Summary of Conference Call Notes Industry Overview - The conference call discusses the **China Consumer** sector, focusing on consumption trends and market dynamics in **2Q25** and the outlook for **2H25** [1][2]. Key Points and Arguments 1. **Consumption Trends**: - Demand softened in **2Q25**, with unexciting demand continuing into **3Q25**. Some categories like restaurants, sportswear, prepared food, and spirits showed minor sequential improvements in August, attributed to normalizing policy impacts [1][2]. - Companies maintain a prudent outlook due to demand uncertainty, with expectations for significant demand-side stimulus being unlikely in the near term [1]. 2. **Pricing Dynamics**: - There are downside risks to pricing in categories such as sportswear and spirits due to demand softness. The restaurant sector is experiencing intensified pricing activities driven by food delivery subsidies and market education on new categories [1][2]. 3. **Structural Growth Opportunities**: - Continued demand for experience-based consumption, particularly in IP retailers, freshly made drinks, and pet foods [2]. - Opportunities for category expansion and penetration in beverages, cosmetics, and pet foods, with companies like Laopu experiencing upward brand cycles [2]. - Overseas expansion remains a growth opportunity, especially in home appliances, despite demand uncertainties [2]. - Lower-tier cities present untapped potential for various categories [2]. 4. **Sector Preferences**: - Preferred sectors include sports brands, diversified retailers, beverages, and pet food. Least preferred sectors are apparel/footwear OEM, furniture, projectors, and non-super-premium spirits [3][8]. 5. **Stock Recommendations**: - Buy recommendations include companies like Anta, Eastroc, Midea, and WH Group, while jewelry has been upgraded to Neutral due to stabilized sentiment [8]. 6. **Market Sentiment**: - The market is showing interest in turnaround themes, with shareholder returns supporting stock prices [2]. Additional Important Content - The macroeconomic environment remains resilient, but consumption-related indicators are muted. The GS macro team anticipates limited significant demand-side stimulus due to the stable GDP numbers [1][9]. - The report highlights a divergence in performance among companies, with stronger brands gaining market share while weaker ones struggle [9]. - The conference call also touches on the impact of policy changes, including temporary interest and childbirth subsidies, which may influence consumer behavior [1]. Conclusion - The China Consumer sector is navigating a challenging landscape with softer demand and pricing pressures. However, structural growth opportunities and strategic sector preferences present potential investment avenues. The outlook remains cautious, with companies focusing on prudent strategies to manage uncertainties in demand and pricing.

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.

Investment Rating - The report initiates coverage on Anadolu Group Holding (AGHOL) with a Buy rating and a target price of TRY373 per share, implying approximately 43% upside potential [6][22][30]. Core Views - Anadolu Group Holding is a consumer conglomerate with strong exposure to the defensive FMCG sector, primarily driven by its key businesses in beer, soft drinks, and food retail, which accounted for 93% of the group's revenue and EBITDA in 2024 [2][13][36]. - The company has demonstrated solid growth execution, with revenues and EBITDA growing at a compound annual growth rate (CAGR) of approximately 11.7% and 12.2%, respectively, from 2019 to 2024 [3][48]. - The group's net debt/EBITDA ratio has significantly improved, decreasing from 2.3x in 2019 to 0.5x by the end of 2024, indicating strong deleveraging and balance sheet strength [4][18][66]. - The current NAV discount of AGHOL has narrowed from an average of 77% in 2019 to 35%, which is viewed as unjustified given the company's defensive positioning and growth potential [5][21][40]. Summary by Sections Investment Case - AGHOL's portfolio is resilient, with a strong focus on defensive FMCG sectors, which are less susceptible to macroeconomic volatility [13][36]. - The company has a leading position in the Turkish market, with significant stakes in Anadolu Efes, Coca-Cola Icecek, and Migros, all of which have strong growth prospects [2][13][36]. Financial Performance - The retail and soft drink segments are the primary growth drivers, with revenue CAGRs of approximately 14% and 13%, respectively, from 2019 to 2024 [3][14][49]. - The beer segment has faced challenges, growing at a CAGR of 7.1% over the past five years due to external factors like the COVID-19 pandemic and geopolitical tensions [55]. Balance Sheet Strength - The group's net debt has decreased significantly, with a notable improvement in cash flow generation capabilities, supporting a comfortable leverage position [4][18][66]. - The deleveraging trend is primarily driven by Migros, which has transitioned to a net cash position [70]. Dividend Profile - AGHOL has seen a substantial increase in dividends received, rising from TRY0.8 billion (USD46 million) in 2022 to TRY2.7 billion (USD81 million) in 2024, with a dividends-paid-to-received ratio reaching 52% in 2025 year-to-date [19][77][80]. Valuation - The target NAV estimate for AGHOL is TRY90.9 billion, with a 25% holding company discount applied to arrive at the target price of TRY373 per share [6][22][29].

Core Investment Criteria - An ideal investment operates in a sector expected to experience structural growth exceeding GDP growth over the next 5-10 years [1] - It benefits from sustainable competitive advantages that lead to attractive unit economics [1] - The investment should be managed by competent, ethical, and long-term thinkers [1] - A fair valuation is essential for the investment [1]

Group 1 - The article discusses the hold rating for Casey's General Stores (NASDAQ: CASY) based on its core business performance and market conditions [1] - The investment is considered ideal if it operates in a sector expected to experience structural growth exceeding GDP growth over the next 5-10 years [1] - Sustainable competitive advantages and attractive unit economics are highlighted as essential factors for profitability [1] Group 2 - The article emphasizes the importance of competent, ethical, and long-term thinking management for the success of the investment [1] - Fair valuation is mentioned as a critical criterion for assessing the investment opportunity [1]

Group 1 - The ideal investment is characterized by core business operations in sectors expected to grow structurally at rates exceeding GDP growth over the next 5-10 years [1] - Profits should stem from sustainable competitive advantages that lead to attractive unit economics [1] - The investment should be managed by competent, ethical, and long-term thinkers, and should be fairly valued [1]