Galaxy Securities: Strengthening the policy of trading in old for new, emphasizing the opportunities in structured consumer consumption.

China Galaxy Securities released a research report stating that it is expected that national subsidy funds will be gradually distributed to local governments after the two sessions, and it is recommended to continue to pay attention to the progress and marginal changes in the implementation of the 25-year national subsidy policy. In terms of paper packaging, the 25-year consumer goods replacement policy will further expand the scope of applicability for household appliances and automobiles based on 2024, and also add the larger market scale of consumer electronics, which will to some extent benefit upstream leading packaging companies. It also recommends focusing on companies with strong growth prospects. China Galaxy Securities' main points are as follows: Home Furnishings: The 25-year national subsidy policy continues to aid leading performance recovery. It is expected that national subsidy funds will be gradually distributed to local governments after the two sessions, and it is recommended to continue to pay attention to the progress and marginal changes in the implementation of the 25-year national subsidy policy. Compared to 24-year, it is expected that the 25-year national subsidy will: 1) increase the subsidy amount; 2) strengthen the subsidy intensity, with the highest discount rate for household kitchen and bathroom subsidies expected to reach 30%; 3) the restrictions on application for subsidies will be stricter: local subsidies can only be received and used locally. From the performance side, the 24-year national subsidy had a significant catalytic effect on company performance, but due to factors such as order cycles, it is expected to be concentrated in 25Q1, with temporary pressure on the full-year performance in 24. Optimistic about the continued performance recovery of leading companies in 25. Packaging: Downstream demand expected to steadily increase under national subsidy, improving competitive landscape. Paper packaging: The 25-year consumer goods replacement policy will further expand the scope of application for household appliances and automobiles based on 2024, and also add the larger market scale of consumer electronics, which will to some extent benefit upstream leading packaging companies. It also recommends focusing on companies with strong growth prospects. Metal packaging: The acquisition of ORG Technology is expected to be completed, accelerating industry resource integration and further improving the competitive landscape. Toys: Industry shows high growth potential, with wide opportunities in segmented tracks. The industry has shown high growth potential from 24 to 25, with BLOKS listing in Hong Kong in January 25, and several companies such as Card Games planning to go public, indicating high market enthusiasm. In the segmented tracks, building block toys (BLOKS)/grain economy (Guangbo Group Stock)/blind boxes (POP MART) and other sub-industries have shown good growth performance. Papermaking: 24Q4 profits temporarily under pressure. On the revenue side, the landing of leading capacity planning has driven momentum growth. However, since 24, due to factors such as weak demand and falling raw material prices, finished paper prices have continued to decline. Although some paper prices rebounded in December, the overall year-on-year comparison of finished paper prices in 24Q4 still declined. In terms of profits, pulp prices have been steadily declining since 24Q2 and dropped on a quarter-on-quarter basis in 24Q3, but still remained higher than the same period in 23 on a year-on-year basis, putting pressure on raw material costs in 24Q4; at the same time, the decline in paper prices will also have a negative impact on profits. Looking ahead, the shutdown of leading companies will alleviate supply pressures, and finished paper prices have increased since December 24, with leading companies releasing price increase letters before the Spring Festival; 24Q4 low pulp prices will gradually reflect in 25Q1, driving down costs. Necessary Consumption: Leading domestic companies with outstanding capabilities. Shanghai M&G Stationery Inc.: 24Q4 cultural and office supplies demand has slightly recovered, with social retail sales up 6% year-on-year, and it is expected that the company's traditional core business growth rate will improve on a quarter-on-quarter basis; retail large store business steadily contributes incremental growth; direct sales to office customers were affected by bidding, but expected to grow steadily. Chongqing Baiya Sanitary Products: Continuous iteration and upgrading of products, increase in proportion of new products driving business scale and profitability upwards; overflow of TikTok channel driving growth across all channels, with high revenue growth continuing in 24Q4. However, profits in 24Q4 declined due to the impact of public opinion turmoil in the sanitary napkin industry. Dencare: Offline channels are steadily developing, with strong expansion of TikTok channels online leading to rapid growth, and it is expected that the company's revenue growth will accelerate in 24Q4. At the same time, product structure is continuously optimized, with an increase in the proportion of medical research products driving profitability upwards. Mingyue Optical Lens: Business rebounded in 24Q4, with favorable response to new series, and revenue growth rate recovery. In addition, the company is fully deploying in intelligent glasses sector, in contact with Xiaomi, and is expected to achieve incremental growth in the future. Exports: High-quality leading growth realized, with prominent advantages in globalized layout. The continuous development of high-quality consumer export leading businesses, maintained rapid revenue growth, and some companies' profits are under pressure due to previous business investments and rising shipping costs. Looking ahead, with the background of a new round of tariff increases, leading consumer export companies have proactively completed overseas production layout, expected to achieve significant tariff cost advantages in the future, thereby obtaining incremental customers and orders; as business development scales up, and with the decline in shipping costs in 24Q4, it will drive subsequent cost improvements. Risk Warning Risks of macroeconomic and domestic demand falling short of expectations; risks of intensified industry competition; risks of significant fluctuations in raw material prices, exchange rates, and shipping costs; risks of uncertain trade policies.