Cinda2025 Young Workers Manufacturing Strategy Report: Emphasize Setting Up in Low Positions and Cyclic Order, Focus on Scarce Growth.

Cinda released a research report saying that the current stage of the A-share market still leans towards policy, growth, and thematic styles. It is recommended to actively allocate in case of a pullback in value targets. It is expected that undervalued strategies will still dominate next year, with dividend strategies expected to remain effective, and the valuation center of cyclical growth prospects expected to rise. Focus on four allocation directions in the light industry sector: 1. Low-position cyclical: home furnishings greater than papermaking, 2. Scarce cyclical growth & consumer stocks with increasing market share, 3. Companies with outstanding global resource allocation capabilities, 4. Steady dividend assets. Cinda's main points are as follows: Home Furnishings: Real estate pressure weakening, industry chain restructuring, driven by replacement of old with new The real estate cycle is at its bottom, with a focus on a rebound in the second-hand housing market and intensified real estate policies. Linear prediction suggests that the industry will still be in an adjustment period in 2025-2026, with stabilizing turning positive in 2027. The industry landscape is expected to continue to change in 2023-2024, with trends towards channel diversification and integrated industry chain business, leading companies actively transitioning channels and improving internal capabilities. With the implementation of home furnishings subsidies, leading companies are expected to benefit from industry growth, price corrections, and structural improvements; according to the bank's calculations, if home furnishing subsidies reach 20 billion/30 billion, leading companies are expected to achieve positive growth/double-digit growth throughout the year. It is recommended to focus on Jason Furniture (603816.SH), MAN WAH HLDGS (01999), Xilinmen Furniture (603008.SH), De Rucci Healthy Sleep (001323.SZ), Guangdong Hotata Technology Group (603848.SH), Xiamen R&T Plumbing Technology (002790.SZ), etc., with a leading position in the replacement of old with new Oppein Home Group Inc. (603833.SH), Suofeiya Home Collection (002572.SZ), Zbom Home Collection (603801.SH), Goldenhome Living (603180.SH), and Qu Mei Home Furnishings Group (603818.SH) reflecting resonance improvement both domestically and overseas. Papermaking: Bottom of the cycle, resources are key The global supply of wood chips is shrinking, with demand expected to continue to rise due to downstream pulp production. The shortage of wood chip resources may become a norm, supporting the upward trend of pulp prices in the medium to long term. In 2024, there will be a mismatch between supply and demand for pulp, with prices starting high and then falling low; in 2025, global interest rate cuts are expected, demand may stabilize, combined with limited new commodity pulp production capacity, supply and demand may be in basic balance, and prices are expected to rise moderately. In terms of finished paper, the short-term competitive landscape is expected to moderate improvement, and paper prices are expected to rebound mildly; in the medium term, the supply-demand relationship for container boards/corrugated boards is expected to ease, with prices expected to stabilize and rise, while supply-demand pressures for pulp and paper persist, with leading companies expected to continue to expand their competitive advantage through the integration of wood pulp and paper. Bulk Paper: It is suggested to pay attention to Shandong Sun Paper (002078.SZ) with a solid foundation for upward profit, ND PAPER (02689), Shanying International Holdings (600567.SH), Shandong Bohui Paper Industry (600966.SH), Yueyang Forest & Paper (600963.SH), Shandong Chenming Paper (01812,000488.SZ), etc. Specialty Paper: It is recommended to focus on Xianhe Co., Ltd. (603733.SH), Hangzhou Huawang New Material Technology (605377.SH), Wuzhou Special Paper Group (605007.SH), Guangdong Guanhao High-tech (600433.SH), Zhejiang Hengda New Material (301469.SZ), Qifeng New Material (002521.SZ), etc. with diverse products, excellent cyclical resistance, and ample growth momentum. Consumption: Seize the scarce cyclical growth, increase market share in consumer stocks With the government's efforts in pro-cyclical policies, traditional consumption is expected to stabilize and recover. In the midst of structural changes, self-indulgent consumption is gradually rising, with rapid growth in consumer demand for emotional, intelligent, and healthy products, as well as the booming development of self-indulgent tracks such as playfulness, grains, pets, etc. It is promising to focus on increasing market share, with sanitary napkins, toothpaste, pet food, and local brands of baby care relying on quality products, meticulous channel control, and precise marketing to achieve a leap in market share. It is recommended to focus on Goneo Group (603195.SH) with prospects for the recovery of traditional consumption, Shanghai M&G Stationery Inc. (603899.SH), Chongqing Baiya Sanitary Products (003006.SZ), Dencare (001328.SZ), YADEA (01585), Aima Technology Group (603529.SH), Mingyue Optical Lens (301101.SZ), Gambol Pet Group (301498.SZ), SMOORE INTL (06969), CONANT OPTICAL (02276), Ninebot Limited (689009.S)H) Doctor Glasses Chain (300622.SZ), Runben Biotechnology (603193.SH), Yantai China Pet Foods (002891.SZ), Perfect Group Corp., Ltd (603059.SH), Petpal Pet Nutrition Technology (300673.SZ), Hangzhou Haoyue Personal Care (605009.SH), Shenzhen Comix Group (002301.SZ), etc.Export: Order continuation is positive, global supply pattern is reshaping In the short term, export performance has a high degree of certainty, with stable overseas demand for terminals over the past 25 years and potential for inventory replenishment. The bank expects companies with the ability to revise earnings expectations or strengthen growth logic to still have room for upward valuation. Stock valuations are expected to differentiate during the anti-globalization cycle, with companies relying on efficient global supply chain layouts and brand globalization continuing to increase their global market share expected to see an increase in valuation. Recommend focusing on high-quality targets that have overseas layouts, such as UE Furniture, HHC Changzhou Corp., CoCreation Grass, Zhejiang Cayi Vacuum Container, ZheJiang Haers Vacuum Containers, Ziel Home Furnishing Technology, Henglin Home Furnishings, Zhejiang Xidamen New Material, Tianjin Yiyi Hygiene Products, Yuma Sunshade, Guangzhou Haoyang Electronic, Zhejiang Tianzhen Technology, Impulse (Qingdao) Health Tech, Intco Recycling Resources, among others on structural growth. Packaging: Metal packaging integration is imminent, solid dividends for ShenZhen YUTO Packaging Technology & Huangshan Novel Metal packaging: The capital expenditures and profitability of the two-piece can industry are at a cyclical low point, and industry consolidation is expected to catalyze improvement in the industry structure; short-term profitability is still expected to be weakened by downstream demand, with mid-term industry synergy expected to drive profits. Paper packaging: With the increase in the national coverage of the old-for-new program, the 3C packaging industry is expected to benefit; ShenZhen YUTO Packaging Technology is expected to continue steady growth in various businesses in the short term, with the mid-term 3C new product cycle and old-for-new spending driving recovery, deepening long-term overseas layout, increasing intelligent capabilities, expanding business boundaries, all expected to drive the company's market share. Plastic packaging: Huangshan Novel has diversified downstream industries and customers, along with improving consumer demand and strengthening high dividend attributes. Recommendations include focusing on Huangshan Novel, ShenZhen YUTO Packaging Technology, Shanghai Baosteel Packaging, Sunrise Group, ORG Technology, Shandong Newjf Technology Packaging, Jiamei Food Packaging, among others. New tobacco: Positive policy outlook, accelerated product iteration, core suppliers benefit The tobacco industry continues to increase its investment in new tobacco products, expanding its product matrix, accelerating product format/technology iteration and expanding coverage areas (BAT introducing the HNB upgrade series GloHilo; PMI expected to receive FDA authorization for the IQOSILUMA25H2), with expected faster future growth rates and potential for continuous increases in market share for leading brands/manufacturers. Recommend focusing on SMOORE INTL, which is deeply bound to global major customers and has strong technological barriers, with a diverse business matrix expected to continue contributing to incremental growth. Also, focus on Xiamen Intretech Inc., which is deeply bound to the global HNB leader, Philmo International, and upgrading its supply position. Risk factors: Domestic and overseas consumption recovery falls below expectations, intensification of global trade frictions, real estate sales recovery below expectations, significant fluctuations in raw material prices, and policy risks for new tobacco.