Consumers Sector

[winston]

China Consumption: Better-than-expected Labour Day holiday data

Despite heightened geopolitical tensions and a high base for comparison, consumption momentum during the Labour Day holiday outperformed previous long holidays, indicating that some consumption categories held up better than market expectations.

The 5-day holiday reaffirmed robust Chinese leisure travel demand, with domestic tourist numbers and tourism revenue rising 6.4% and 8% year-on-year (YoY), respectively.

However, per capita tourism spending remained 10% below pre-pandemic levels, suggesting still-cautious spending and the need to restore consumer confidence.

The recovery in Chinese outbound travel continued, even in the face of CNY depreciation concerns, while inbound travel also showed encouraging signs.

Online travel agencies (OTAs) reported strong demand for domestic long-haul and outbound trips. There was a noticeable uptick in demand for niche destinations, a surge in first-time travelers, and increased spending from both lower-tier city residents and the elderly “silver generation”.

We also observed stronger-than-expected hotel and airfares compared to the softer pricing seen during the 2025 Chinese New Year, supported by improving tourist traffic and more disciplined promotional activity.

Sub-sector performance varied, with fast food, beverages, and restaurants outperforming, while categories like spirits, cinema, and apparel remained relatively weak.

Notably, home appliances, automobiles, and communication equipment posted solid growth, driven by resilient consumer demand and ongoing trade-in incentives.

The solid consumption trend also lend support to e-commerce players such as JD.com (9618 HK). Moreover, online/mobile games have posted robust sales trend as NetEase’s (NTES US) “Where Winds Meet” hit a record high single day mobile grossing.

Amid ongoing tariff and de-risking concerns, the market is increasingly favouring domestically focused Chinese consumer plays. Many of these, particularly the staples segment, are domestically oriented and could benefit from supportive policy as China looks to strengthen household consumption.

Given persistent headwinds from external challenges, weak demographics and a sluggish property market, China may need to adopt a more aggressive approach on stimulating demand.

Against the backdrop, we continue to adopt a selective, bottom-up approach and prefer consumer names with:-
i) policy support such as home appliances, dairy and baijiu companies;
ii) earnings visibility with attractive dividend yield such as the beverage companies;
iii) market share gains with healthy margins;
iv) value-focused companies that capitalise on the consumer downgrade trend and; v) improving industry outlook.

Some of our preferred picks under our coverage include Trip.com (9961 HK/TCOM US), Alibaba (9988 HK/BABA US), JD.com (9618 HK/JD US), Meituan (3690 HK), Haier Smart Home (6690 HK/600690 CH), Tingyi (322 HK), Uni-President China (220 HK), Yum China (9987 HK), Anta Sports Products (2020 HK), BYD (1211 HK), China Mengniu Dairy (2319 HK), and Kweichow Moutai (600519 CH).

Source: OCBC

[winston]

Chinese economy stays challenged but some consumer stocks offer potential: BOA

Those with an emotional, functional or affordable value proposition are tipped to do better than large-cap premium brands

by Therese Soh

Stocks that focus on the categories of;-
1. Health and wellness;
2. Affordable luxury;
3. Pragmatic goods and services;
4. Personal experiences and emotional value as well
5. Intellectual property.

Energy drinks, outdoor brands win on post-pandemic health, wellness focus

Within the passenger vehicle market, domestic brands nearly doubled their market share from 33 per cent in 2020 to 65 per cent in the first four months of 2025,

With improved product offerings, local brands in the smartphone market such as Xiaomi and Huawei have taken market share away from Apple.

This trend towards affordability is reflected in travel, where short-haul and domestic trips via railways and budget airlines have been on the rise; and domestic, “affordable luxury” hotel chains have wrestled market share away from global five-star hotels.

Boosted by policy stimulus, sales for home appliances, furniture and consumer electronics rose by 20 to 25 per cent year-on-year for the first four months of 2025.

Mass market brands such as Geely, Leapmotor and XPeng, are expected to outperform premium/luxury brands including Zeekr, Li Auto and Nio.

Consumers are travelling more albeit spending less and treating themselves to “small delights” such as new snacks, online games, cosmetics and pets.

Chinese snackmaker Yankershop reported 76 per cent year-on-year growth in 2024, significantly higher than that of the overall snack industry, thanks to its innovative konjac products.

Consumer spending on intellectual property-related goods and services – such as Labubu toys or domestic movies like Ne Zha – drives up sales for co-branded products.

Source: Business Times

https://www.businesstimes.com.sg/intern ... ential-boa

[behappyalways]

Chinese Consumer Brands Rapidly Expand In Southeast Asia
https://www.zerohedge.com/markets/chine ... heast-asia