Huatai Securities 2026 Outlook: Domestic demand is expected to continue to steadily recover, focusing on four major investment themes.

Huatai Securities research report indicates that in 2025, the performance of new and old consumption will continue to differentiate. The transformation of the "people, goods, and market" and technological advancement are driving rapid iterative innovation and structural growth opportunities in the consumer industry. New consumption tracks such as trendy IP, beauty and personal care, and freshly made beverages are emerging with a group of excellent industry leaders. Looking ahead to 2026, we believe that continued efforts in consumption promotion policies are expected to stimulate supply and demand potential. Domestic demand is expected to continue a steady recovery trend, with the industry continuing to differentiate in terms of prosperity. Leading companies will achieve sustainable growth through their leading and innovative advantages, as well as their integration capabilities. Based on industry reforms, we recommend focusing on four main investment themes: 1) Rise of domestic brands: Focus on trendy, beauty, gold jewelry, and other domestic brands, interpreting new competitive dynamics in both domestic and international markets; 2) Technological consumption under AI empowerment: Emphasize the rapid increase in the penetration of intelligent products brought by technological and product innovation in technology consumption companies; 3) Emotional consumption: Changes in supply and demand are still evolving, with a focus on service consumption, freshly made beverages, pets, and new tobacco products with potential for growth; 4) Undervalued high dividend blue-chip leaders: Focus on opportunities for marginal recovery with both offense and defense.