November 14, 2025 04:49 PM GMT Investor Presentation | Asia Pacific China Consumer: Where is consumption trending now? M | Downloaded by Neil.Wang@troweprice.com M | Not for redistribution without written consent of Morgan Stanley Equity Analyst Lillian.Lou@morganstanley.com | | --- | --- | | November 14, 2025 04:49 PM GMT | Foundation | | Investor Presentation Asia Pacific | Morgan Stanley Asia Limited+ | | M | Lillian Lou | | China Consumer: Where is consumption trending | +852 2848-6502 | | | Dustin Wei ...

Core Insights - Investors today have a wide range of options for investment, including private markets and cryptocurrencies, making traditional stocks seem outdated [1][2] - Exchanges are increasingly collaborating rather than competing, reflecting a shift in the investment landscape [2] Market Performance - Stock markets are performing well, with indices reaching all-time highs, driven by retail investors engaging with popular companies and investment trends [3] - The U.S. market is showing signs of recovery, with more companies looking to go public, including private equity and government-backed firms [4] IPO Trends - Saudi Arabia has seen a significant increase in IPOs, rising from 8-9 annually to around 40-45 [5] - Hong Kong has completed nearly 80 IPOs recently, indicating a recovery in investor confidence regarding Chinese stocks [5] Investor Behavior - The rise in global IPOs is attributed to investors seeking diversification to mitigate market volatility caused by geopolitical uncertainties and protectionist policies [6] - There is a strong demand for investments in sectors like AI, semiconductors, and green technology, alongside a new trend in consumer products, exemplified by the popularity of Labubu dolls [6]

多元场景引客 优质供给留客 新型消费拓客 我市消费市场持续升温消费活力显著增强 发放的消费券 覆盖餐饮、零售、文旅等核心消费领域 直接拉动消费8亿元 带动社会消费突破20亿元 组织各类以旧换新促消费活动2145场次 2024年全年使用补贴资金3.22亿元 全市网络零售额由2021年的72.1亿元 稳步提升至2024年底的123.26亿元 "十四五"以来，全市商务系统锚定"消费焕新"核心目标，以多元融合丰富消费场景、以提质升级优化消费供给、以创新驱动释放消费潜能，一套"组合 拳"下来，全市融合型消费生态逐步形成，消费市场活力持续攀升。 截至目前，全市已组织各类以旧换新促消费活动2145场次，2024年全年使用补贴资金3.22亿元，直接拉动消费25亿元；2025年以来，补贴资金使用规模增 至4.8亿元，带动商品销售达36.7亿元，居民潜在消费需求得到充分挖掘。立足本地特色，"承德净菜"也加速走出河北、走向全国，鑫达商贸等5家企业成 功获评"河北净菜"品牌授权企业；全市累计组织特色产品参加省内外农产品产销推介活动50余场次，直接拉动销售600余万元，兴隆山楂、围场胡萝卜等 净菜产品，先后亮相京津冀党政主要领导座谈会 ...

Investment Rating - The report maintains an "Overweight" (OW) rating for Pop Mart (9992 HK) despite recent sell-off pressures [1]. Core Insights - Pop Mart experienced a significant sell-off, dropping 10.6% to a four-month low, despite a strong Q3 sales performance [1][2]. - The sell-off is attributed to a combination of factors including high short-selling activity and competition concerns from other companies like Miniso [2][3]. - There are indications of declining interest from resellers, raising questions about the sustainability of demand for Pop Mart's products [3]. Summary by Sections Sales Commentary - Pop Mart's stock fell significantly, with a notable drop in US ADRs and a high trading volume in Hong Kong [1]. - The stock's turnover reached over HK$9.5 billion, surpassing Alibaba's HK$7.8 billion, indicating heightened trading activity [2]. Market Dynamics - Short-sell turnover for Pop Mart reached a record high of approximately HK$1.99 billion, accounting for 10.8% of the total short-sell turnover in Hong Kong [2]. - The latest short interest data shows approximately 46.8 million shares shorted, representing 6.3% of the float, with a week-over-week increase of 52% and a month-over-month increase of 64.3% [2]. Competitive Landscape - Miniso's Chairman announced plans to transform the company into a leading global IP platform, which may heighten competition concerns for Pop Mart [3]. - Reports indicate a decline in resale prices for Labubu products, which could impact future demand and investor sentiment regarding Pop Mart's revenue growth potential [3].

Summary of Key Points from the Investor Presentation on China Consumer Trends Industry Overview - The presentation focuses on the **China Consumer** sector, particularly the **"New Consumption"** stocks and their performance trends in the Asia Pacific region [1][2]. Core Insights and Arguments - **Market Capitalization Trends**: Key "New Consumption" stocks have shown significant market capitalization growth, with notable companies including Pop Mart, Bloks, Mixue, and others [6][7]. - **Consumer Industry Performance**: The overall consumer industry has experienced fluctuations, with a notable annual price movement of key indices and sectors, indicating a mixed performance across different consumer segments [10][11]. - **Price Movement Analysis**: The price movement of overall Chinese consumer stocks has been compared against major indices, revealing a decline in certain periods, particularly in 2022 and 2023 [10][11]. - **Earnings Growth Estimates**: The projected earnings growth for consumer stocks is estimated at **6%** for 2025, with a historical average of **15.1%** from 2010-2014 [75]. - **Retail Sales Trends**: Retail sales in July 2025 showed a year-over-year growth of **4.3%**, with specific categories like **Gold & Jewelry** and **Home Furnishing** performing particularly well [69][70]. Important but Overlooked Content - **Consumer Sentiment and Economic Indicators**: The presentation highlights the importance of consumer sentiment, with metrics such as household savings rates and youth unemployment rates impacting consumption trends [60][64][66]. - **Sector Valuation**: Current P/E valuations for various consumer segments are compared against their historical ranges, indicating potential investment opportunities in undervalued sectors [46][49]. - **Divergence in Performance**: There is a notable divergence in share price performance within consumer segments, with some categories like **IP Products** and **Gold & Jewelry** outperforming others significantly [42][44]. Conclusion - The China consumer sector is experiencing a dynamic shift, with "New Consumption" stocks leading the way in growth. However, macroeconomic factors and consumer sentiment will play crucial roles in shaping future trends and investment opportunities in this sector.

Summary of Key Points from the Investor Presentation on China Consumer Trends Industry Overview - The presentation focuses on the **China Consumer** sector, particularly the **"New Consumption"** trend, which includes companies like **Pop Mart**, **Bloks**, **Mixue**, **Guming**, **Giant Biogene**, **Weilong**, **Maogeping**, and **Laopu Gold** [6][19][39]. Core Insights and Arguments - **Market Capitalization Trends**: The market capitalization of key "New Consumption" stocks has shown significant growth, with some companies experiencing year-to-date share price increases of up to **239%** [38][39]. - **Consumer Industry Performance**: The overall consumer industry has seen varied performance, with certain segments like **IP Products** and **Gold & Jewelry** outperforming others, while traditional sectors like **Restaurants** and **Large Appliances** lag behind [35][40]. - **Price Movement Analysis**: The price movement of Chinese consumer stocks has been volatile, with major indices reflecting a decline of **-12%** to **-16%** in recent years, while some consumer segments have shown resilience [9][10][11]. - **Earnings Growth Estimates**: The projected earnings growth for the consumer sector is estimated at **6%** for 2025, with a compound annual growth rate (CAGR) of **4%** from 2024 to 2026 [25][72]. Important but Overlooked Content - **Consumer Sentiment and Spending**: Consumer confidence remains a critical factor, with a notable **youth unemployment rate** of **15%** impacting spending behavior. The household savings rate has also increased, reflecting a cautious approach to spending [57][60][63]. - **Retail Sales Trends**: Retail sales in July 2025 showed a year-over-year growth of **4.3%**, with specific categories like **Home Furnishing** and **Gold & Jewelry** performing particularly well [67][68]. - **P/E Valuation Insights**: The current price-to-earnings (P/E) ratios for various consumer segments indicate a discount to historical averages, suggesting potential undervaluation in certain areas of the consumer market [43][44]. Conclusion - The **China Consumer** sector is undergoing significant transformation, driven by the rise of "New Consumption" companies. While there are challenges such as economic volatility and consumer sentiment, the growth potential remains strong, particularly in innovative and emerging segments. Investors should closely monitor these trends for potential opportunities and risks in the market [4][49][72].

Summary of Key Points from the Conference Call Industry and Company Involvement - The focus is on the **China equity market**, particularly the interest from **US investors** in **Chinese equities** and sectors such as **AI humanoid robotics**, **biotech**, and **new consumption** [2][3][4]. Core Insights and Arguments 1. **Increased Investor Interest**: There has been a significant rise in interest from US investors in the China market, with over **90%** expressing willingness to increase exposure, marking the highest level since early **2021** [3][4]. 2. **Shift in Investment Focus**: US investors are expanding their focus beyond **ADR** and internet stocks to include the **onshore A-share market**, particularly in sectors like **AI/semiconductors** and **robotics** [4][7]. 3. **Positive Market Sentiment**: Factors contributing to this positive sentiment include: - China's leadership in tech sectors [7]. - Incremental policy steps by Chinese policymakers aimed at stabilizing the economy [7]. - Improved liquidity in the China market, which is expected to sustain market rallies [7]. - A growing demand for diversification from US-centric allocations [7]. 4. **Current Positioning of US Investors**: Many US investors are just beginning to re-enter the China market after years of reduced investment, indicating a potential for increased inflows as they conduct further research [10] [11]. Important Considerations and Monitoring Points 1. **Macro Concerns**: Ongoing concerns about deflation and the housing market, with excess inventory expected to take **10 to 12 months** to digest [11]. 2. **Policy Direction**: Monitoring the upcoming **4th plenary** for insights on domestic price stabilization and economic rebalancing is crucial [11]. 3. **Hedging Tools**: The availability of hedging tools is essential for macro and quant funds to participate more actively in the A-share market [11]. 4. **Geopolitical Uncertainty**: Potential meetings between US and Chinese leaders around the **APEC summit** and ongoing negotiations could impact market volatility [11]. Additional Insights - The overall preferred trading markets for US investors remain **ADR > Hong Kong > A-shares**, indicating a hierarchy in trading preferences [4]. - The report suggests that while the sentiment is positive, investors should remain cautious and monitor specific macroeconomic and geopolitical developments that could affect market conditions [11].

天风证券在最新报告《龙头公司财报陆续发布，继续看好港股中概AI方向机会》中认为，南向资金持 续结构性流入，建议持续关注互联网、消费、智能驾驶的产业趋势机会。互联网方面，该机构指出，近 期多家龙头互联网公司发布Q2业绩。腾讯集团二季度实现营收1845亿元，同比增长15%；毛利1050亿 元，同比增长22%；经营利润（Non-IFRS）692亿元，同比增长18%。京东集团第二季度收入为3567亿 元，同比增加22.4%，远超市场预期，再次刷新近三年来同比增速的纪录，归属于公司普通股股东净利 润为62亿元。 8月19日早盘，港股三大指数集体高开后震荡下行，恒生科技指数跌幅一度超0.5%。盘面上，科网股涨 跌不一，油气设备与服务股活跃。A股同赛道规模最大的恒生科技指数ETF（513180）跟随指数下跌， 持仓股跌多涨少，其中，小鹏汽车、比亚迪电子、理想汽车、金蝶国际、蔚来等跌幅居前。 南向资金年内净流入超9400亿港元，主要流向人工智能和新消费等核心资产。AI、新消费这两大赛道 体现出新兴产业的发展趋势和一定的稀缺性，有望进一步吸引资金加码，助推港股行情持续向好。公开 信息显示，恒生科技指数ETF（513180）标的 ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the polarization between New and Old Consumption in China, highlighting three key trends: 1. A stagnant economy limits overall growth, creating selective opportunities [1] 2. Supply-demand mismatches and corporate competency gaps challenge companies amid commoditized supply and demanding consumers [1] 3. A new generation of consumers seeks instant, experiential, and affordable "dopamine" experiences, reflecting a global trend [1] Analytical Framework - The "365" framework is reiterated, consisting of: 1. **Three macro themes**: structural imbalance of supply, demand, and intermediary channels [2] 2. **Six behavior patterns**: emotional value quest, instant gratification, focus on IP/contents, she-economy, brand demystification, and upgrade vs. downgrade [2] 3. **Five baskets**: emotional value, health & wellness, addictiveness, value for money, and new channels [2] New vs. Old Consumption - Definitions of New and Old Consumption are often ambiguous; adaptation to trends is crucial [3] - Strategies for Old Consumption include product innovation, brand rejuvenation, and channel recalibration [3] - Risks for New Consumption include scalability, lifecycle sustainability, and regulatory challenges [3] Market Dynamics - New Consumption was a significant trade in 1H25 due to macro weakness and liquidity, but recent market rotations have negatively impacted it [4] - Earnings sustainability and visibility are emphasized as key factors for investment decisions [4] Stock Picks - Preferred companies based on fundamentals and valuation include: - **New Consumption**: Pop Mart and Laopu Gold - **Old Consumption incorporating New Consumption**: Mao Geping, Eastroc, and Nongfu Spring - Mixue is rated as Underperform due to unfavorable risk-reward dynamics [5] Performance Metrics - New Consumption stocks have shown a 70% increase in share price since March 2025, while Old Consumption remains largely flat [14] - New Consumption trades at a 71% premium to Old Consumption on average since 2024 [17] Consumer Behavior Insights - The report identifies a quest for emotional value driven by stress and a fragmented society, leading to a rise in "dopamine consumption" [45] - Instant gratification and granular "dopamine" are becoming prevalent due to shorter attention spans and digital media immersion [56] - The she-economy is reshaping consumption narratives, with female consumers becoming more vocal and influential [82] Brand Dynamics - Brand demystification is occurring as traditional branding foundations are challenged, leading to a new storytelling journey for brands [94] - The rise of emotional value and community sharing is significant in the she-economy, with consumers focusing on quality-for-money rather than brand prestige [93] Conclusion - The report emphasizes the importance of understanding the evolving landscape of consumer behavior in China, particularly the distinctions between New and Old Consumption, and the implications for investment strategies in the consumer sector [1][2][3][4][5]

Summary of Key Points from the Conference Call Company and Industry - **Companies Involved**: NetEase, Bilibili, Kuaishou - **Industry**: China Digital Entertainment Core Insights and Arguments 1. **Stock Performance**: China digital entertainment stocks have seen significant YTD performance with Kuaishou, NetEase, and Bilibili rising by +75%, +57%, and +30% respectively, compared to HSI's +27% [1][11] 2. **Downgrade Ratings**: NetEase and Bilibili have been downgraded from Overweight (OW) to Neutral due to less attractive risk-reward profiles after recent stock rallies [1][11] 3. **NetEase Earnings Outlook**: Limited earnings upside for NetEase is anticipated due to rising game promotion expenses and a lack of blockbuster game launches in the second half of 2025. The estimated P/E ratio for 2025 is 16x, with a projected EPS CAGR of 6% for 2026-2027 [1][11][26] 4. **Bilibili Revenue Growth**: Bilibili's revenue growth is expected to decelerate from over 20% in the first half of 2025 to 5% in the second half, primarily due to a high comparison base from mobile games [1][11] 5. **Investment Recommendations**: The report suggests accumulating stocks with reasonable valuations (less than 20x P/E) and double-digit profit CAGR, favoring Kuaishou with a 14x P/E and 20% profit CAGR [1][11] Financial Forecasts and Changes 1. **NetEase Financials**: - Revenue forecast for 2025 is RMB 113.54 billion, with an adjusted net income of RMB 39.87 billion [22] - Expected net profit growth to slow to -1% in Q4 2025 and -9% in Q1 2026 [11][26] 2. **Bilibili Financial Revisions**: - Net revenue for 2025 revised down by 1% to RMB 30.20 billion, with mobile games revenue down by 6% [5] - Advertising revenue forecasted to decline by 3% [5] Other Important Insights 1. **Market Conditions**: The digital entertainment sector is influenced by themes such as AI and the experience economy, which are seen as safer investments compared to e-commerce and local services [1] 2. **Competition and Regulation**: Increased competition in the gaming market and potential regulatory changes in China pose risks to revenue growth for both NetEase and Bilibili [11][15] 3. **Valuation Metrics**: NetEase's valuation is at a 20% discount to its five-year average P/E, reflecting a cautious outlook on its future performance [14][17] Conclusion The conference call highlights a cautious outlook for NetEase and Bilibili amidst strong past performance, with concerns over rising costs and competition. The recommendation is to focus on companies with solid growth potential and reasonable valuations within the digital entertainment sector.