Core Insights - The report indicates that the domestic service consumption has increased to 47% of total consumption, entering a phase of rapid growth and becoming a major component of household spending. The long-term stability and focus of policies on service consumption have been emphasized, highlighting its growing importance in policy frameworks. The current valuation of the social service sector remains below the average of the past five years, indicating potential for recovery [9][8]. Market Review - On the last trading day of 2025, the Shanghai Composite Index rose by 0.09% to close at 3968.84 points, while the Shenzhen Component Index fell by 0.58% and the ChiNext Index dropped by 1.23%. The total trading volume in the Shanghai and Shenzhen markets reached 2.05 trillion yuan. In terms of industry performance, sectors such as defense, media, and real estate led the gains, while communication, agriculture, and electronics lagged behind. Concept stocks related to Xiaohongshu, Kuaishou, and China Shipbuilding saw increases, whereas sectors like silicon energy and liquid cooling servers experienced declines [6][2]. Important News - The State Council has set a target for the comprehensive utilization of major solid waste to reach 4.5 billion tons annually by 2030, with a focus on recycling 510 million tons of major renewable resources. The plan emphasizes the elimination of outdated production capacity and the prohibition of new mining projects without supporting waste disposal facilities [7][3]. - Ctrip's report indicates a strong start for the domestic tourism market in 2026, with a fourfold increase in ticket bookings compared to the previous year. The report highlights that the post-00s generation represents the largest demographic of travelers at 39%, followed by the post-90s at 33% [7][3]. Industry Insights - The travel chain sector is expected to see marginal improvements due to the introduction of the Spring and Autumn holiday system, which will extend consumption periods and accelerate travel demand [11]. - The duty-free market at airports is undergoing significant changes, with the introduction of international retailers and investment in airport equity expected to revitalize the market. The policy benefits and the effects of duty-free shopping are anticipated to stimulate consumer interest [11]. - The restaurant industry is experiencing accelerated chain development, with leading companies expanding rapidly through standardized operations and brand recognition. The industry is expected to undergo a significant consolidation phase, with regional brands expanding nationally [11]. - Emerging consumption trends include service platforms that enhance user engagement and efficiency, concert experiences that cater to younger audiences, and sports events that leverage star athletes and strong operational models to create a sustainable ecosystem [11].

Core Viewpoint - The report from Wanlian Securities indicates that domestic service consumption in China has rebounded to 46% of total household consumption in 2024, nearing a structural critical point of 50%, suggesting a rapid growth phase for the industry, which is expected to be a key driver for domestic demand and consumption [1] Group 1: Investment Opportunities - Investment opportunities in the service consumption sector can be focused on two key dimensions: 1) High replicability, emphasizing business models that can achieve rapid replication through standardized processes and strong supply chains; 2) High experience creation capability, targeting services that provide unique experiences, emotional resonance, or cultural identity [2] Group 2: Overview of Service Consumption - Modern service consumption is transitioning from "functional satisfaction" to "experience co-creation" and "emotional healing," where consumers pay for personalized, memorable experiences that create deep and lasting memories. Compared to traditional goods consumption, service consumption shows significant growth elasticity, stable profitability, and superior operational efficiency [3][4] Group 3: Development Trends - Service consumption in China is approaching a structural critical point for accelerated penetration in consumption share. The demand side is increasingly segmented, focusing on the "young and elderly" demographics. The supply side is characterized by a diversified service platform ecosystem that incubates supply and influences decision-making [4] Group 4: Classification of Service Consumption - The classification framework for service consumption is based on two dimensions: 1) Experience creation capability, which relates to psychological satisfaction and emotional resonance; 2) Replicability, which assesses the standardization of service processes and the potential for cross-regional and cross-demographic expansion. Three main tracks are identified: 1) Scale efficiency type (low experience + high replicability); 2) Artisan economy type (high experience + low replicability); 3) Brand premium type (high experience + high replicability) [5] Group 5: Recommendations - Recommendations include: 1) Chain restaurants/tea drinks, focusing on leading brands with supply chain advantages; 2) Sports, leveraging the economic impact of events and related services; 3) Performing arts, targeting operators with scarce IP value; 4) Service platforms, which are crucial for supply-demand matching and brand incubation [6]

Investment Rating - The industry maintains a "Strong Buy" rating, indicating a positive outlook for investment opportunities in the service consumption sector [4]. Core Insights - In 2024, domestic service consumption's share in resident consumption has recovered to 46%, nearing the structural critical point of 50%, and is expected to enter a rapid growth phase, becoming a key engine for driving domestic demand and boosting consumption [2][28]. - Compared to goods consumption, service consumption offers higher growth elasticity and user stickiness due to its personalized interaction and unique experiences, presenting vast investment opportunities [2][57]. - Investment opportunities in the service consumption sector can be strategically focused on two key dimensions: one is along the high replicability line, emphasizing scale expansion and supply chain efficiency; the other is along the high experience shaping capability line, focusing on services that provide unique experiences, emotional resonance, or cultural identity [2][57]. Summary by Sections Service Consumption Overview - Service consumption is defined as the total expenditure on various non-physical services paid by residents to meet their life needs, covering twelve major categories including health services, entertainment, and education [10]. - The essence of modern service consumption is shifting from "functional satisfaction" to "experience co-creation" and "emotional healing," emphasizing the creation of multi-dimensional experiences that form lasting memories [10][14]. Development of Service Consumption - The share of service consumption is expected to accelerate, with a structural critical point approaching, as seen in international examples where service consumption's share increases significantly after surpassing 50% [24][25]. - The growth potential of service consumption is high, with per capita service consumption growth consistently outpacing overall consumption growth, indicating a slower marginal utility decline compared to goods consumption [29]. Classification of Service Consumption - A classification framework for service consumption is proposed based on two dimensions: experience shaping capability and replicability. This framework helps identify investment value across different business models [44]. - Three main tracks of service consumption are identified: 1. Scale efficiency type (low experience shaping capability + high replicability) represented by chain restaurants and tea shops [48]. 2. Artisan economy type (high experience shaping capability + low replicability) exemplified by concert events [51]. 3. Brand premium type (high experience shaping capability + high replicability) typified by sports events [54]. Investment Recommendations - The report suggests focusing on key tracks such as chain restaurants/tea shops, sports companies, performing arts operators, and platform enterprises that can effectively connect supply and demand [57].