UBS: Policy boost consumer confidence, consumer goods sector valuations expected to rise.

At a media event on November 12th, the head of Consumer Goods Research at UBS Greater China, Peng Yanyan, stated that due to strong support from central policies towards the consumption sector and industry recovery signals reflected in the social zero data, confidence in the Chinese consumer goods industry is on the rise, and she holds a relatively optimistic attitude towards the industry. Specifically, she believes that the consumer goods sector listed on the Hong Kong stock exchange is a good choice, as these companies have a relatively large discount compared to historical levels and are mostly high dividend-paying companies, which further amplifies their valuation advantages under policy support. In addition, she also has a positive outlook on the home appliance sector, especially with the sustainability of the "trade-in old for new" policy expected to have a positive impact on the industry in the next two years. Peng Yanyan mentioned that since August, there have been more direct measures to support the consumption sector, particularly with the "trade-in old for new" policy for home appliances. It is predicted that out of the 300 billion yuan "trade-in old for new" policy recently announced, 30-60 billion yuan will be directly related to home appliances. In addition to this, local governments have also introduced subsidy policies for the home appliance industry. Furthermore, during the "Double 11" period, there were corresponding subsidies in the home furnishing industry which directly supported the consumer goods industry. Moreover, during the National Day holiday in October, the growth trend of total social consumer goods retail sales (social zero) showed a significant improvement compared to September. Peng Yanyan believes that the strong performance of the home appliance and catering industries is the main reason for this improvement. For example, in Shanghai, a consumption voucher policy targeting the catering and consumer goods industries was introduced at the end of September, effectively stimulating consumption growth. The implementation of various stimulus policies not only promoted the recovery of the catering industry but also drove growth in the entire consumer goods industry. Regarding the export side, Peng Yanyan stated that data shows that this year, the growth of the home appliance industry mainly comes from non-US markets, with traditional markets like Europe and America gradually being replaced by Southeast Asia, Africa, and Latin America, becoming the driving forces for export growth of home appliance companies. These emerging markets, due to the increase in economic growth and CKH HOLDINGS, are expected to maintain their growth momentum for a longer period of time. Furthermore, Peng Yanyan also mentioned the inventory situation of essential consumer goods channels. She mentioned that in the second and third quarters of this year, industries such as dairy and beer underwent large-scale inventory clearance, leading to a significant reduction in enterprise inventory by the end of the third quarter. Through research, UBS found that entering the fourth quarter, these enterprises showed improvements in revenue and profits on a month-to-month basis, mainly benefiting from the positive effects of inventory clearance in channels.