Core Insights - A series of international perfume brands are engaging with Chinese audiences through the autumn exhibition, Notes Shanghai and Beauty Shanghai, held from October 18 to 19 at the Shanghai West Bund International Exhibition Center [1][4] Group 1: Event Overview - The fourth edition of Notes Shanghai and the inaugural Beauty Shanghai are being held concurrently, themed "Heritage" and "Standards of Beauty," respectively, creating a platform for deep integration of the fragrance and beauty industries [1][5] - The first day attracted nearly 4,000 professional visitors, with expectations to draw over 8,000 professionals and more than 15,000 consumers throughout the event [1] Group 2: Exhibition Highlights - Notes Shanghai showcases nearly 300 boutique fragrance brands from 30 countries and regions, featuring both international classics and niche brands, as well as emerging Chinese brands [4][5] - The original formula of a historic perfume, presented by the world's first perfume archive (Osmothèque), is being exhibited for the first time in China, generating significant interest among industry professionals and fragrance enthusiasts [4] Group 3: Special Exhibitions and Forums - Nine special exhibitions cover various themes, including the history of perfume, ingredient exploration, olfactory art, brand storytelling, and cultural expression, providing a sensory journey for both professionals and the public [5] - Beauty Shanghai features nearly 200 quality brands, focusing on high-quality skincare, makeup, and personal care, and discusses how brands can define new industry heights through product, cultural, and creative strengths [5][6] Group 4: Industry Integration - The joint hosting of Notes Shanghai and Beauty Shanghai represents not only a spatial collaboration but also a fusion of concepts and industries, creating a vibrant picture of contemporary sensory culture in China [6] - The exhibitions aim to connect brands, channels, buyers, and consumers, showcasing the collective rise of Chinese brands in terms of cultural and brand strength [6]

Investment Rating - The industry investment rating is "Recommended" for the media sector, indicating an expected performance greater than 10% compared to the benchmark index [8]. Core Insights - The beauty market is expected to perform strongly during the 2024 Double Eleven shopping festival, with an online GMV of 126.7 billion yuan, reflecting a year-on-year growth of 17.42%. Tmall's GMV accounted for 50.1% of the market, with a 29.3% increase, while Douyin and JD.com followed with 26.7% and 11.7% market shares, respectively [4][5]. - Major e-commerce platforms are actively preparing for the 2025 Double Eleven, implementing various promotional strategies, including Tmall's "pre-sale + stock" and Douyin's significant marketing subsidies [4][6]. - Some beauty brands have already initiated promotional activities for Double Eleven, with notable discounts and subsidies to attract consumers [5][6]. Summary by Sections Industry Performance - The media sector has shown strong relative performance over the past year, with a 59.1% increase compared to the Shanghai and Shenzhen 300 index's 22.9% [1][2]. E-commerce Strategies - Tmall, Taobao, Douyin, and other platforms are launching innovative promotional strategies, including cash subsidies and interactive games, to enhance consumer engagement and drive sales [4][6]. Brand Promotions - Brands like Vino and Natural Hall are leading the charge with significant discounts and cash subsidies, indicating a competitive landscape as Double Eleven approaches [5][6]. Company Focus and Earnings Forecast - Specific companies such as 毛戈平 and 哔哩哔哩 are rated as "Buy," with projected earnings per share (EPS) growth and favorable price-to-earnings (PE) ratios for the coming years [8].

Group 1 - The report indicates that M1 has shown a significant recovery, with a year-on-year increase of 11 percentage points from September 2024 to June 2025, which correlates with a 9 percentage point increase in non-financial corporate cash flow, suggesting a new cash flow cycle for enterprises has begun [1][7][10] - Non-financial operating cash flow saw a notable year-on-year increase of nearly 1 trillion yuan in Q2 2025, marking it as the primary positive contributor to the growth of cash and cash equivalents [7][10][17] - Historical cash flow cycles are referenced, indicating that the current improvements in operating cash flow, narrowing negative contributions from financing cash flow, and reduced negative contributions from investment cash flow align with the characteristics of the beginning of a new cash flow cycle [1][7][17] Group 2 - The overall improvement in non-financial operating cash flow is primarily attributed to reduced purchasing rather than increased sales, with a notable contraction in cash outflows for purchases, which is a rare occurrence historically [2][20][27] - Industries experiencing net inflow expansion due to downstream prosperity include automotive, machinery, electronics, non-ferrous metals, and chemicals, while those benefiting from significant cost reductions include construction, transportation, real estate, utilities, and new energy [2][8][20] - Leading contributors to cash increment across the A-share market include construction (+1.4 percentage points), new energy (+1.3 percentage points), real estate (+1.0 percentage points), and electronics (+1.0 percentage points), while coal and food & beverage sectors showed negative contributions [3][8][17] Group 3 - The report highlights that the automotive and food & beverage sectors have shown healthy cash flow expansion, indicating improved cash collection and sales quality, which is crucial for maintaining cash flow health [35][36] - The construction and transportation sectors are noted for their significant net inflow expansions, driven by cost control and operational efficiency improvements [2][29] - The electronics sector has benefited from increased demand driven by AI and technological advancements, leading to improved operating cash flow and accelerated capital expenditures [3][8][35]

Macro Economic Overview - The "14th Five-Year Plan" emphasizes the use of more proactive fiscal policies to support employment and foreign trade, and to improve people's livelihoods [3][4] - Recent policies focus on industrial internet applications and the development of new energy sectors, indicating a shift towards digitalization and innovation [3][4] Fixed Income Market - As of August 2025, the total bond custody amount reached 174.54 trillion yuan, with a net increase of 15,060.06 million yuan, indicating a slight decrease in growth compared to previous months [9][10] - The leverage ratio in the bond market slightly increased to 106.88%, reflecting a cautious optimism in the market [13][14] Pharmaceutical Industry - The pharmaceutical sector is entering a new growth phase driven by innovation and optimization of centralized procurement, with major companies like Heng Rui Pharmaceutical and China Biologic Products showing robust revenue growth [17][18] - The recent adjustments in the national medical insurance directory are expected to benefit innovative drugs, leading to potential rapid growth for companies involved [18][19] Non-Bank Financial Sector - The performance of non-bank financial companies is primarily driven by property and equity investments, with significant contributions from the property insurance sector [21][22] - The net profit growth of listed insurance companies improved in the first half of 2025, largely due to the profitability of property insurance [21][24] Agricultural Sector - The price of white feather chicken increased due to supply disruptions and rising demand, with the average selling price reaching 7.17 yuan/kg in August 2025 [30][31] - The egg market faces pressure from high production capacity, limiting the potential for price increases despite some upward movement in prices [32][33] Machinery Industry - The valuation of global robotics companies is being redefined, with Figure's recent funding round valuing the company at 39 billion USD, indicating a bullish outlook for the robotics sector [37][38] - Key components in robotics are expected to see significant valuation increases, with potential PE ratios reaching 200 times as the industry matures [38][39] Consumer Services Sector - The upcoming National Day holiday is expected to boost travel bookings, with a steady increase in pre-booking trends observed [42][45] - The tea and coffee sector continues to show strong performance, with leading brands expanding their market presence despite some overall industry slowdowns [43][45] Real Estate and Construction - China Overseas Property is experiencing growth in both scale and profitability, with projected net profits increasing from 16.1 billion yuan in 2025 to 19.6 billion yuan by 2027 [47][48] - The company is focusing on high-quality expansion and has seen a significant increase in managed area and new contract signings [49][50] Electronics Industry - The domestic high-power server power supply market is growing, with companies like Oulu Tong positioned as leaders in this space, benefiting from the rise of AI applications [51][52] - The demand for higher power server supplies is expected to increase, with new products in development to meet the needs of advanced AI servers [53]

Investment Rating - The investment rating for the social services industry is "Positive" (maintained) [1] Core Insights - The social services sector is experiencing a positive trend, with significant growth in tourism and related services, driven by government policies and consumer demand [5][22] - The tea and coffee sectors are showing robust growth, with leading brands expanding their store counts and achieving strong same-store sales growth [44][55] - The collectible toy market is witnessing steady online sales growth, particularly in plush and blind box categories, while offline store performance is mixed [26][39] Summary by Sections Travel and Tourism - The National Day holiday is expected to see a stable increase in travel bookings, with domestic flights projected to reach 139,000 flights, a year-on-year increase of 5.7% [15][22] - The average ticket price for domestic economy class is approximately 896 yuan, showing a slight increase of 0.5% year-on-year [15] Collectible Toys - Online sales in the collectible toy category reached 1.275 billion yuan in August 2025, marking a year-on-year growth of 16% [26][27] - The average store efficiency for collectible toy brands increased by 11% year-on-year, with top brands like Pop Mart showing significant growth [39] Food and Beverage - The tea beverage sector has 517,600 stores nationwide as of August 2025, with a net increase of 1,800 stores [48] - The average monthly store efficiency for the tea industry was 226,400 yuan, reflecting a year-on-year growth of 3.5% [45][48] - Major tea brands like Mixue Ice Cream and Gu Ming have seen substantial store expansions, with Mixue adding 7,625 stores in the first eight months of 2025 [52][55] Cross-Border E-commerce - Shopee is enhancing its content e-commerce strategy through partnerships with major social media platforms, indicating a focus on growth in Southeast Asia [7][8] Market Performance - The social services index outperformed the Shanghai and Shenzhen 300 index by 2.13 percentage points during the week of September 15-19, 2025, ranking 6th among 31 primary industries [7][8]

Group 1 - The report highlights that the initial adjustments during the main upward phases of A-shares in 2015, 2017, and 2020 typically saw an average adjustment period of 11 trading days, with an average decline of nearly 5% for the overall market and a 20% pullback in popular sectors [5][28][32] - The report indicates that the current adjustment has lasted for 6 trading days with a decline of 2.35%, and popular sectors have experienced a pullback of 28.5%, suggesting that the adjustment is nearing completion and a consolidation phase is beginning [5][8][66] - The report suggests that the main upward phase of A-shares is characterized by a significant influx of household deposits into the market, which has been a driving force behind the current upward trend [15][17] Group 2 - The report outlines that the adjustment in 2015 was primarily driven by regulatory warnings and weak earnings reports, leading to a decline in market sentiment [33][36] - In 2017, the adjustment was influenced by disappointing macroeconomic data and external shocks, such as credit rating downgrades, which affected investor confidence [51][52] - The 2020 adjustment was marked by a significant outflow of northbound capital and the IPO of a major company, which created short-term liquidity pressure on the market [64][66] Group 3 - The report identifies key sectors to focus on during the current market phase, including interest rate-sensitive sectors (TMT, non-bank financials, and metals), sectors benefiting from a potential PPI recovery (chemicals, machinery, and consumer goods), and growth sectors that may see rotation (AI hardware, innovative pharmaceuticals, and defense) [8][66] - The report emphasizes that the style rotation in the market is contingent on fundamental performance, with growth sectors expected to continue leading, while a shift towards consumer and cyclical sectors may occur if earnings improve [7][8][66]

Investment Rating - The report maintains an "Overweight" rating for the industry, with a focus on new consumption sectors such as beauty care, IP derivatives, and gold jewelry [5][28]. Core Insights - The report highlights significant market movements, with the retail trade, social services, and beauty care sectors showing varied performance, ranking 19th, 27th, and 25th respectively among 31 primary industries during the week of September 8-12, 2025 [14][16]. - Key events include Huaxi Biological's strategic investment in Saint Pharma, which focuses on small nucleic acid drugs, and Jinbo Biological's approval for a new injectable collagen product [3][23]. - The report notes a substantial increase in domestic and international flight searches ahead of the Mid-Autumn Festival and National Day holidays, indicating a recovery in travel demand [4][24]. Summary by Sections 1. Weekly Market Review - The retail trade sector increased by 0.85%, while social services and beauty care sectors decreased by 0.28% and 0.23% respectively, compared to the Shanghai Composite Index's increase of 1.52% [14][16]. 2. Key Industry Data and News - The Chinese government allocated 100 billion yuan for childcare subsidies and plans to gradually implement free preschool education [3][23]. - Huaxi Biological invested approximately 138 million HKD in Saint Pharma, acquiring a 9.44% stake, while Jinbo Biological's new collagen product is the first of its kind to enter the pharmaceutical excipient market [23][24]. 3. Key Company Announcements - Jinbo Biological announced management changes, with founder Yang Xia appointed as CEO, and plans for a cash acquisition by Langzi Co. for a controlling stake in a cosmetic surgery hospital [27][28]. 4. Investment Recommendations - The report recommends focusing on companies such as Shangmei Co., Juzi Biological, and Marumi Biological, among others, as potential investment opportunities in the beauty care and new consumption sectors [5][28].

Summary of Key Points from Conference Call Records Industry Overview - The new consumption sector benefits from policy support and consumption upgrades, catering to the needs of Generation Z, with performance growth exceeding the industry average and long-term growth potential, particularly in areas like the pet economy and trendy IP derivatives [1][3][12] Core Insights and Arguments - New consumption companies are actively expanding into overseas markets, showing excellent single-store profitability and rapid store opening speeds, leading to significant growth and attracting attention from southern capital and overseas active equity funds [1][4] - The expectation of interest rate cuts by the Federal Reserve is strong, with a nearly 100% probability of a rate cut on September 18, which is expected to enhance market risk appetite and liquidity, thereby increasing the valuation levels of the new consumption sector [5][6][7] - The Hong Kong stock market has underperformed compared to the A-share market due to fundamental profit downgrades, liquidity contraction, and low valuation levels, but the new consumption sector may benefit from improved liquidity and upward revisions in performance [1][8][12] - Internet platform subsidies led to significant profit losses in the Hong Kong stock market in Q2, but some segments, like ready-to-eat beverage companies, benefited, although certain sub-sectors have seen corrections from previous highs [1][11] Additional Important Insights - The new consumption sector shows a clear sustainability in performance growth, driven by the high consumption willingness of young consumers, particularly in areas like the pet economy and trendy IP derivatives, with over two-thirds of young people's spending focused on emotional and seasonal consumption [3][6] - The new consumption sector is expected to lead market strength in the near future, especially in the Hong Kong market, as it transitions from goods to service-oriented and emotional consumption [2][12] - The performance of the Hong Kong stock market in 2025 is expected to lag behind the A-share market, particularly in sectors like software services, semiconductors, and consumer services, while sectors like pharmaceutical biotechnology and essential consumer retail may outperform [10] - The upcoming Federal Reserve rate cuts are anticipated to significantly benefit non-essential and emotional stocks in the Hong Kong market, reinforcing the investment value of the new consumption sector [5][7] Investment Recommendations - It is recommended to focus on the new consumption sectors such as the pet economy, trendy concepts, and beauty care, which are expected to outperform traditional sectors due to policy support, consumption upgrades, and technological and channel innovations [1][12][13] - The Penghua Fund's National Index Hong Kong Consumption ETF (159,265) tracks the National Index Hong Kong Consumption Index, which has a high concentration of new consumption stocks, making it suitable for investors [1][16] - Investors are advised to use index-based tools for investment in the new consumption sector, which is characterized by new products, channels, and marketing models, and to consider the Penghua Fund's index products for diversified exposure [13][15]

Investment Rating - The investment rating for the industry is "Positive" (maintained) [4] Core Insights - The report highlights the strong brand power of the leading company in the folding bicycle sector, which holds a market share of 26.3% in retail volume and 36.5% in retail value as of 2024 [4] - The company has established a robust distribution network with 38 dealers across 30 provincial-level regions in China, covering 680 retail points, with domestic dealer revenue constituting 68% of total revenue in 2024 [4] - The product lineup includes five major series tailored for specific customer segments and usage scenarios, showcasing diverse performance features [4] - Recent government policies are expected to stimulate the growth of the sports industry in China, with a projected total scale exceeding 7 trillion yuan by 2030 [5] Summary by Sections Industry Performance - The new consumption sector has shown varied performance, with the textile and apparel index increasing by 1.37% and the retail index decreasing by 0.59% during the week of September 1 to September 5, 2025 [9] Key Industry Data - Retail sales in July for various categories showed growth, with jewelry sales increasing by 8.2% year-on-year [17] Investment Analysis - The report suggests focusing on high-quality domestic brands in emerging consumer goods, particularly in beauty, jewelry, and tea beverage sectors, which resonate well with younger consumers [22]

Core Viewpoint - The podcast "基会来了" discusses the future of new consumption in China, questioning whether it is a fleeting trend or a sustainable growth opportunity [4]. Group 1: New Consumption Trends - New consumption companies often start with high valuations due to uncertainty about their growth potential, but they may face significant price declines if they fail to establish a solid market presence [5]. - A systematic understanding of the industry’s business model is crucial, particularly the presence of scale effects, as industries without them tend to become increasingly fragmented [5]. - The long-term success of consumer goods relies heavily on brand strength, with high gross margins indicating strong pricing power [5]. Group 2: Understanding Consumer Behavior - The 80s generation fund managers can still effectively study the consumption patterns of younger generations by recognizing industry trends and conducting thorough research [7]. - Observing new trends and being open to understanding them is essential for investment research, even if the researcher is not part of the target consumer group [7]. - Engaging with industry leaders and analyzing market data can provide valuable insights into consumer preferences and market dynamics [9]. Group 3: Consumption Dynamics - Current consumer behavior reflects a generational shift, with younger consumers displaying confidence in their purchasing decisions, prioritizing product quality and value over brand prestige [10]. - Economic growth in consumption is fundamentally linked to rising household incomes, making income growth a prerequisite for sustained consumption growth [10]. Group 4: Competitive Advantage in Global Markets - Chinese consumer brands have shown significant competitive advantages in international markets, particularly in gaming, where they have adapted products to local cultures and achieved substantial success [13]. - The success of Chinese products abroad challenges the notion that cultural differences would hinder market acceptance, as many products have thrived in Western markets [16]. Group 5: Promising Consumption Segments - Key areas for future investment include international expansion of companies, modern consumer categories like self-care products, gaming, and the pet economy, as well as the technology and AI sectors [18].