTG DUTY-FREE and Wangfujing. Overall, the industry's supply is gradually stabilizing, and the future brand valuation and growth potential will significantly increase

Zhitong

Wangfujing

CTG DUTY-FREE

GALAXY ENT

DMALL

Anker Innovations

BTG Hotels

MIXUE GROUP

Marubi

Yonghui Superstores

Atour

LN Holdings

HWORLD-S

TONGCHENGTRAVEL

CAIBAI

HAIDILAO

Proya

SSAW Hotels & Resorts

GUMING

YUM CHINA

Wuika Times

SUMEC

LANCY

JINJIANG HOTELS

XIYU TOURISM

CITIC Construction Investment: The fundamentals of the social services industry will continue to be under pressure in 2024, and companies with strong brand attributes are expected to continue to outperform