Summary of Key Points from the Conference Call Industry Overview - **Industry**: Greater China Consumer Sector - **Period Covered**: H125/Q225 results and H2 outlook - **Key Findings**: - Weighted average revenue and net profit grew by 11% and 12% YoY in H125, respectively, compared to 7% and 16% YoY in Q125, indicating a deceleration in net profit over Q2 [2][3] - 37 companies had positive EPS revisions while 36 had negative revisions, with the percentage of companies with positive revisions declining from 60% in Q125 to 51% in H125, although this still marks a YoY improvement from 41% in H124 [2][3] Earnings Performance - **New Consumer Names**: Companies like Younghui Superstores, Laopu, Pop Mart, Guming, and Arashi Vision are leading positive EPS revisions, with Yonghui Superstores showing the largest EPS revision for the next 12 months due to a potential turnaround in 2026 [2][3] - **Consumer Staples and Home Appliances**: Most companies in these sectors underperformed due to slowing demand recovery, intensifying competition, and phasing-out subsidies. However, established leaders like Nongfu, CR Beer, and Weilong showed positive EPS revisions [2][3] Market Performance - **MSCI China**: Delivered a 30% return YTD, with the Consumer Discretionary sector posting a 22% return, supported by resilient demand among new consumer names. The Consumer Staples sector lagged with a 19% return due to soft overall demand [2][3] Economic Indicators - **Retail Sales Growth**: China's retail sales grew by 4.0% YoY in July 2025, up from 2.7% YoY in July 2024. Restaurant sales rose by 1.1% YoY, down from 3.0% YoY a year ago, reflecting the impact of delivery subsidies [3][4] - **Government Policies**: Supportive policies introduced by the Chinese government, including childcare subsidies and interest subsidies on personal consumption loans, are expected to boost consumption in H2 [3][4] Stock Recommendations - **Preferred Stocks**: - Stocks benefiting from domestic consumption policies (e.g., Yum China, DPC Dash) - Value plays with decent shareholder returns (e.g., WH Group) - Structural growth opportunities (e.g., Pop Mart, China Pet Food) - Home appliance makers with overseas earnings potential (e.g., Roborock, Midea) [4][5] Sector-Specific Insights - **Agriculture**: Hog prices stable YoY in H125, with Muyuan increasing its dividend payout ratio to 47.5% [7] - **Baijiu Sector**: Notable revenue and NP declines in Q225, with Kweichow Moutai showing resilience [8] - **Beer Sector**: Yanjing Brewery and CR Beer reported revenue/NP growth, attributed to premium product growth [9] - **Beverages**: Freshly-made beverage chains reported strong revenue growth, driven by store expansion [10] - **Condiments and Frozen Food**: Sluggish sales in Q225, with Yihai expected to accelerate growth in H225 [11] - **Dairy**: Liquid milk sales under pressure, while infant milk formula showed recovery signs [12] - **Pet Food**: Strong domestic growth, with both China Pet Foods and Gambol reporting 40% YoY growth [14] - **Next-Generation Tobacco**: RLX and Smoore saw strong revenue growth, with RLX benefiting from regulatory tailwinds [15] Conclusion - The Greater China consumer sector is experiencing a mixed performance with notable divergences among companies. While some new consumer names are thriving, traditional sectors like consumer staples and home appliances are facing challenges. Government policies aimed at boosting consumption may provide a tailwind for the sector in the second half of the year.

Financial Data and Key Metrics Changes - LPA's revenue increased by 12.9% to $11.8 million, while NOI grew almost 6% to $9.4 million in Q1 2025 [5][14] - Average rent per square foot increased by 1.9% across the property portfolio compared to Q1 2024 [14] - The net debt to adjusted EBITDA improved, decreasing by 30 basis points over the same period [16] Business Line Data and Key Metrics Changes - Peru, representing 29% of LPA's portfolio GLA, saw rental income grow by 38.4% [15] - Costa Rica, accounting for 47% of the portfolio, experienced a revenue increase of 6.1% [15] - Colombia, which makes up 24% of the portfolio, delivered a 2.6% revenue increase [15] Market Data and Key Metrics Changes - Peru's economic environment is characterized by low inflation, minimal government debt, and low unemployment, contributing to strong consumer spending [5][6] - Mexico is viewed as a long-term growth avenue, with a focus on logistics rather than light manufacturing due to tariff uncertainties [10][12] Company Strategy and Development Direction - LPA plans to increase its footprint in Lima with a new 215,000 square foot building, which is already 73% pre-leased [7] - The company aims to replicate its success in Mexico while being selective in investments due to potential tariff impacts [10][12] - LPA maintains a disciplined approach to investment, focusing on logistics space driven by domestic consumption [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of foundational markets and the potential for additional NOI growth in 2025 [26] - The company is focused on high-quality customers and investments to scale its regional platform [26] - Management noted that tariffs have not significantly impacted operations in foundational markets, which are primarily consumer-driven [22] Other Important Information - LPA's entire operating portfolio reached 100% occupancy, marking a significant milestone [7] - The company has a healthy maturity profile with no significant debt due in the near term [16] - LPA repurchased $800,000 worth of ordinary shares during the quarter, totaling 2.1 million in buybacks [16] Q&A Session Summary Question: Is LPA shying away from light manufacturing in Mexico? - Management indicated a preference for logistics assets in Mexico while remaining selective about light manufacturing due to current uncertainties [21] Question: Are tenants still in a wait-and-see mode regarding tariffs? - Management noted that foundational markets are mostly consumer-driven, and tariffs have not significantly affected leasing activity [22][23]

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call primarily discusses the implications of the 2025 National People's Congress (NPC) in China, focusing on macroeconomic and sector-specific insights, particularly in relation to fiscal policy, economic growth targets, and various industries including healthcare, education, and property. Core Insights and Arguments 1. **Macroeconomic Implications**: - The NPC budget indicates a nominal growth expectation higher than 4.2% for 2024, with fiscal revenue assumptions appearing softer, raising concerns about potential under-delivery risks [1][6][10]. - The fiscal budget deficit is projected at 4% of GDP for 2025, up from 3% in 2024, with a total fiscal budget deficit of RMB5.66 trillion [9][21]. 2. **Economic Targets**: - Real GDP growth target remains around 5% for both 2024 and 2025, with a CPI target of 2% for 2025 [9][21]. - New urban employment target set at over 12 million for 2025, consistent with previous years [9][21]. 3. **Sector-Specific Insights**: - **Healthcare**: The government plans to support innovative drug development and increase the stimulus fund for medical equipment to approximately RMB27 billion in 2025, up from RMB20 billion in 2024 [17]. - **Education**: The focus will be on expanding high school capacity and promoting vocational-academic integration while maintaining a balanced "Double Reduction" approach [18]. - **Property Market**: The NPC emphasizes stabilizing the property market, mitigating risks associated with property firms, and increasing local flexibility in housing policies [19][20]. 4. **Defense Budget**: - The defense budget for 2025 is set at RMB1.78 trillion (approximately USD249 billion), reflecting a 7.2% year-on-year growth, which is consistent with previous years and exceeds GDP growth expectations [12]. 5. **Banking Sector**: - Plans to issue RMB500 billion in central government special bonds to recapitalize large banks, with a focus on addressing capital deficiencies in specific banks [14]. Additional Important Content - The NPC's work report indicates a lack of major breakthroughs in fiscal and monetary policies, suggesting a cautious approach to external risks, particularly concerning US tariffs [6][10]. - The report highlights the importance of domestic consumption as a top priority for economic strategy, with technology development also being emphasized [10]. - The government is open to foreign investment in healthcare, allowing wholly foreign-owned hospitals in pilot cities, which may enhance the sector's growth potential [17]. This summary encapsulates the key points discussed in the conference call, providing insights into the macroeconomic landscape and sector-specific developments in China as outlined in the NPC 2025.