China Galaxy Securities: Focus on the direction of continuous economic prosperity exceeding expectations in gambling, tea and coffee, and AI+ commercialization.

China Galaxy Securities released a research report stating that the rise and fall range of the social services industry this month is +5.13%, with professional services (+7.5%), tourism and scenic areas (+6.6%), education (+3.7%), and hotels and catering (-0.6%). The Hainan Free Trade Port will officially close on December 18, 2025, and the policy dividend continues to be released: the proportion of "zero tariffs" goods tax items on the island has increased from 21% to 74%, and goods with a processing value added of 30% can be exported to the mainland duty-free. It is expected to significantly increase the customer base of offshore duty-free shopping. Meanwhile, Macau's gross gaming revenue in July was 22.1 billion Macau patacas, an increase of 19% year-on-year, showing the effect of the non-gaming transformation, combined with the favorable policy of visa-free travel for the Middle East, the industry's high prosperity in the second half of the year is expected to continue. Key points from China Galaxy Securities: Industry important dynamics and news 1) On August 1st, the three major food delivery platforms successively issued statements to resist vicious competition and eliminate unfair competition; 2) The operation of the closure of the entire island of Hainan Free Trade Port is officially scheduled to start on December 18, 2025. Duty-free: Confirmation of the timing of the closure of the free trade port, policy enhancement is expected to promote the expansion of the duty-free market in Hainan With the approval of the Central Committee, the closure of the Hainan Free Trade Port is scheduled to be officially implemented on December 18, 2025. Based on the current policy planning, the institution believes that after the closure, Hainan is expected to build a high-level international trade port. On the one hand, the proportion of tax-exempt goods imported on the island will increase from 21% to 74%, and on the other hand, goods that meet the conditions for tax exemption can be processed and value-added in Hainan up to 30% and then be duty-free for sale to the mainland. Benefitting from the highly liberal tax rate regulations after the closure, the institution predicts that Hainan's attractiveness to large international companies, as well as domestic and foreign tourists, is expected to increase, thereby promoting an increase in the number of inbound and outbound tourists and expanding the customer base for duty-free shopping on the island. Macau Gaming: Gaming consumption continues to exceed expectations, the narrative of non-gaming transformation is expected to drive sector valuation repair In July, Macau's gross gaming revenue was 22.1 billion Macau patacas, an increase of 19.0% year-on-year, exceeding market expectations for three consecutive months. Especially in July, after the impact of the typhoon and the end of the Jacky Cheung concert, the growth rate of gaming consumption did not slow down compared to June, reflecting the current recovery of gaming consumption demand in Macau. The driving factors behind this are the optimization of entry visas to Macau and the successful transformation to non-gaming, which are attracting high-end gaming consumers back to Macau. Looking ahead to Q4, considering the continued enrichment of Macau in sports events such as the National Games, as well as the potential attraction of wealthy tourists from the Middle East due to the visa-free policy, gaming consumption in Macau in the second half of the year is expected to continue to maintain high prosperity. Catering: Q2 performance of ready-to-drink beverages exceeds expectations, optimistic about summer demand Benefitting from the strong stimulation of demand from large-scale subsidy activities by food delivery platforms starting in April, the Q2 performance of companies in the ready-to-drink beverage industry has significantly exceeded market expectations. For example, Luckin Coffee achieved revenue of 12.4 billion yuan in Q2, an increase of 37% year-on-year, with a month-on-month growth rate of 5.9 percentage points; same-store sales in directly operated stores increased by 13.4% year-on-year, with a month-on-month growth rate of 5.3%. Looking ahead to Q3, although the large subsidies such as "zero cost purchase" and "free vouchers" between platforms gradually fade away starting from the end of July, subsidies continue to be distributed on a regular basis, and Q3 is the peak season for ready-to-drink beverage consumption due to weather factors. Therefore, the overall Q3 outlook remains optimistic. The commercialization of domestic AI+ education and human resource products continues to advance, and large model technology is expected to further drive the iterative development of relevant AI applications in the second half of the year Since Q2, the commercialization of AI+ education and human resource applications has been accelerating: 1) Doushen (Beijing) Education & Technology Inc.'s AI CLASS products (Super Practice Reading + Super Essay) officially launched until July 30th, with GMV exceeding 17.4 million yuan; 2) FENBIAI+ public examination product, the AI question brushing system launched in April, with sales exceeding 14 million yuan in two months, and the number of paid students surpassing 40,000, with full-year sales expected to exceed 100 million yuan; 3) AI+ human resources, Beijing Career International's He Wa platform has released 9 major recruitment full-process tools launched by AI 2.0, and its Match System has been applied in various scenarios such as customer acquisition, talent search, and internal coordination, and is expected to be integrated into the He Wa platform in the second half of the year. The advantages of large models in semantic understanding and information matching enable companies to intelligently replace repetitive work and shorten the recruitment cycle, significantly improving the accuracy and efficiency of matching people and positions. Considering that OpenAI and Deepseek will release new large model technologies within the year, coupled with the continuous iteration of AI application products through the accumulation of user data, the institution predicts that AI+ education and human resources are expected to transition from thematic investment to commercial realization. Risk warning Risks of natural disasters and other force majeure events; risks of consumption recovery falling short of expectations; risks of macroeconomic downturn.