Dongxing: Multi-dimensional boost in consumption worth looking forward to, interest consumption-related concepts are the main driving force for growth.

Dongxing released a research report stating that we are currently in a period of waiting for consumption policies, and the policies introduced by relevant departments earlier may provide a foundation and guidance for future policies. In the future, it is recommended to focus on opportunities in the following segmented tracks: 1. Continue to focus on cosmetics and medical beauty consumer types. For cosmetics, focus on increasing market share of domestic beauty brands, while for the medical beauty industry, the increase in penetration rate is driving market expansion. Pay attention to the creation of new growth curves after the launch of new products. 2. The trendy play industry, direct beneficiaries of "interest consumption." Concepts related to interest consumption are still the main drivers of consumption growth. Brands and retailers that directly produce or operate IP are the biggest beneficiaries of the rise of IP economy and Guzi economy. Dongxing's main views are as follows: Home Furnishings: Benefiting from replacement of old with new, favoring top brands. The document states "strengthening quality, standards, and brand construction in the home appliances and home furnishings field" and "supporting the upgrade of home product consumption," indicating support for the home furnishings sector, further increasing the likelihood of continued subsidies for home furnishings. Smart home and home decoration and kitchen and bath "renovation" are expected to remain key areas for subsidy support. Only a few regions actually promoted home furnishing subsidies last year (far less than home appliances), and this year's further support from the policy end, coupled with last year's positive feedback, is expected to drive more provinces and cities to invest in home furnishing subsidies. With a significant decline in real estate completion last year, the pressure on natural demand for home furnishings was high, and this year's national subsidies are expected to help stabilize demand, smoothing out the trough. Subsidies generally require merchants to meet audit conditions and provide upfront funding. Major home furnishing manufacturers have high compliance and strong financial capabilities under their dealerships, making them more likely to meet subsidy requirements. Major manufacturers also have advantages in craftsmanship and brand construction, but their prices are relatively high, in line with the document's focus on "improving consumption supply quality." Therefore, the bank also believes that this year's subsidies will mainly be distributed to major manufacturers, helping to increase industry concentration. Textiles, clothing, gold and jewelry, cosmetics, enjoy the rise of national trends. The action plan mentions enhancing the overall image of "Made in China," supporting the innovative development of old brands, accelerating the transformation of clothing, jewelry, leather goods, cosmetics and other boutique national trend fashion. It points out that the future development direction of fashion consumer goods in China is to promote the rise of domestic goods, and the improvement of product quality and the integration of national trend culture are important ways to achieve the rise of domestic goods. Currently, the beauty and skincare industry and the gold and jewelry industry are moving in this direction. In recent years, the R&D strength of domestic beauty companies has continued to increase, with product and brand strength constantly growing. Combined with their advantages in new channels such as interest-based e-commerce, leading domestic beauty brands have to some extent gained market share from international giants. At the same time, the bank also notes that brands focusing on Oriental beauty are rising rapidly, verifying the trend of rising national trends. For the gold and jewelry sector, the improvement of gold craftsmanship has increased its appeal to young customers, while the increase in penetration rate is an inherent driver of industry growth. National elements have also been extensively applied to product design, such as LAOPU GOLD's traditional handcrafted gold artifacts and the "Forbidden City Collaboration Series," which have achieved impressive sales performance. Looking ahead, the bank believes that the trend of the rise of domestic goods in the fashion consumer goods industry will continue, and the bank is optimistic that leading domestic brands will increase their market share, and brands with strong product and brand strength and national trend elements will benefit more. Service consumption has great development potential, focusing on key areas such as health preservation, education, and cultural tourism. Improving service consumption quality in multiple dimensions. The action plan states that service consumption quality will be improved from multiple dimensions such as credit, service standards, service certification, and evaluation mechanisms, mentioning industries including elderly care and rehabilitation, childcare, housekeeping, cultural tourism, and finance. Overall, the future focus of social services will still revolve around the basic sectors of people's livelihood, with companies that have layouts in these sectors expected to continue benefiting. The improvement of service quality is expected to promote the release of consumption demand on one hand, and on the other hand, it also places higher demands on service providers, with leading industries with high service standards likely to further enhance their competitiveness. AI + consumption direction is expected to create more consumption scenarios. The action plan also states that actively layout new consumption areas, promote the emergence economy, promote the construction of consumption landmarks, focus on digital consumption, green consumption, health consumption, and create new consumption scenarios. Systematically build a digital consumption ecosystem, vigorously promote the integration of online and offline consumption, and create immersive and experiential consumer scenes. The bank believes that two major consumption trends will benefit from this: one is offline retail channels, as the current adjustment is the main theme of the traditional offline retail industry, and as the adjustment is completed, it is expected to become a quality consumption hub that meets consumer needs, while offline retail channels are also important places for emerging economies, with offline retailers with advantageous geographical resources and significant adjustment efforts expected to benefit; the other is the AI + consumption direction, as AI technology has already been applied in some consumption scenarios, and with the continuous iteration of AI technology, new consumption scenarios and applications will continue to emerge, such as AI-driven travel experiences, smart retail, smart education, and wearable technology. Agriculture, forestry, animal husbandry, and fishery: Focus on rural revitalization, pay attention to agricultural technology. By reviewing the central No. 1 document of the past five years, referring to recent policies released by the central government and the Ministry of Agriculture and Rural Affairs, and combining recent domestic and international development situations, the bank believes that the central No. 1 document for 2025 and the topics related to agriculture at the two sessions will revolve around three key points: 1) Continuously focus on rural revitalization. The No. 1 document for 2025 and the two sessions are likely to continue the policy direction of the 24th Central Rural Work Conference, focusing on "deepening rural work reform and promoting comprehensive rural revitalization." The content includes reforms in management systems and land systems, innovative rural revitalization investment and financing mechanisms, cultivating new rural formats, and improving diversified input security mechanisms. Emphasis on food security baseline. Against the backdrop of tariff trade wars, the policy focus on food security is expected to continue to increase. 2) Food security. It is expected that the No. 1 document for 2025 will focus on improving the yield of grain and oil crops, strengthening the protection of arable land, and strictly GUIStyleLeather Goods protecting. Balance of occupation and supplementation etc. 3) Focus on promoting agricultural science and technology. Biotechnology and information technology are leading a new round of productivity revolution, and the agricultural industry needs to cultivate and develop new quality productivity. The bank assesses that biological breeding is an important means to improve crop yield, and its scope of promotion and application is expected to further expand. In addition, the content of agricultural science and technology may involve aspects such as breeding of good varieties, Jiangsu Nonghua Intelligent Agriculture Technology, disease prevention and control, green low-carbon, etc.Food and Beverage: Catering consumption is expected to boost. As an important sector in consumption, the food and beverage consumption will also benefit from the stimulation of consumption policies. It is expected that the consumption environment will be actively improved, and both online and offline food and beverage consumption will benefit. We are optimistic about the future reforms in the consumption environment, transaction environment, and policy environment driven by national policies, and we are optimistic about the overall improvement in the performance of the food and beverage industry. Especially in catering consumption, with the implementation of the plan, consumption in tourism, shopping districts, offline experiences, and other areas will be boosted, providing a significant pull for catering consumption. At the same time, it is expected that local subsidies for consumption will also increase the level of subsidies for catering, which will positively help the catering industry. Risk warning: Insufficient consumer demand, policies not meeting expectations when implemented, and increased market competition, etc.