Core Insights - The report maintains an "outperform" rating for the retail sector, anticipating that easing international conditions and domestic policy stimulus will positively influence the sector's performance [3][42]. - The overall retail sales in May 2025 reached 4.13 trillion, growing by 6.4% year-on-year, with goods retail sales increasing by 6.5% [11][14]. Beauty and Personal Care - In May 2025, the cosmetics retail sales grew by 4.4%, with high online penetration leading to diminishing promotional effects. However, leading domestic brands are expected to outperform the market due to the trend of domestic product substitution [11][12]. - The competitive landscape is intensifying, with rising sales expense ratios expected to pressure profit margins for some brands, although top players with strong product innovation may still achieve robust growth [11][12]. Gold and Jewelry - The gold and jewelry sector saw a significant year-on-year growth of 21.8% in May 2025, benefiting from a low base effect from the previous year. Products that appeal to younger consumers are expected to drive higher growth rates [11][12]. Supermarkets and Department Stores - From January to May 2025, department store sales slightly increased by 1.3%, while supermarket sales grew by 5.7%. Companies that adapt to the current value-for-money consumption trend through supply chain upgrades are expected to perform better [12][14]. Cross-Border E-commerce - The second quarter is expected to face short-term performance pressures due to external environmental challenges. However, leading platform companies are anticipated to demonstrate strong resilience in the medium to long term due to flexible tariff responses and solid product capabilities [12][14]. Investment Recommendations - The report recommends several companies across different sectors, including: - Beauty and Personal Care: Recommended companies include 毛戈平, 丸美生物, and 登康口腔, which are expected to benefit from domestic product substitution and channel optimization [3][42]. - Gold and Jewelry: Companies like 老铺黄金 and 潮宏基 are highlighted for their potential to achieve accelerated growth due to favorable market conditions [3][42]. - Cross-Border E-commerce: Recommended companies include 小商品城 and 安克创新, which are positioned to capitalize on improving trade conditions [3][42]. - Retail: Companies such as 名创优品 and 重庆百货 are suggested for their low valuation and potential for improvement [3][42].

Industry Overview - The top 100 retail companies in China reported a revenue decline to 2.13 trillion, down 0.47 trillion or 18.08% compared to 2019, with no significant rebound observed [1] - In 2024, 19 out of 26 listed retail companies experienced a year-on-year revenue decline, and 17 faced a drop in net profit [1] Company Strategies - Retail companies are actively seeking solutions to navigate the challenging market by restructuring their business models, focusing on product quality, upgrading experiences, and enhancing supply chain efficiency [3][6] - The transformation of retail businesses is aimed at moving away from traditional sales models to a more integrated approach that includes product selection, quality control, and supply chain management [7][9] Case Study: Xinyulou - Xinyulou has successfully transformed its operations, achieving a revenue increase from 15.15 billion in 2019 to 23.965 billion in 2024, marking a cumulative growth of 58.18% over five years [11] - The company has established a robust supply chain with 240 direct procurement bases, ensuring quality control and traceability from production to sale [11] - Xinyulou's membership program has shown strong engagement, with a membership count reaching 170,705, representing 23.06% of the local population, and a high repurchase rate of 89.14% [16] Market Challenges - The retail sector faces challenges such as consumer spending downgrades and increased competition from online channels, necessitating a focus on enhancing customer experience and product quality [14][22] - The government has introduced policies aimed at boosting consumption and addressing the challenges faced by the retail sector, emphasizing the importance of consumer trust and quality service [14][22] Future Outlook - The retail industry is expected to prioritize quality supply and consumer-centric strategies to drive growth, with a focus on building trust and enhancing customer loyalty [22][23] - The concept of "trust-price ratio" is emerging as a new competitive strategy, emphasizing the importance of trust and quality over mere price competition [22][23]

Group 1: Retail Industry Overview - The retail industry is focusing on three main investment themes for the second half of 2025: strong product momentum, improved operational conditions, and large comprehensive enterprises [7] - The beauty and personal care sector is showing strong performance, with a year-on-year growth of 62.51% in Q1 2025 for companies like Jinbo Biological and 28.01% for Marubi Biological [38] - The jewelry sector is witnessing a shift towards lighter and more affordable gold products, driven by younger consumers and the trend of diversification in the market [7] Group 2: Consumer Confidence and Sales Performance - In the first quarter of 2025, the total retail sales of consumer goods reached 12.47 trillion yuan, with a year-on-year increase of 3.6% [14] - The consumer confidence index showed a recovery trend in early 2025, indicating a positive outlook for retail consumption [14] - The beauty and jewelry categories experienced year-on-year retail sales growth of 5.48% and 8.06% respectively in the same period [14] Group 3: E-commerce and Offline Trends - E-commerce sales showed a mixed performance, with a total sales index of 50.6% in May 2025, reflecting a slight decline compared to previous months [23] - The offline retail market is stabilizing, with a noticeable recovery in shop rental rates, which reached 53.6% in April and May 2025 [29] - The operating space index showed fluctuations but remained stable, indicating a cautious approach to new store openings [29] Group 4: Investment Recommendations - The report recommends focusing on companies with strong product momentum and operational improvements, such as Proya, Giant Biological, and Marubi Biological [62] - The beauty sector is highlighted for its resilience and growth potential, with specific companies recommended for investment based on their strong performance metrics [62] - The medical beauty sector is also emphasized, particularly companies that are expanding their product lines and improving operational capabilities [7][63]

Core Viewpoint - The company reported a decline in revenue for 2024, but showed resilience in net profit and operational adjustments across its business segments, indicating potential for future growth [1][2][3]. Financial Performance - In 2024, the company achieved revenue of 17.14 billion, a year-on-year decrease of 9.8%, while net profit attributable to shareholders was 1.31 billion, up 0.5% year-on-year [1]. - The fourth quarter of 2024 saw revenue of 4.14 billion, a slight decline of 1.7% year-on-year, but net profit surged by 109.7% to 390 million [1]. - The company's gross profit margin improved to 26.5%, an increase of 0.8 percentage points year-on-year, primarily due to a decrease in the proportion of low-margin automotive trading business [2]. Business Segment Analysis - Revenue breakdown for 2024 showed the following performance across four main segments: - Department stores: 1.77 billion, down 12.2% - Supermarkets: 6.16 billion, down 0.3% - Electronics: 3.30 billion, up 12.9% - Automotive trading: 4.29 billion, down 29.5% [1]. - The department store segment faced intensified competition and margin pressure, while the supermarket segment benefited from operational adjustments in 10 stores, achieving double-digit growth [1][2]. Future Outlook - The company is optimistic about the ongoing adjustments in its business segments, with plans to continue transforming the department store segment and further improving supermarket operations in 2025 [2]. - The electronics segment is expected to benefit from expanded national subsidies, while the automotive trading segment is undergoing structural changes to enhance performance [2]. Investment Insights - The company is positioned to benefit from a resilient consumer market in Chongqing and effective adjustments across its business segments, suggesting a stable growth trajectory for future earnings [3]. - Profit forecasts for 2025 and 2026 are projected at 1.38 billion and 1.47 billion, respectively, with a current valuation of 11x, indicating a safety margin for investors [3].