01364 Overview

Lunar New Year Consumption Performance: The Lunar New Year holiday showed strong demand in catering and tourism, prompting Daiwa to recommend stocks like GUMING and YUM CHINA that benefit from this trend.

Economic Reflation Signs: The report highlighted initial signs of reflation in the Chinese economy driven by service consumption, with rising prices and reduced promotions in various sectors.

Catering Sector Outlook: Daiwa remains optimistic about GUMING and YUM CHINA, suggesting that a broader recovery in catering could enhance alcohol consumption at venues, while also favoring NONGFU SPRING and TINGYI due to domestic tourism.

Caution on MIXUE GROUP: Despite the positive outlook for many stocks, Daiwa expressed caution regarding MIXUE GROUP due to uncertain profit growth visibility, maintaining a Neutral rating.

Catering Sales Growth: Goldman Sachs predicts a 4.2% year-on-year growth in catering sales in Mainland China for this year, an increase from last year's 3.2%, with demand stabilizing despite overall consumption not improving significantly.

Price Hikes and Demand: The industry is facing price increases due to higher operational and raw material costs, alongside a rise in food delivery orders, which is supported by the stabilization of demand.

Stock Recommendations: Goldman Sachs is optimistic about GUMING and MIXUE GROUP, adjusting their target prices to $34 and $493 respectively, with ratings of Conviction List Buy and Buy, citing GUMING's strong expansion and product launch capabilities.

HAIDILAO's Outlook: The target price for HAIDILAO has been adjusted to $14.7 with a Neutral rating, as the company is in a mature stage and building new brands will take time.

Spring Festival Travel Rush: The first week of the 2026 Spring Festival travel rush saw significant growth in passenger flows, with strong flight and hotel bookings, indicating a positive outlook for leisure travel demand during the holiday period.

Market Optimism: CICC expressed optimism regarding the recovery of the social services sector, anticipating that leading enterprises will experience price rebounds or restoration of same-store sales due to a stabilizing competitive landscape.

Investment Recommendations: BofAS highlighted that YUM CHINA's 4Q25 results exceeded expectations, leading to slightly raised EPS forecasts, and recommended several companies including Luckin Coffee and Atour Lifestyle Holdings for investors.

Short Selling Data: The report included short selling data for various companies, indicating varying levels of short interest, with notable figures for YUM CHINA and HAIDILAO among others.

Hong Kong Stock Market Performance: The Hong Kong bourse experienced a rally on the 28th, with the HSI reaching a 4.5-year high of 27,757, up 630 points or 2.3%, and a turnover of HK$176.495 million.

MIXUE GROUP Stock Decline: MIXUE GROUP's stock opened 2.5% lower and fell to HK$396, down 10.6%, following a downgrade by UBS, which cited potential short-term pressures and reduced profit forecasts.

Pressure on Tea Beverage Stocks: Several tea beverage stocks, including CHABAIDAO and GUMING, faced declines of 2-3%, diverging from the overall market trend.

Short Selling Activity: The short selling ratios for various stocks, including MIXUE GROUP and others in the tea beverage sector, indicate increased market skepticism, with significant short selling reported.

Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with ZIJIN GOLD INTL and MINIMAX-WP experiencing significant gains, while others like GUMING and CHERY AUTO faced declines.

Short Selling Data: Short selling activity varied across stocks, with FWD showing a high short selling ratio of 16.999%, while NANSHAN AL INTL had a notably low ratio of 0.135%.

Market Capitalization Insights: The market capitalization at the end of the lock-up periods for these stocks ranges from 21.4 billion to 406.6 billion, indicating varying levels of investor interest and company valuations.

Future Lock-up Dates: Key lock-up expiration dates for these stocks are set between early 2026 and late 2026, which may impact trading strategies and stock performance as these dates approach.

Investment Themes for China's Consumer Sector: Key themes for 2026 include lukewarm end-demand with potential policy stimulus, accelerated industry consolidation due to price deflation, a focus on design and social value among younger consumers, overseas expansion to counter domestic growth weaknesses, and challenges/opportunities from an aging population.

Top Buy Picks by JPMorgan: Recommended stocks include LAOPU GOLD for its gold price and expansion potential, Luckin Coffee for market share and digitization, GUMING for regional diversification, MNSO for strong products and store expansion, Yum China for robust performance, and POP MART for its growth potential and valuation.

Stocks to Avoid: JPMorgan advises against investing in BUD APAC and YANGHE due to their poor performance and high short-selling ratios.

Market Insights: The report highlights the importance of understanding market dynamics, including short-selling data and stock performance, to make informed investment decisions in the evolving consumer landscape.