China Securities Co., Ltd.: Consumer demand is shifting from quantity to structure, and supply innovation is creating new opportunities.

China Securities Co., Ltd. released a research report, stating that from the demand side, the consumption sentiment in 2024 is relatively weak with internal structural differentiation. The company believes that in the overall environment of weak consumption and peak population, investment opportunities in consumption are shifting from overall to structural and even individual stocks. On the demand side, it is important to closely monitor new trends, such as the emergence of new consumer groups (such as the growth of the second-generation culture) and changes in consumer psychology (rational consumption, satisfying emotional value, etc.). These companies can also take advantage of the viral marketing effect through social media, further amplifying the communication effect and forming a growth loop. The main views of China Securities Co., Ltd. are as follows: Gold and Jewelry: Moving from the era of channels to the era of brands and products The changes in the national standard for foot gold in 2016 have brought about more possibilities for the product strength improvement of gold jewelry. With the innovation of technology such as 3D, 5G, gold-encrusted diamonds, and the rise of national trends, the gold and jewelry industry is transitioning from the era of channels to the era of brands and products. LAOPU GOLD, as the first brand of ancient gold, is the pioneer of ancient gold, foot gold-encrusted diamonds, and foot gold-fired blue. Its product design integrates traditional cultural elements and modern international aesthetics, leading the industry product trend. LAOPU GOLD, with a systematic high-end positioning in products, channels, and services and a comparatively low premium level, benefits from the trend of rationalization of high-end consumption, exploding brand momentum, and achieving rapid growth. IP Toys: Emotional consumption drives demand, supply innovation drives high growth The demand for emotional value has driven the rise of related cultural and toy consumption based on IP development, especially products with character images that easily connect with people emotionally. BLOKS adopts a standard parts + feature parts model to make figurines with the concept of building blocks. Its standardization level is higher than Bandai, and the character fidelity is close to Bandai and higher than LEGO blocks, creating the category of "block figures." On the supply side, it provides consumers with fun experiences and affordable prices, achieving high growth in performance. Medical Aesthetics: Product-driven track, new materials such as regeneration/collagen open up new growth points The medical aesthetics industry has high barriers (technology, pharmaceutical supervision, certification and approval, etc.) and is a typical product/license-driven track, usually driven by innovation and change from upstream manufacturers to downstream medical aesthetics institutions and consumers. It is currently transitioning from hyaluronic acid to regeneration materials to collagen protein materials, tapping into consumer potential and replacing old products. For example, the pure target of recombinant collagen protein medical aesthetics track, JINBO, obtained the first three licenses for recombinant collagen protein injection in the entire industry in 2021, starting the growth curve. The company currently holds the market's only three recombinant human collagen protein implant products (freeze-dried fiber-water light, ZHEN (10mg, focusing on ligament nourishment), gel-filling), with a good competitive landscape and continuously drives product volume through new strategies and enhanced institutional deep plowing. In April 2025, the low-temperature gel made of recombinant collagen protein targeting mid-face augmentation was approved, opening up the filling market and is expected to replace some animal-derived collagen protein and regeneration materials market in the future. New Tobacco: Product innovation drives rapid replacement of traditional tobacco Based on the vast market space of the tobacco market, the progress in supply-side, new products replacing old products, such as nicotine salt, heat not burn, atomized ceramic core technologies, often bring explosive growth as supply is the determining factor of demand. FIMO International is the pioneer of heat not burn products, and since its launch in 2014, its IQOS product has undergone multiple iterations, continuously optimizing from product design, endurance, heating technology, etc. By the end of 2024, the number of users has reached 32.2 million. In November 2024, SMOORE INTL launched a new HNB product with a major customer, which is expected to become the company's second growth curve. Risk Analysis 1) Fluctuation risk of raw material prices; 2) Risk of changing trends; 3) Failure to meet consumer demand.