Investment Rating - The report maintains an "Outperform" rating for the light industry manufacturing sector [3] Core Viewpoints - The light industry manufacturing sector is experiencing price increases, with wood pulp paper companies announcing price hikes for various paper products starting from May 21, 2025 [2] - The report highlights a positive outlook for new consumption sub-sectors, including personal care, IP cultural products, new tobacco, smart glasses, and pet-related products [2] - Following the temporary suspension of tariffs between China and the U.S., there is a recommendation to focus on the recovery of the export chain [2] Summary by Sections Home Furnishing - In April, residential construction area decreased by 26% year-on-year, and residential sales area fell by 3.5% year-on-year [6] - Retail sales of furniture increased by 26.9% year-on-year in April, while sales in building materials and home furnishing markets decreased by 2.52% [6][39] - The report suggests focusing on leading companies in the customized home furnishing sector, such as Oppein Home and Sophia [6] Paper and Packaging - As of May 23, 2025, prices for various paper products show mixed trends, with double glue paper at 5162.5 CNY/ton and boxboard paper at 3525.4 CNY/ton [6][50] - The report recommends companies with integrated wood pulp and paper operations, such as Sun Paper, and those with strong domestic sales expectations like Huawang Technology [6] - The report notes a 7.6% year-on-year increase in fixed asset investment in the paper industry for the first four months of 2025 [6][64] Light Industry Consumption - The approval of new national standards for disposable sanitary products is expected to benefit compliant leading brands [6] - The report highlights the strong performance of personal care e-commerce in April and suggests focusing on brands like Dengkang Oral Care and Baiya [6] - The report also mentions the positive outlook for cultural products, recommending companies like Morning Glory [6] Export Chain - In April, exports of certain products like thermos cups increased by 7.34%, while pet food exports decreased by 9.08% [6] - The report anticipates a significant effect from the temporary suspension of tariffs, benefiting companies with robust domestic and international production capabilities [6] New Tobacco - The report notes the potential for new tobacco products to gain traction as international tobacco companies launch HNB products [6] - It recommends focusing on leading companies in the new tobacco sector, such as Smoore International, which has strong partnerships with major clients [6] Textile and Apparel - The textile and apparel sector is also noted for outperforming the market, with specific companies showing significant stock price increases [6][29] - The report suggests monitoring companies like Anta and Li Ning in the sportswear segment [6]

Investment Rating - The report maintains an "Outperform" rating for the light industry sector [3] Core Insights - In April, China's overall exports showed resilience, with a year-on-year increase of 8.1% in export value, although exports to the U.S. declined by over 20% [8] - The global sales of AI smart glasses reached 600,000 units in Q1 2025, marking a 216% year-on-year growth, driven primarily by the success of Ray Ban Meta smart glasses [8] - The report continues to recommend sectors benefiting from new consumer trends, particularly in personal care and trendy toys [8] Summary by Sections Light Industry Manufacturing - The light industry manufacturing sector outperformed the market with a 3.02% increase in the index from May 6 to May 9, 2025, compared to a 2.00% increase in the CSI 300 index [17] - Sub-sectors such as entertainment products (+3.91%) and home goods (+3.30%) showed strong performance [17] Home Furnishing - In March, the furniture retail sales increased by 29.5% year-on-year, while the furniture export value decreased by 7.8% in April [45] - The report highlights the potential for recovery in the home furnishing sector as consumer confidence gradually improves [6] Paper and Packaging - As of May 9, 2025, the prices of various paper products showed mixed trends, with double glue paper at 5,250 CNY/ton (-56.3 CNY/ton) and boxboard paper at 3,506.6 CNY/ton (+2.4 CNY/ton) [55] - The paper industry experienced a cumulative revenue decline of 1.4% in the first quarter of 2025, with a sales profit margin of 2.7% [69] New Consumer Trends - The report emphasizes the growth in the AI smart glasses market, with expectations of 5.5 million units sold in 2025, driven by new product launches from various brands [8] - Recommendations include focusing on companies like Mingyue Optical and Kangnai Optical, which are positioned to benefit from this trend [8] Textile and Apparel - The textile and apparel sector also outperformed the market, with a 3.47% increase in the index from May 6 to May 9, 2025 [27] - The report suggests monitoring leading brands in apparel and outdoor products as domestic consumption policies begin to take effect [27]

Investment Rating - The report suggests a positive outlook for the home furnishing sector, new tobacco, and light consumer goods, while indicating a cautious stance on the paper packaging industry due to weak demand and unclear tariff trends [4][6][16][19]. Core Insights - The home furnishing sector shows signs of recovery with a 29.5% year-on-year increase in retail sales in March, driven by consumption subsidies. However, Q1 earnings for many companies are expected to face pressure [6][13]. - The new tobacco sector is poised for growth as regulatory actions against illegal e-cigarettes in the U.S. may expand the compliant market, with companies like Smoore International showing strong confidence through significant share purchases [19]. - The paper packaging industry is currently experiencing weak pricing trends due to seasonal demand and uncertain tariff impacts, with recommendations to focus on companies with lower exposure to U.S. tariffs [16]. Summary by Sections Home Furnishing Sector - Domestic retail sales of furniture increased by 29.5% year-on-year in March, and 18.1% for the first three months of the year, reflecting the impact of consumption subsidies [6][13]. - Companies like Sophia and Gujia Home are highlighted for their strategic positioning and potential for earnings recovery, with Sophia's PE ratio at 12x indicating significant valuation upside [13]. - The report emphasizes the importance of focusing on domestic leaders with high dividend support and attractive valuations in the home furnishing sector [6][13]. New Tobacco Sector - The U.S. is increasing regulatory scrutiny on illegal e-cigarettes, which may benefit compliant brands and the overall market expansion [19]. - Smoore International is recommended due to its competitive positioning and growth potential in the heated tobacco product (HNB) segment, supported by its collaboration with British American Tobacco [19]. Paper Packaging Sector - The report notes a weak pricing environment for paper products, with prices for various types of paper remaining stable or declining slightly as of April 18 [16]. - The packaging sector is expected to benefit from new consumer electronics subsidies, with companies like Yutong Technology positioned favorably due to their limited exposure to U.S. tariffs [16]. Light Consumer Goods - The pet food sector shows strong growth, with a 23% increase in GMV for Q1, while baby diaper sales also saw a significant rise [17]. - The report highlights the potential for brands like Bubble Mart and Guibao Pet to capitalize on the growing domestic market and consumer trends [17]. Two-Wheel Vehicles - The sector is experiencing a positive trend driven by the "old-for-new" policy, with Q1 production up 25% year-on-year to 11 million units [18]. - The report suggests focusing on leading companies with integrated supply chains and strong product performance as the market continues to recover [18].

Investment Rating - The report maintains an "Outperform" rating for the industry [3] Core Insights - The report emphasizes the importance of focusing on undervalued companies with strong fundamentals, particularly those driven by domestic demand, such as Sun Paper, Xianhe Co., Sophia, and others [2] - Recent buyback announcements from companies like Yutong Technology and Simoer International reflect confidence in their growth prospects, suggesting opportunities for investment in oversold stocks [2] - The report highlights the potential for Chinese companies to gain greater influence in the IP licensing space, particularly in the IP toy industry, as they scale up and improve their product offerings [2] Summary by Sections Weekly Market Performance - The light industry manufacturing sector underperformed the market, with a decline of 5.84% compared to a 2.87% drop in the CSI 300 index [16] - Sub-sectors such as home goods, paper, and entertainment products also showed significant declines [16] Home Furnishing - The report notes a narrowing decline in residential sales and construction, with a 1-2 month drop of 17.8% in residential completion and a 3.4% decrease in sales [35] - Companies like Oppein Home and others are highlighted as potential beneficiaries of improving industry dynamics [5] Paper and Packaging - Paper prices have shown mixed trends, with double glue paper at 5387.5 CNY/ton, down 37.5 CNY/ton, while corrugated paper prices increased slightly [5] - The report indicates a 1.9% year-on-year decline in revenue for the paper industry in the first two months of the year [70] Consumer Goods - The report suggests a focus on cultural and creative product leaders like Morning Glory, which are expected to benefit from a recovering domestic consumption environment [5] - Companies in the personal care sector are also recommended for their channel expansion and price increases [7] Export Chain - The report discusses the impact of U.S. tariffs on exports, noting that some countries have received a 90-day delay on tariffs, which benefits companies with established overseas production [7] - Companies like Zhejiang Natural and others are highlighted as potential investment opportunities in the export chain [7] New Tobacco Products - The report mentions Simoer International's stock buyback as a sign of confidence amid regulatory changes in the e-cigarette market [7] - The focus on compliance and harm reduction in the tobacco industry is emphasized as a growing trend [7] Textile and Apparel - The textile and apparel sector also underperformed, with a 5.72% decline in the index [25] - Companies like Hailan Home and others are recommended as potential investments due to their brand strength [7]

Investment Rating - The report maintains an "Outperform" rating for the light industry sector [3] Core Viewpoints - The report highlights a recovery in consumer expectations, particularly in the home furnishing sector, with a potential turning point in the fundamentals [2] - It emphasizes the benefits of policy support and high-growth segments, recommending companies with strong product upgrades and e-commerce channels [2] - The report suggests focusing on leading companies in the lens industry that possess core R&D capabilities and strong brand development [2] Summary by Sections Home Furnishing - The report notes a recovery in the home furnishing sector driven by increased transactions in the second-hand housing market and improved consumer confidence, predicting better performance during the 315 promotional event compared to last year [8] - Key companies to watch include custom furniture leaders such as Oppein Home, Sophia, and Zhijia Home, as well as soft furniture leaders like Mousse and Kuka [8] Paper and Packaging - As of March 14, 2025, prices for various paper products remained stable, with double glue paper at 5450 CNY/ton, copper plate paper at 5820 CNY/ton, and box board paper at 3639.2 CNY/ton, which saw a decrease of 47.2 CNY/ton [8] - The report recommends companies like Sun Paper and Huawang Technology, which are expected to benefit from improved industry dynamics [8] Light Industry Consumption - The report mentions Meta's collaboration with Ray-Ban to launch limited edition AI glasses, which could drive demand for smart eyewear [8] - It also highlights the recovery of domestic consumption, suggesting a focus on cultural and creative leaders like Morning Glory and oral care leader Dengkang [8] Export Chain - The report discusses recent policy changes in Guangdong aimed at supporting cross-border e-commerce, which could enhance profitability for companies in this sector [8] - Companies to watch include Zhejiang Natural and Hars, which are expected to benefit from these developments [8] New Tobacco Products - The report notes trends in electronic cigarette regulation in the U.S., suggesting that compliance and harm reduction will be key focuses [8] - It recommends companies like Smoore International, which have strong partnerships and product advantages in the new tobacco sector [8] Textile and Apparel - The textile and apparel sector has shown strong performance, with companies like Hailan Home and Anta benefiting from supportive policies [8] - The report highlights the growth of the outdoor economy, recommending companies like Zhejiang Natural and Mugaodi [8]