Investment Rating - The report maintains an "Outperform" rating for ZTO Express, J&T Global Express Limited, and S.F. Holding, indicating a positive outlook for the express delivery sector [7][63]. Core Insights - The express delivery sector is experiencing a recovery in profitability driven by anti-involution measures, with a recommendation to focus on leading companies such as ZTO Express and J&T Global Express Limited, which are showing high overseas growth [7][63]. - The report highlights that the volume growth of express deliveries has slowed to single digits in Q4 2025, with a year-on-year increase of 5% in November 2025, reflecting a trend of maintaining single-digit growth [9][63]. - The anti-involution measures have effectively improved average selling prices (ASP) and profitability across the industry, with notable increases in single ticket revenue for major companies [9][63]. Summary by Sections Investment Advice - The report continues to be optimistic about the express delivery sector, recommending ZTO Express, J&T Global Express Limited, and S.F. Holding as key players to watch [7][63]. Industry Volume and Pricing - Q4 2025 saw express delivery volume growth drop to single digits, with the industry achieving a total of 180.6 billion parcels in November, marking a 5% year-on-year increase [9][63]. - The average single ticket revenue for the express delivery industry was 7.62 RMB in November 2025, reflecting an 8.3% decline year-on-year but a 1.9% increase month-on-month [19][63]. - The report notes that the share of intercity express delivery continues to rise, while the share of same-city delivery has decreased slightly [23][24]. Company Performance - S.F. Holding's volume growth outpaced its peers, with a year-on-year increase of 20.13% in November 2025, while other major companies like YTO and Yunda also showed positive growth [35][36]. - The report indicates that profitability is recovering across major companies, with net profit margins for ZTO, YTO, Yunda, and Shentong showing improvements in Q3 2025 [46][63]. Long-term Outlook - The report suggests that the express delivery industry is moving towards healthy competition, with leading companies expected to continue to rise in prominence due to their pricing power and market leadership [50][57].

Investment Rating - The report recommends focusing on the cyclical turning points in the pig and beef farming sectors, highlighting companies like Muyuan Foods and WH Group as potential investments. The pet industry shows clear growth potential, with companies that integrate production, sales, and research expected to succeed, such as Zhongchong Co., Guibao Pet, and Petty Co. The planting sector also has significant growth potential, with recommendations for companies like Morning Light Bio and Noposion [11]. Core Insights - The pig farming sector is expected to face continued low prices in the first half of 2026, driven by both policy and cyclical factors, with a focus on cost improvement and growth potential in pig farming enterprises [2][15]. - The poultry sector is experiencing a recovery phase, with white chicken prices remaining low and yellow chicken demand potentially increasing due to promotional activities [3][37]. - The beef farming sector is characterized by a long production cycle, with supply-side contractions likely to drive prices upward, particularly from 2025 onwards [4][46]. - The feed and animal health sectors are expected to see growth in sales, with a focus on the competitive landscape and the impact of low profits on animal health demand [5][63]. - The planting sector is projected to see stable grain prices, driven by domestic control and innovation, with a focus on specialty crops and plant extracts [6][69]. Summary by Sections Pig Farming - Prices are expected to remain low in the first half of 2026, with a gradual increase in supply due to rising breeding sow inventories [15]. - Capacity policies and cyclical adjustments are leading to a continued reduction in production capacity, with a focus on cost reduction and debt management among pig farming companies [23][27]. - Companies like Muyuan Foods are highlighted for their cost improvements, with expectations of further reductions in production costs [29]. Poultry Farming - The white chicken industry is in a deep price slump, with recovery expected to take time, while yellow chicken prices may see slight recovery due to promotional efforts [32][37]. - Leading companies are improving their operational efficiencies to cope with low prices, which may enhance their performance when prices recover [33]. Beef Farming - The long production cycle and fragmented market structure of beef farming in China are significant factors, with supply reductions expected to lead to price increases starting in 2025 [41][46]. - The beef supply is projected to decrease in the latter half of 2025, with expectations of continued price increases through 2027 [47]. Feed and Animal Health - The feed sector is expected to see a recovery in sales, with high inventory levels in the livestock sector supporting growth [52]. - The animal health sector may face pressure due to low profits in the livestock sector, but there are opportunities for breakthroughs in key products [63][65]. Planting - Grain prices are expected to stabilize and rise, with a focus on domestic production and innovation in seed varieties [69][75]. - The planting sector is seeing a shift towards high-quality, innovative seed varieties, with companies like Kangnong Seed showing strong growth potential [87].

Investment Rating - The report indicates a stable market outlook for the real estate industry in 2026, with expectations of continued policy support [1][13]. Core Insights - Last week, real estate transactions in major cities showed mixed results, with policies remaining stable, which is expected to support a steady market in 2026 [1][13]. - New home sales in 30 major cities reached 3.15 million square meters in the first week of 2026, reflecting a 5.2% increase from the previous week but a 20.6% decrease year-on-year [14]. - First-tier cities saw a significant increase in sales, with 710,000 square meters sold, up 31.0% week-on-week but down 24% year-on-year [14]. - Second-tier cities sold 1.98 million square meters, up 2.83% from the previous week, down 15% year-on-year [14]. - Third-tier cities experienced a decline in sales, with 470,000 square meters sold, down 12.3% week-on-week and down 34.5% year-on-year [14]. - Cumulative sales in 30 cities as of January 1, 2026, were 90,000 square meters, down 61.8% from December 2025 [14]. - Second-hand home sales in 24 cities fell to 2.04 million square meters, down 7.50% from the previous week and down 14.5% year-on-year [15]. - The land transaction growth in 100 cities continued to decline, with land supply at 10.28 million square meters and transactions at 33.30 million square meters, resulting in a supply-to-sales ratio of 0.31 [16]. - The cumulative land supply in 100 cities was down 27% year-on-year, with cumulative transaction growth down 24.8% year-on-year [16]. - The inventory clearance cycle in 35 cities rose to 24.54 months, indicating a longer time required to clear existing inventory [17].

Investment Focus - The Japanese stock market experienced a valuation expansion in 2025, with the Nikkei Stock Average closing at 50,339.48, marking a 26% annual gain, driven by global enthusiasm for generative AI, persistent inflation in Japan, and the ascension of the new Prime Minister [3][39]. - The outlook for 2026 indicates a return to an inflationary economy for Japan for the first time in three decades, with expectations of improved domestic demand and accelerated government and private investment [6][40]. Market Review - In 2025, the Japanese stock market outperformed the US Dow Jones Industrial Average for three consecutive years, with significant capital inflows following the election of the new Prime Minister [3][4]. - The market sentiment improved significantly after the new Prime Minister took office, leading to a bullish trend in the stock market, with the Nikkei 225 index surpassing 50,000 points [5][6]. Economic Policies - The new government under the Prime Minister has implemented a comprehensive economic stimulus plan totaling 21.3 trillion yen, with a supplementary budget of 18.3 trillion yen for the fiscal year 2025 [10][11]. - The government plans to invest 8.9 trillion yen in measures to support living standards and address inflation, including direct cash transfers to families and subsidies for energy costs [11][12]. Corporate Governance and Valuation - The Tokyo Stock Exchange and the Financial Services Agency plan to revise corporate governance codes in 2026 to enhance oversight of companies with excessive cash reserves, promoting more effective use of cash [6][27]. - The expectation of improved return on equity (ROE) for listed companies could lead to an overall valuation increase in the market, with the TOPIX price-to-earnings (PE) ratio potentially rising to 18 times [6][28]. Sector Focus - The report highlights several sectors expected to benefit from the economic policies, including advanced manufacturing related to AI, domestic service industries, and companies actively engaging in corporate governance reforms [33][36]. - The government aims to boost the shipbuilding sector significantly, with plans to increase ship production and enhance Japan's market share in global shipbuilding [35]. Corporate Performance - Major listed companies in Japan reported a net profit increase of 7% in the first half of the fiscal year, exceeding market expectations, with non-manufacturing sectors showing strong growth [25][26]. - The consensus for 2026 anticipates a revenue growth of 3.1% and an operating profit increase of 13.7%, particularly benefiting from a recovering manufacturing sector [26]. Technological Innovation - The report emphasizes the importance of AI and related technologies, predicting continued investment growth in AI data centers and a strong demand for semiconductor and related hardware [29][30]. - Japanese companies in the robotics sector are expected to leverage their competitive advantages and partnerships to capitalize on the growth of AI applications [34].

Investment Rating - The investment rating for the essential consumer goods sector in China is "Outperform" for multiple companies including Kweichow Moutai, Wuliangye, and Yili [1]. Core Insights - In December 2025, four out of eight monitored essential consumer sectors showed positive growth, while four experienced negative growth. The growing sectors included condiments, frozen foods, soft drinks, and catering services, while the declining sectors comprised mid-to-high-end baijiu, mass-market baijiu, dairy products, and beer. The overall performance indicates a slight improvement in growth rates for most sectors, driven by policy support and changing consumer preferences [27]. Revenue Forecasts - The revenue for mid-to-high-end baijiu in December was 28.4 billion yuan, down 17.0% year-on-year, with a cumulative revenue of 377.6 billion yuan for the year, reflecting a 7.1% decline [28]. - The mass-market baijiu sector generated 25.2 billion yuan in December, a 3.1% year-on-year decline, with a total revenue of 206.1 billion yuan for the year, down 7.9% [29]. - The beer industry reported revenue of 8.2 billion yuan in December, a decrease of 5.7% year-on-year, with a cumulative revenue of 170.5 billion yuan for the year, down 0.3% [30]. - The condiments sector achieved revenue of 41.1 billion yuan in December, up 1.4% year-on-year, with a total of 453.9 billion yuan for the year, reflecting a 1.3% increase [31]. - Dairy products generated 31 billion yuan in December, down 3.4% year-on-year, with a cumulative revenue of 450 billion yuan for the year, down 2.3% [32]. - The frozen food sector's revenue reached 9.57 billion yuan in December, up 4.0% year-on-year, with a total of 106 billion yuan for the year, a 2.3% increase [33]. - The soft drink industry reported revenue of 40.2 billion yuan in December, up 3.6% year-on-year, with a cumulative revenue of 698.5 billion yuan for the year, a 4.1% increase [35]. - The catering sector recorded revenue of 13.9 billion yuan in December, up 0.7% year-on-year, with a total of 174.6 billion yuan for the year, down 0.6% [36]. Subsector Performance - The mid-to-high-end baijiu market showed a pattern of initial growth followed by a downturn, with significant price corrections observed at the end of December [28]. - The mass-market baijiu segment remained resilient, supported by government policies and year-end holiday spending [29]. - Beer consumption faced challenges due to cold weather and seasonal factors, impacting outdoor consumption scenarios [30]. - The condiments sector benefited from promotional activities and a slight recovery in catering demand, although profitability remains under pressure [31]. - Dairy products continued to experience weak demand, with increased discounting observed in retail channels [32]. - The frozen food sector maintained robust consumer demand, with stable growth in customized orders [33]. - The soft drink sector saw a narrowing of discount margins, indicating reduced competition during the off-season [35]. - The catering industry showed signs of stabilization, although mid-to-high-end dining demand remains sluggish [36].

[Table_yemei1] 观点聚焦 Investment Focus [Table_summary] (Please see APPENDIX 1 for English summary) 上周我们认为， A 股或再度尝试上行，港股也有望跟随补涨，但 A 股进一步上行将面临年度高点的压力，在成交未 出现明显放量之前，直接突破难度较大，全周走势或呈现冲高回落。本周 A 股上证综指小幅上行 0.1%，创业板指跌 1.3%，港股在周五明显补涨的带动下全周表现较强，恒生指数涨 2%，恒生科技涨 4.3%。 [Table_Title] 研究报告 Research Report 4 Jan 2026 中国策略 China Strategy 半导体主线逐步确立，维持逢低配置思路 Semiconductors Emerging as a Core Theme; Continue to Accumulate on Pullbacks 周林泓 Amber Zhou 黄雨昕 Yuxin Huang amber.lh.zhou@htisec.com yx.huang@htisec.com 上周我们提到，国际贵金属进入投机加速阶段 ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Japanese consumer sector is experiencing a mixed recovery, with Black Friday promotions boosting consumption, but duty-free sales showing negative growth [1][3] - Consumer confidence in Japan has improved significantly, with the consumer confidence index rising to 37.5 in November, the highest since April 2024 [2][9] - The Bank of Japan raised interest rates by 25 basis points to 0.75%, marking the highest level since 1995, indicating a shift towards normalizing monetary policy [2][11] Macroeconomic Summary - The consumer confidence index increased by 1.7 points from October to November, with notable improvements in perceptions of overall living conditions and income growth expectations [2][9] - November's core CPI remained at 3.0%, exceeding the Bank of Japan's 2% target for 44 consecutive months, while the overall CPI for goods rose by 4.0% [2][11] - The actual wage in October contracted by 0.7% year-on-year, but the decline was less severe than the previous month's 1.3% [2][9] Industry Summary - Black Friday promotions have become a key driver for retail, with companies leveraging exclusive member discounts and early online sales to attract customers [3][15] - Domestic consumers are exhibiting frugal spending habits, focusing on value for money, which has led to a contraction in daily expenditures [3][15] - Duty-free sales have turned negative, primarily due to a decline in high-value goods, although consumables like cosmetics and food continue to grow at double-digit rates [3][15] Essential Companies - In the essential goods retail sector, November same-store sales for PPIH, Aeon, and 7-Eleven increased by 6.9%, 6.3%, and 2.7% respectively, driven by higher average transaction values [4][18] - Welcia and Matsukiyo Cocokara reported same-store sales growth of 4.1% and 3.6% respectively, with customer traffic increasing slightly [4][20] - The beverage sector saw a decline in sales for Suntory and Asahi, with Asahi's sales dropping by 21% due to a cyberattack affecting operations [4][21] Optional Companies - The restaurant sector performed well, with notable same-store sales growth for various chains, including Sally's and Skylark, with increases of 19.0% and 8.9% respectively [5][27] - Clothing sales also showed strong performance, with same-store sales for companies like Shimamura and Uniqlo increasing by 16.0% and 7.6% respectively, driven by seasonal demand [5][29] - Department store sales reached 521.4 billion yen in November, a 0.9% increase year-on-year, marking four consecutive months of growth [5][34] Stock Market Performance - The consumer sector saw most stocks rise from November 28 to December 30, with the service industry and food and beverage sectors increasing by 4.3% and 2.8% respectively [6] - Investment recommendations focus on companies with optimistic profit outlooks, such as Mercari and Kirin Holdings, which have shown strong operational performance [6][6]

Investment Rating - The report initiates coverage with an OUTPERFORM rating for Softcare, indicating a positive outlook compared to the market [1][2]. Core Insights - Softcare is positioned as a leading player in the hygiene products sector within emerging markets, focusing on localized deployment to build a competitive moat [1][4]. - The company has a strong market presence in Africa, with leading market shares in baby diapers (20.3%) and sanitary napkins (15.6%) based on 2024 sales volume [4][9]. - The growth drivers include demographic advantages and low penetration rates in the hygiene products market, which present significant growth potential [4][29]. Financial Performance - Revenue projections for Softcare show a steady increase, with expected revenues of $551 million in 2025, representing a 21% year-over-year growth [7]. - Net profit is projected to reach $112 million in 2025, reflecting a 14% increase from the previous year [7]. - The company maintains a gross profit margin (GPM) of approximately 34.2% for 2025, indicating stable profitability [7][24]. Market Dynamics - The African market for baby and female hygiene products is characterized by a young population and increasing urbanization, which are expected to drive demand [28][29]. - The penetration rates for baby diapers and sanitary napkins in Africa are significantly lower than in developed markets, suggesting ample room for growth [29][31]. - The report highlights that the African hygiene products market is projected to grow at a compound annual growth rate (CAGR) of 7.9% from 2025 to 2029, outpacing other regions [33]. Competitive Advantages - Softcare has developed a diversified brand strategy with over 340 SKUs across four core categories, enhancing its market reach [5]. - The company has established a localized production model with eight factories across eight African countries, which reduces costs and improves supply chain efficiency [5][6]. - A multi-channel sales network has been developed, reaching over 80% of the local population in key markets [5]. Future Growth Strategy - Softcare plans to replicate its successful African model in Latin America and other emerging markets, aiming to create a sustainable second growth curve [6]. - The company is focused on expanding its product categories through both organic growth and strategic acquisitions [6]. Valuation - The report assigns a target price of HK$40.50, based on a price-to-earnings (P/E) ratio of 25x for 2026, reflecting the company's strong market position and growth potential [7].

Investment Rating - The report assigns an "Outperform" rating to multiple companies in the essential consumer goods sector, including Guizhou Moutai, Wuliangye, and Yili [1]. Core Insights - Downstream demand remains subdued, with modest fluctuations in costs across various consumer goods categories [1][34]. - The cost indices for six monitored consumer goods showed mixed trends, with soft drinks and instant noodles experiencing increases, while condiments, dairy products, frozen foods, and beer saw declines [34]. Cost Index Summary Beer - The spot cost index for beer decreased by 1.05% month-on-month, while the futures index increased by 0.88%. Year-to-date, the spot index has declined by 3.84% and the futures index by 7.87% [4][35]. - Glass prices fell by 1.9% month-on-month and 18.0% year-on-year, while aluminum prices showed mixed trends [12][35]. Condiments - The spot cost index for condiments dropped by 0.29% month-on-month, and the futures index fell by 0.47%. Year-to-date, the spot index has decreased by 3.95% and the futures index by 9.74% [16][36]. - Soybean prices showed a slight decrease in spot prices but an increase in futures prices [16][36]. Dairy Products - The spot cost index for dairy products decreased by 0.45% month-on-month, while the futures index increased by 0.39%. Year-to-date, the spot index has declined by 2.92% and the futures index by 4.19% [19][37]. - Raw milk prices remained stable at 3.03 yuan/kg, with supply pressures emerging due to cash flow issues in dairy farming [19][37]. Instant Noodles - The spot cost index for instant noodles rose by 0.49% month-on-month, while the futures index fell by 0.51%. Year-to-date, the spot index has decreased by 0.77% and the futures index by 7.05% [23][38]. - Palm oil prices showed a decline, impacting overall costs [23][38]. Frozen Foods - The spot cost index for frozen foods dropped by 0.54% month-on-month, and the futures index fell by 1.13%. Year-to-date, the spot index has decreased by 0.65% and the futures index by 2.42% [27][39]. - Vegetable prices experienced a month-on-month decline but a year-on-year increase, influenced by weather conditions affecting supply [27][39]. Soft Drinks - The spot cost index for soft drinks increased by 1.06% month-on-month, and the futures index rose by 0.99%. Year-to-date, the spot index has increased by 0.42% while the futures index has decreased by 10.18% [30][40]. - PET chip prices rose month-on-month, contributing to the cost increase in soft drinks [30][40].

Investment Rating - The report assigns an "Outperform" rating to multiple companies in the essential consumer goods sector, including Guizhou Moutai, Wuliangye, Luzhou Laojiao, and others, indicating a positive outlook for these stocks [1]. Core Insights - Wholesale prices of Baijiu have mostly stabilized, with specific brands showing varied price changes. For instance, the price of Feitian Moutai (case) is 1600 yuan, down by 50 yuan from last month, while the price of Wuliangye has increased by 20 yuan to 820 yuan [3][38]. - Discounts on liquid milk have significantly increased, while discounts on seasoning and soft drink products have narrowed compared to the end of November. The average discount rate for seasonings rose from 85.9% to 87.1%, and for soft drinks from 85.6% to 86.7% [5][17][35]. Summary by Sections Baijiu Pricing - The report details the wholesale prices of key Baijiu brands, noting that Feitian Moutai's prices have decreased by 640 yuan year-to-date compared to the previous year. Other brands like Wuliangye and Luzhou Laojiao have also shown price stability or slight increases [9][38]. Discount Trends - Discounts on liquid milk products have widened, with the average discount rate dropping from 66.0% to 62.8%. In contrast, discounts on convenience foods have decreased from 95.8% to 94.8% [19][21][36]. - The report highlights that infant formula and beer products have maintained stable discount rates, with slight changes observed [18][35]. Company Ratings - The report lists several companies rated as "Outperform," including Guizhou Moutai, Wuliangye, and others, indicating strong expected performance relative to the market [1].