Open source securities: the effects of the old-for-new policy are good, and the growth rate of social retail in October continues to rebound.

Open source securities released a research report stating that in October, stimulated by policies such as old-for-new incentives, the growth of durable consumer goods such as household appliances and office supplies was significant. Meanwhile, the "Double Eleven" e-commerce promotion led to a continued rebound in social retail growth, but the food and beverage consumption still needs repair. With the continuous implementation of a package of incremental policies, it is expected that consumer confidence and willingness to consume will improve, and the food and beverage sector is expected to gradually recover. Key points from the open source securities include: Monthly observation: In October, the growth rate of social retail improved month-on-month, while demand for food and beverages still needs repair. In October 2024, the total retail sales of consumer goods increased by 4.8% year-on-year, with a month-on-month growth rate of 1.6 percentage points compared to September. The growth rate of social retail in October continued to rise, driven mainly by the old-for-new policy stimulating sales of household appliances and office supplies, and the e-commerce promotion of "Double Eleven" starting earlier than in previous years. In October 2024, the year-on-year growth rates of catering and catering above quota were +3.2% and -0.3% respectively, with month-on-month growth rates in September of +0.1 percentage points and -1.0 percentage points respectively. Demand for catering still needs repair. Among the sub-industries, in October 2024, the year-on-year growth rates of grain and oil food, beverage, and tobacco and alcohol were +10.1%, -0.9%, and -0.1% respectively, with month-on-month growth rates in September of -1.0 percentage points, -0.2 percentage points, and +0.6 percentage points respectively. Grain and oil food as essential consumption maintained a good growth rate, while consumption of beverages and tobacco and alcohol remained relatively weak, showing a relatively slow recovery in consumer demand. Quarterly observation: It is expected that the continued rise in social retail in the fourth quarter of 2024, while catering and food and beverage consumption still need recovery. Considering the implementation of incremental policies, it is expected that the growth rate of social retail in the fourth quarter of 2024 may continue to rise, but the growth rate of catering and food and beverage consumption may recover relatively slowly. Specifically: The growth rate of total retail sales of consumer goods in October 2024 increased by 2.3 percentage points compared to the third quarter of 2024, and it is expected that the old-for-new policy will continue to drive the growth of social retail data in the fourth quarter. The growth rates of catering and catering above quota in October 2024 increased by +0.2 percentage points and -0.4 percentage points respectively compared to the third quarter of 2024. This was mainly due to weak consumer spending in mass catering, and a soft performance in business banquets. In terms of consumer goods, in October 2024, the growth rates of grain and oil food, beverages, and tobacco and alcohol were -0.4%, -3.4%, and -0.8% respectively compared to the third quarter of 2024. In terms of growth rates, the performance of grain and oil food was relatively better, while the consumption of beverages and tobacco and alcohol still needs recovery. Looking ahead to the fourth quarter, with the stimulation of policies, improved expectations of household income, it is expected that the consumption of beverages and tobacco and alcohol will improve compared to the previous quarter. Industry observation: Liquor companies release risk pressure, leisure food maintains good growth. In the short term, the liquor industry still faces pressure. In the third quarter report, liquor companies took the initiative to adjust their reports, releasing channel and market pressures, and actively promoted sales promotion, destocking, and price stability in the fourth quarter. Looking ahead to 2025, with the release of pressure and the transmission of economic policies, the industry is expected to enter a period of steady growth. In the mass products sector, the leisure food sector will enter the peak season for Spring Festival stocking in the fourth quarter. Major companies still have good growth momentum, and it is expected that performance may exceed expectations. Investment advice: In terms of sectors, it is advised to buy liquor stocks on dips, with specific targets including Anhui Gujing Distillery (000596.SZ), Kweichow Moutai (600519.SH), Wuliangye Yibin (000858.SZ), and Shanxi Xinghuacun Fen Wine Factory (600809.SH). In the mass products sector, it is suggested to focus on the snack sector, as snack volume vendors are still in a bonus period with snack companies opening up growth space through overseas strategies. Seasoning products may benefit from the recovery of catering after an increase in economic activity. Also, attention should be given to the dividend brought by cost reductions, such as the downward trend in sugar prices benefiting Angel Yeast Co., Ltd.'s profit release, and lower vegetable prices helping improve the profit margins of Chongqing Fuling Zhacai Group. Risk warning: Risks from fluctuations in raw material prices, market operation risks, food safety risks, etc.