Sinolink: The bottoming-out effect of China's high-end consumption is manifested, focusing on recommending the duty-free and gold jewelry industries.

Sinolink released a research report stating that the recovery of luxury goods, high-end fragrances, and high-end retail performance is accelerating, with the consumption recovery of high-net-worth individuals being the main reason for the improvement in high-end consumption. The bank believes that the current bottoming effect of high-end consumption in China has already been demonstrated, and in the short term, the recovery of high-end consumption will depend on the wealth effect of high-net-worth individuals and policy stimulus targeting the middle class. In the medium to long term, attention should be paid to systematic improvements in income and employment, the stabilization and recovery of the real estate market, and the pace of the diffusion of the wealth effect from high-net-worth individuals to the middle class. The improvement in actual demand for high-end consumption, relative scarcity of supply, and strong policy effects highlight the need to focus on the duty-free and gold and jewelry industries. Sinolink's main points are as follows: Duty-free: With a low base, strong policy dividends, and the recovery of high-end consumption, the duty-free industry is expected to return to growth Duty-free is an important channel for the circulation of imported cosmetics, luxury goods, and other high-end consumer goods, which will greatly benefit from the recovery of high-end consumption. The launch of the Hainan Free Trade Port has officially sealed off, and is expected to have a significant impact on the duty-free business in Hainan and across the country. In addition, after the decline in tourism to Japan, Hainan has become a new popular destination. Data from platforms such as Qunar Travel and Ctrip show that as of early February, daily airline ticket orders to Hainan during the Spring Festival holiday increased by over 45% year-on-year. China Tourism Group Duty Free Corporation: The company's fundamentals are improving, and from the perspective of domestic demand, the recovery of high-end consumption is the basis for the recovery of the duty-free industry, which presents an overall opportunity; from the perspective of external demand, the consumption potential of inbound tourists has not been fully recognized by the market, and it is expected that the performance of CDFG will exceed expectations in terms of growth. Gold and Jewelry: With the continuous rise in gold prices, it is beneficial for high-end self-consumption and brand transformation On the demand side, gold prices continue to rise to high levels, and the cost-effectiveness of fixed-price products is evident. At the same time, under the trend of self-consumption, the emotional value of gold jewelry surpasses the functional necessities, as gold jewelry shifts from being priced by weight to fixed prices. This shift reflects consumers paying for the "value resonance" brought by the product, rather than just the functional satisfaction. The value of the product's design and craftsmanship is increasingly recognized by the market, and this recognition will gradually accumulate to enhance the brand's consumer reputation and trust. On the supply side, the trend of store adjustments continues, and companies that increase their store network against the trend by 2026 are expected to have greater business elasticity. In addition, new store openings in 2025 are expected to contribute to incremental sales, and gold and jewelry brands with a high proportion of sales in gold jewelry and investment gold are expected to show superior revenue growth. LAOPU GOLD: Despite fluctuations in gold prices, consumer enthusiasm for consumption during the Spring Festival remains strong, and terminal performance in January may exceed expectations. Optimistic about the optimization and adjustment of stores in 2026 and high customer operation strategies, same-store growth is expected to continue. Meanwhile, accelerated overseas expansion is expected to contribute to additional growth. Guangdong CHJ Industry: The introduction of high-quality products is enhancing the single-store model of franchisees, and store openings are expected to continue to exceed expectations, with accelerated revenue in the second half of the year. With an increase in the proportion of self-produced products and optimization of product structure, profitabil... Liquor: The overall performance of the Baijiu industry during the Spring Festival window is still commendable, and it is expected that the pressure on industry prices will gradually ease Maotai liquor, with Feitian Maotai as the core, continues to exceed expectations in terms of sales and wholesale prices, with wholesale prices of Feitian Maotai original cases rising to over 1700 yuan before the holiday, confirming the strong demand before the holiday; non-standard Maotai sales have been relatively stable compared to the same period last year. Considering that Kweichow Moutai began comprehensive market-oriented reforms at the end of '25, Channels for non-standard Maotai have significantly reduced their supply since the beginning of the year, with only a few distributors completing contracts for the '15 Maotai vintage and other non-standard Maotai wines, so the main volume in the channels is from the clearance of previous stocks and the current inventory has been significantly reduced. The bank expects that after the Spring Festival, there will be a clear acceleration in contract signing in the channels and the pace of market supplies. In addition to Maotai liquor, the bank expects other well-known liquors to have a small double-digit shortfall in sales compared to the same period last year, with the decline attributed to some consumption scenarios being constrained and reduced consumption of alcohol by enterprises/residents. The impact of consumption downgrading due to consumption power and sentiment disturbances has marginally weakened, mainly in terms of obvious price adjustments for liquor. However, the overall performance of the industry's price system during the Spring Festival window is still commendable, with prices remaining stable without significant declines, and the bank expects that the pressure on the price system as a whole will gradually ease, with the focus after the Spring Festival being on the support of channel sentiment and sales in a relatively low base context during the off-season. The most challenging period for the industry has passed, and external constraints on consumption scenarios are expected to continue to ease. In the medium term, with the continuous implementation of the "anti-inner loop" policy and the improvement in corporate ROE, the per capita expenditure and income expectations of residents are expected to improve. Currently, the market's expectations for the Baijiu industry are at an absolute low, and with the sentiment of Maotai sales and wholesale prices rising, there has been a slight improvement in sentiment. Medical Aesthetics: Iterative core components are leading the medical aesthetics and skincare markets into a new stage, with recombinant collagen and PDRN using their unique regenerative repair mechanisms to become high-growth themes with high certainty and prosperity On the demand side, consumer demands have evolved from a single increase in capacity and hydration to a compound demand for regeneration, anti-aging, and other diversified effects; traditional hyaluronic acid and botulinum toxin have entered into red ocean competition, while recombinant collagen and PDRN precisely meet the market's pursuit of regenerative materials. On the supply side, regulatory thresholds continue to rise, and companies with first-mover advantages are establishing significant entry barriers through early layout. PDRN and recombinant collagen, as emerging bi... Recombinant collagen represents the high-end innovation direction in China, with technological barriers concentrated at the research and development end, and combined with the cautious supervision brought about by domestic original research, forming a double barrier of technology and supervision; PDRN is expected to continue the path of domestic substitution. The bank expects a clear gradient in the market monopolistic period of the three types of ingredients: Recombinant collagen > PDRN > Hyaluronic acid. Relevant stocks to watch include JINBO and GIANT BIOGENE. Risk Warning: Consumption recovery falls short of expectations, consumption recovery falls short, high-end consumption falls short, exchange rate fluctuations are large; business expansion falls short, domestic consumption falls short, product performance falls short, international trade policies fluctuate significantly; macroeconomic recovery falls short of expectations, regional market competition risks, food safety risks; risks of slower than expected certification progress; potential competition risks from imported products; risks of slower than expected market promotion of new products; risks of intensified domestic cross-border competition.