Investment Focus - The Bank of Japan (BOJ) raised the policy rate from 0.25% to 0.5% on January 24, marking the third rate hike since the end of negative interest rates in March last year, bringing the rate back to a 30-year high [3][18] - The new rate will take effect from January 27, 2025, and is the highest level since September 1995 [3][18] - The BOJ significantly increased its inflation forecast for the fiscal year 2025, raising the core CPI prediction by 0.5% to 2.4% [3][4] Economic Growth and Inflation Forecast - The actual GDP growth and core CPI forecasts for Japan are as follows: - FY 2024: GDP growth at 0.5%, core CPI at 2.7% - FY 2025: GDP growth at 1.1%, core CPI at 2.4% - FY 2026: GDP growth at 1.0%, core CPI at 2.0% [4] Market Reactions - The rate hike was in line with market expectations, with over 90% of the market anticipating the increase prior to the announcement [6] - Following the announcement, the Japanese stock market experienced slight fluctuations, but the overall sentiment remained stable [6][10] Future Rate Hikes - There is a high probability of another rate hike of 0.25% in the summer of 2025, as the BOJ believes that Japan still faces upward pressure on import prices [8][10] - The BOJ's current policy rate is still below the neutral rate, indicating potential for further increases if economic conditions align with expectations [8] Consumer Spending and Wage Growth - Real wages in Japan showed a year-on-year increase of 0.5% in November, marking the first positive growth in four months, which supports consumer spending recovery [9] - The BOJ noted that wage increases are becoming a common consensus in Japanese society, which is expected to bolster consumer spending [9] Stock Market Impact - The BOJ's rate hike is seen as a positive signal for the Japanese stock market, particularly for domestic demand-related sectors, as it enhances confidence in Japan's economic recovery from deflation [10] - The report anticipates increased capital investment by Japanese companies, which could improve future profitability [10]

Macro Environment - Real wages rose by 0.5% year-on-year in November, with total cash payrolls increasing by 3.9% year-on-year [2][7] - The Consumer Confidence Index for December was 36.2, a decrease of 0.2 from the previous month [2][9] - The Bank of Japan raised the benchmark interest rate from 0.25% to 0.5%, the highest level since 2008 [2][9] - December CPI increased by 3.6% year-on-year, up from 2.9% previously, with core CPI rising by 2.5% for the full year of 2024 [2][9] Industry Overview - The year-end holidays significantly boosted consumer demand, with increased travel and spending from both domestic and foreign tourists [3][16] - In the staples sector, Pan Pacific International Holdings led with strong unit price growth, while the soft drink sector experienced an overall decline in sales due to price increases [3][84] - In discretionary spending, dining and apparel expenditures continued to rise, with Sukiya and Uniqlo showing the highest same-store sales growth in December [3][84] Staples Companies - In December, same-store sales for PPIH, AEON, and 711 Japan were up by 5.8%, 2.6%, and 1.3% year-on-year respectively [4][85] - Drugstore sales for Matsukiyo Cocokara and Welcia both increased by 6.1% year-on-year [4][85] - The soft drink sector saw a decline in sales volumes, with major brands like Suntory, Kirin, and Asahi reporting a 4% drop [4][85] Discretionary Companies - December same-store sales for restaurants such as Sukiya and Saizeriya increased by 16.7% and 16.4% year-on-year respectively [5][86] - Apparel sales also saw significant growth, with Uniqlo reporting a 15.3% increase in same-store sales [5][86] - Duty-free sales in December rose by 31.3% year-on-year, with the number of customers increasing by 36.6% [5][86] Equity Market - Most consumer sub-sectors saw gains in December, with textiles and apparel leading at 3.5% and 2.8% respectively [6][87] - In the staples sector, home goods and personal care products rose by 1.7% and 1.5% respectively, while beer sales fell by 0.9% [6][87] - Retail and food & beverage ETFs experienced net inflows of $29.67 million and $10.34 million respectively [6][87] Investment Recommendations - Focus on companies with optimistic profit improvement prospects, including ASICS, benefiting from improved pricing and product mix [88] - Pan Pacific International Holdings continues to show strong same-store sales growth [88] - Fast Retailing Group is experiencing rapid growth in international business alongside strong local sales [88]

Investment Rating - The report assigns a positive investment rating, indicating a strong expected growth in net profit for the company in 2024 [1]. Core Insights - The net profit attributable to shareholders of the parent company is projected to increase by 152.58% to 199.94% year-on-year, with an expected range of RMB 800 million to RMB 950 million [2][4]. - The company aims to enhance its technological innovation and integrated industrial chain advantages, providing competitive new material solutions to global customers [2][4]. - The modified plastics and special engineering plastics sectors have shown stable growth in sales and gross profit across various industries, including automotive and consumer electronics [2][4]. - The green petrochemical sector is improving its operational quality through better integration with the modified plastics sector, leading to enhanced production efficiency [2][4]. Summary by Sections Financial Performance - The expected net profit for 2024 is between RMB 800 million and RMB 950 million, representing a year-on-year increase of 152.58% to 199.94%. The net profit after non-recurring items is projected to be between RMB 771 million and RMB 921 million, reflecting a growth of 288.43% to 364.00% [2][4]. Business Strategy - The company is focusing on technological innovation and enhancing its integrated industrial chain to improve competitiveness and market share [2][4]. - Efforts are being made to optimize product structure and improve production capacity utilization in the green petrochemical sector [2][4]. Market Position - The company has established itself as a leader in the special engineering plastics field, with a diverse product range including PA10T, PA9T, PA6T, LCP, and PPSU [2][6]. - The company is expanding its overseas operations, with significant growth in sales volume from its international bases, achieving a 28.55% increase in finished product sales in the first half of 2024 [2][7]. Product Development - The company has developed new materials suitable for robotics, including continuous carbon fiber reinforced composites and special engineering plastics [2][6]. - A new production facility for PPSU/PES synthetic resin has been successfully tested, and the LCP synthetic resin project is on track for production in Q4 2024 [2][6].

Investment Rating - The report maintains an "Outperform" rating for the company, with a target price of HKD 6.35, corresponding to a 10x PE for 2025 [2][12]. Core Insights - The company has shown strong turnover growth across all categories, particularly in children's wear and e-commerce, with e-commerce turnover growing 30-35% YoY in 24Q4 [8][9]. - E-commerce has been the fastest-growing channel since 2023, with expectations for improved profitability due to cost control and exclusive online products [9][10]. - The company is enhancing store efficiency and has opened its first direct store in Southeast Asia, indicating a strategic expansion [10][11]. - Continuous product innovation is expected to drive turnover, with several new product launches planned for 24Q4 [10][11]. - Brand popularity is being enhanced through events and collaborations, which are expected to increase consumer engagement [11]. Financial Data and Forecast - Revenue is projected to grow from RMB 8,423 million in 2023 to RMB 13,000 million by 2026, with a CAGR of approximately 13.9% [2][6]. - Net profit attributable to shareholders is expected to increase from RMB 961 million in 2024 to RMB 1,475 million in 2026, reflecting a strong growth trajectory [2][6]. - The gross margin is forecasted to improve gradually from 41.1% in 2023 to 42% in 2026, indicating effective cost management [2][6].

Investment Rating - The report initiates coverage on HLA Group with an "Outperform" rating, setting a target price of RMB 8.56 per share [1][96]. Core Insights - HLA Group maintains its position as a leading menswear brand in China, with a strong market share and ongoing collaborations with major partners like JD.com and Adidas to expand its business [1][96]. - The company is focusing on channel optimization and overseas market expansion, with overseas revenue reaching RMB 270 million in 2023, a 24.0% year-on-year increase [1][96]. - The Adidas FCC project aims to penetrate lower-tier cities, with expectations of over 400 stores by 2024, while JD Outlets is enhancing its online and offline presence [1][96]. Financial Data and Forecasts - Key financial data for HLA Group includes: - Revenue projections for 2024, 2025, and 2026 are RMB 20.77 billion, RMB 24.13 billion, and RMB 28.13 billion respectively, with net profits of RMB 2.26 billion, RMB 2.64 billion, and RMB 3.05 billion [1][96]. - The company’s revenue and net profit for 2023 were RMB 21.53 billion and RMB 2.95 billion respectively, with a projected decline in revenue for 2024 to RMB 20.77 billion [1][96]. - The report provides detailed financial forecasts, including expected contributions from various segments such as the main brand, JD Outlets online and offline, and Adidas FCC [1][96]. Business Strategy - HLA Group is enhancing its product innovation and channel optimization strategies, focusing on cost-effective consumption through collaborations with major brands [1][96]. - The company is also expanding its product technology offerings, including advanced materials and designs, to improve competitiveness against international brands [1][96]. - The report highlights the strategic importance of the JD Outlets initiative, which aims to create a new retail model that integrates online and offline shopping experiences [1][96].

Investment Rating - The report maintains an "OUTPERFORM" rating for the company, with a target price of HKD 6.65, corresponding to a 12x price-to-earnings ratio for 2025 [4][15]. Core Insights - The main brand's turnover showed improvement in Q4 2024, with a year-on-year growth of over 30% and a healthy inventory turnover of four months [4][11]. - Saucony's revenue is expected to exceed RMB 1 billion in 2024, with a 50% year-on-year growth in Q4 2024 and a 60% increase for the entire year [4][12]. - The company is optimistic about its running product matrix and anticipates that Saucony's profitability will contribute to a second growth curve [4][15]. Financial Data and Forecast - Revenue projections indicate a growth from RMB 14,346 million in 2023 to RMB 18,331 million by 2026, with a compound annual growth rate (CAGR) of approximately 11.64% [3][8]. - Net profit is forecasted to increase from RMB 1,044 million in 2023 to RMB 1,564 million by 2026, reflecting a strong growth trajectory [3][8]. - The gross margin is expected to improve gradually from 42.17% in 2023 to 43.25% in 2026 [3][8]. Brand Performance - The main brand achieved a completion rate of 22.4% in the Shanghai Marathon, surpassing international brands, while Saucony maintained a top-three position in wear rates [4][14]. - The company has opened new concept stores to enhance brand visibility and product offerings, including collaborations with designers and the introduction of new product lines [4][13]. Market Position - The report highlights the company's strong position in the marathon shoe market, with both the main brand and Saucony leading in wear rates at major marathons [4][14]. - The company is focusing on channel upgrades and product matrix expansion to sustain growth and enhance profitability [4][12][13].

Core Conclusions - The report reviews three historical rounds of consumption stimulation from 1998 to 2021, highlighting the effectiveness of policies aimed at increasing residents' income and reducing expenditures, as well as the impact of market-oriented real estate policies on consumption recovery [3][6] - The report emphasizes that the key to boosting consumption in 2025 will be the "Two New" policies, which aim to stabilize asset prices and increase income, thus driving consumption [3][6] Group 1: 1998-2002: Income Increase and Real Estate Marketization - During 1998-2000, China faced deflation and weak consumer confidence, prompting policies focused on increasing residents' income and reducing rigid expenditures through social security system establishment [7][8] - The average nominal growth rate of urban residents' disposable income rose from 5.1% in 1998 to 12.3% in 2002, contributing to a recovery in consumer confidence and retail sales [13][14] - Real estate-related consumption saw a significant increase, with a cumulative year-on-year growth rate of 22.3% from 2000 to 2002, driven by housing reform and marketization [14][15] Group 2: 2009-2012: Subsidies for Durable Goods - The 2008 global financial crisis led to a focus on stimulating consumption of durable goods such as automobiles and home appliances through subsidies [22][23] - From 2009 to 2012, the government implemented multiple rounds of fiscal subsidies for the "home appliances to the countryside" program, resulting in significant sales growth in rural areas [26][27] - The average year-on-year growth rate for automobile consumption during this period was 26.7%, while home appliance consumption grew at 20.4%, both exceeding the overall retail sales growth rate of 17% [26][27] Group 3: 2018-2021: Support for Information and Durable Goods - Policies during 2018-2021 focused on supporting large-scale consumption in sectors like automobiles, home appliances, and consumer electronics, with a notable emphasis on consumption vouchers during the pandemic [38][39] - The contribution of final consumption expenditure to GDP growth rose to approximately 60% during this period, reflecting a shift towards service consumption and quality consumption [42][39] - The food and beverage sector, along with leading home appliance companies, showed strong performance in the stock market, with significant price increases observed [39][40] Group 4: Expected Consumption Policies in 2025 - In 2025, boosting consumption is positioned as a top priority for economic work, with expectations for enhanced fiscal policies to stimulate domestic demand [50][51] - The "Two New" policies are anticipated to expand, with a focus on consumption goods replacement programs, potentially injecting up to 300 billion yuan in subsidies, which could increase retail sales growth by 0.9-1.2 percentage points [51][56] - The report suggests that stabilizing the real estate market and increasing residents' income will be crucial for restoring consumer confidence and stimulating consumption [55][56]

Investment Rating - The report initiates coverage with a NEUTRAL rating for Coca-Cola Co (KO US) [2][113]. Core Views - The global beverage industry leader, Coca-Cola, is experiencing slowing growth with a focus on price increases to drive revenue, particularly in the carbonated beverage segment, which holds a significant market share in the U.S. [3][117]. - The company's dividend yield is currently less attractive compared to U.S. Treasury yields, leading to a decrease in its relative appeal in the global market [5][120]. - Coca-Cola's strategy includes increasing the dividend payout ratio and engaging in share buybacks to enhance shareholder value amid a low-growth environment [4][121]. Summary by Sections Company Overview - Coca-Cola is the largest non-alcoholic beverage company globally, with a strong presence in the carbonated beverage market, holding a 34.8% market share in the U.S. [3][7]. - The company has a long history and has adapted its business model over time, including a shift towards a lighter asset structure and a focus on brand diversification [8][9]. Financial Performance - Revenue for 2023 is reported at $45.75 billion, with a projected growth of 0.8% in 2024 and 3.0% in 2025 [6][109]. - The company has faced challenges due to the divestment of its bottling operations, but recent price increases have positively impacted profitability, with a gross profit margin expected to rise to over 60% by 2025 [3][88]. Dividend and Share Buyback Strategy - Coca-Cola is known as the "king of dividends," with a historical dividend payout ratio increasing from 50.5% to 73.9% over the past years [4][119]. - The company has a share repurchase plan in place, with a remaining quota of 52.83 million shares valued at approximately $3.29 billion [4][119]. Market Position and Competitive Landscape - The carbonated beverage market is characterized by a duopoly, with Coca-Cola and PepsiCo dominating the space [3][52]. - The company is focusing on expanding its product offerings, including low-sugar and non-carbonated beverages, to adapt to changing consumer preferences [59][64]. Future Outlook - The report forecasts a stable growth trajectory for Coca-Cola, with expected revenue reaching $50.01 billion by 2026, driven by strategic pricing and market expansion [6][112]. - The company is positioned to leverage its strong brand portfolio and market presence to navigate the challenges of a mature market [3][61].

Investment Rating - Maintains an OUTPERFORM rating with a target price of HKD 14.39 [1][2] Core Views - The company is expected to achieve stable growth in its pharmaceutical distribution business, with a projected revenue increase of 8.0% in 2024 [3][12] - The pharmaceutical manufacturing sector is forecasted to decline by 6.5% in 2024 due to price reductions and slower growth in traditional Chinese medicine products [3][12] - The company is actively cutting costs and improving efficiency, which is expected to reduce sales and management expense ratios [4][13] Revenue and Profit Forecasts - Total revenue for 2024 is projected to be CNY 277.3 billion, a 6.5% year-on-year increase [3][12] - Net profit attributable to shareholders is expected to reach CNY 4.8 billion in 2024, a 28.1% increase from the previous year [4][13] - Gross profit margin is expected to decline by 0.9 percentage points to 11.1% in 2024 due to price cuts and a higher proportion of low-margin distribution business [4][13] Business Segments - Pharmaceutical distribution business is expected to generate CNY 252.7 billion in revenue, an 8.0% increase, driven by growth in CSO services, import agency business, and SPD services [3][12] - Pharmaceutical manufacturing sector is expected to generate CNY 24.6 billion in revenue, a 6.5% decline, primarily due to price reductions for polymyxin B and slower growth in traditional Chinese medicine products [3][12] Cost Efficiency and Expenses - Sales expense ratio is expected to decrease by 0.7 percentage points to 4.6% in 2024 [4][13] - Management expense ratio is expected to decrease by 0.1 percentage points to 2.1% in 2024 [4][13] - Financial expense ratio is expected to remain stable at 0.6% [4][13] Acquisition and Strategic Moves - The company acquired a 10% equity stake in Shanghai Hutchison Pharmaceuticals Limited, increasing its total stake to 60% and becoming the actual controller [4][14] - Shanghai Hutchison Pharmaceuticals reported revenues of CNY 2.7 billion and a net profit of CNY 660 million in 2023 [4][14] Valuation and Financial Metrics - The company's valuation is based on a DCF model with a WACC of 6.2%, a perpetual growth rate of 3%, and a 60% discount for H-shares relative to A-shares [5][15] - The current stock price corresponds to 2024/2025 P/E ratios of 8.7x/7.7x [5][15] ESG Performance - The company has established a comprehensive environmental management system and is committed to social responsibility and charitable causes [18][19] - The company continuously improves its sustainability governance system and ESG structure [19]

Investment Rating - The report maintains an "OUTPERFORM" rating for the company with a target price of RMB 9.80, based on a current price of RMB 8.20 [2][11]. Core Insights - The company is a leading domestic fungicide manufacturer, focusing on biosynthesis and experiencing a rebound in the prices of its main products [7][10]. - Key products such as Chlorothalonil, Abamectin, and Mevinphos have seen significant price increases due to strong demand and low inventory levels [8][9]. - The company is expanding its product portfolio and enhancing its capabilities in biosynthesis, aiming to innovate and upgrade traditional production processes [10][11]. Financial Performance Summary - Revenue projections for 2024, 2025, and 2026 are RMB 4.25 billion, RMB 4.54 billion, and RMB 4.73 billion respectively, with a net profit forecast of RMB 78 million, RMB 178 million, and RMB 229 million for the same years [4][6]. - The gross profit margin is expected to improve from 17.0% in 2023 to 19.3% by 2026 [6]. - Earnings per share (EPS) are projected to rise from RMB 0.17 in 2023 to RMB 0.63 in 2026 [6][11]. Product and Market Dynamics - The company has a diverse product range, including a strong insecticide portfolio and a growing herbicide segment, with significant production capacities established [9][10]. - The price of Chlorothalonil has increased by approximately 70% due to high overseas demand and low inventory, indicating a favorable market condition for the company [8]. - The company is strategically positioned to capitalize on industry trends towards biosynthesis, with plans to establish various technological platforms for product development [10].