Shanxi: In October, the domestic social retail zero growth rate increased by 1.6 percentage points, with a high increase in retail sales of cosmetics.

Shanxi released a research report, stating that domestic social retail sales in October increased by 4.8% year-on-year, exceeding market expectations. Among them, online channels continued to outperform the overall retail market, with the "Double Eleven" promotion period extended and trade-in subsidies for old items, resulting in a strong promotion performance. Additionally, an early start to the "Double Eleven" promotion period also drove a high increase in sales of cosmetics, while the sports and entertainment goods market continued to be prosperous. As a result, downstream core customers of textile manufacturing companies returned to normal inventory levels, with a cautious optimistic outlook on future sales prospects. Throughout this year, the sports retail market has outperformed other optional consumer goods categories, demonstrating strong demand resilience. The demand resilience for sportswear is expected to remain strong, but gold and jewelry sales are expected to continue to be under pressure in the third quarter. The main points of Shanxi are as follows: In October, domestic social retail sales increased by 4.8% year-on-year, exceeding market expectations. In October 2024, domestic social retail sales reached 4.54 trillion yuan, an increase of 4.8% year-on-year, an increase of 1.6 percentage points from the previous month, outperforming market expectations (According to Wind, the average forecast for the year-on-year growth rate of social retail sales in October 2024 was +3.9%). By consumption type, in October 2024, catering revenue and retail sales of goods increased by 3.2% and 5.0% year-on-year, respectively. Since the beginning of the year, China's consumer confidence index has declined for five consecutive months starting from the second quarter after continuous improvement in the first quarter, reaching 85.7 in September, a decrease of 0.1 from the previous month. In terms of channels, online channels continued to outperform the overall retail market, with an extension of the "Double Eleven" promotion period and incentives for trade-ins for old items, resulting in a strong promotion performance. In the online channel, from January to October 2024, the sales of physical goods online increased by 3.2% year-on-year, while the sales of physical goods online increased by 8.3% year-on-year, outperforming the overall retail market. Among physical goods sold online, the sales of food, clothing, and household goods increased by 17.7%, 4.7%, and 7.7% year-on-year, respectively. This year, major e-commerce platforms started their "Double Eleven" promotion activities earlier, with a longer duration, and during the promotion period, subsidies were provided for the trade-in of appliances and household goods, leading to a positive overall performance. In the offline channel, by retail formats, from January to October 2024, among retail units with sales above a certain limit, convenience stores, specialty shops, and supermarkets saw year-on-year growth in retail sales of 4.7%, 3.9%, and 2.6% respectively; department stores and brand specialty stores saw a decline in retail sales of 3.0% and 1.1% respectively. According to the China National Commercial Information Center, in October 2024, the retail sales of 50 key large retail enterprises nationwide (mainly in the department store format) decreased by 1.4% year-on-year, with a decrease in the rate of decrease narrowed by 4.4 percentage points from the previous month. Among them, the decline in clothing, cosmetics, and jewelry categories narrowed by 9.3%, 10.5%, and 5.4% respectively; household appliances saw rapid growth in retail sales due to policy incentives, with a year-on-year increase of 51.4%. By category, an early start to the "Double Eleven" promotion period drove a high increase in cosmetics sales, while the sports and entertainment goods market remained prosperous. In October 2024, sales of high-end cosmetics increased by 40.1% year-on-year, with an increase of 44.6% from the previous month; sales of high-end jewelry decreased by 2.7% year-on-year, with a decrease narrowed by 5.1 percentage points, with the average closing price of AU9999 on the Shanghai Gold Exchange increasing by 32.3% year-on-year and by 5.6% from the previous month; sales of high-end textile and clothing increased by 8.0% year-on-year, with an increase of 8.4% from the previous month, and it is expected that the online channel will outperform the offline channel in terms of growth from January to October; sales of high-end sports and entertainment goods increased by 26.7% year-on-year, with an increase of 3.0% from the previous month. From January to October 2024, cumulative growth rates for high-end cosmetics/jewelry/textile and clothing/sports and entertainment goods were 3.0%/-3.0%/1.1%/11.5% respectively. According to Qingyan Intelligence, in October, Tmall and Douyin's skincare categories saw GMV of 19.649 and 18.684 billion yuan respectively, with year-on-year growth of 208.8% and 45.51% respectively; from January to October, the sales of cosmetic skincare categories on JD.com reached 33.956 billion yuan, with a year-on-year growth of 17.8%. Investment recommendations: (1) Textile manufacturing sector: According to the third quarter financial reports released by international sportswear companies in 2024, Deckers, Adidas, and Asics raised their full-year revenue guidance, Vans saw a narrowing in quarterly declines, and Under Armour and Puma maintained their full-year revenue guidance. Downstream core customers of textile manufacturing companies have returned to normal inventory levels, with a cautious optimistic outlook on future sales prospects. In October 2024, China's textile and clothing exports saw an improvement in year-on-year growth rates; Vietnam's textile and clothing and footwear exports continued to grow at a high rate. In the medium to long term, it is recommended to continue to focus on Huali Industrial Group (300979.SZ), which has strong growth potential in downstream customers and continuous growth in new customers; Zhejiang Weixing Industrial Development (002003.SZ) with clear logic for production base expansion in Vietnam and increase in customer market share; SHENZHOU INTL(02313) with vertical integration advantages in fabric and garment production, deepening cooperation with core customers. It is also recommended to pay attention to Zhejiang Natural Outdoor Goods Inc. (605080.SH), with a stable core business in inflatable mattresses and continuous expansion in new product categories such as insulated boxes and water supplies; Shandong Nanshan Fashion Sci-Tech (300918.SZ), with a turning point in ultra-high molecular weight polyethylene products and an expected increase in production next year in the nylon business; and Zhejiang Jasan Holding Group (603558.SH), with steady cotton sock products and potential for profit margin improvement in seamless products. (2) Sportswear sector: In October 2024, sports and entertainment goods retail sales increased by 26.7% year-on-year, with a cumulative year-on-year growth of 11.5% from January to October, outperforming other optional consumer goods categories throughout this year, demonstrating strong demand resilience. The demand resilience for sportswear is expected to remain strong; therefore, it is recommended to focus on ANTA SPORTS, which has a diverse brand matrix and stable operations.In 2020, the retail performance of the popular sports apparel brand 361 DEGREES (01361) outperformed its peers, while BOSIDENG (03998) continued to innovate its products and maintain steady single store operations.(3) Gold and Jewelry Sector: In October 2024, the month-on-month decline in sales of gold, silver, and jewelry continued to narrow. The bank predicts that the terminal sales of gold and jewelry will continue to be under pressure in the third quarter, with an improvement in month-on-month sales starting in September. If the price of gold stabilizes, accompanied by the peak sales season at the end of the year, demand for gold and jewelry is expected to be released steadily. In the short term, continue to track changes in the price of gold and the sales of gold and jewelry terminals, focusing on the traditional peak season sales of gold and jewelry companies at the end of the year. Recommended for the second half of the year, LAOPU GOLD (06181) which has shown consistently strong terminal sales performance, and long-term prospects look good for top gold and jewelry companies with brand momentum enhancement and channel expansion capabilities. It is recommended to pay attention to Chow Tai Seng Jewellery (002867.SZ), Guangdong CHJ Industry (002345.SZ), Lao Feng Xiang (600612.SH), Beijing Caishikou Department Store Co., Ltd. (605599.SH). Risk Warning: Domestic terminal consumption performance falls short of expectations; increased industry competition; significant fluctuations in raw material prices; significant fluctuations in gold prices.