Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies Core Insights - The "Work Plan" issued by the State Council aims to accelerate the cultivation of new growth points in service consumption, focusing on six key areas and three potential areas, which is expected to open up incremental space for service consumption [3][6] - By 2025, the per capita service consumption expenditure in China is projected to reach 13,602 yuan, with a year-on-year increase of 4.5%, accounting for 46.1% of total per capita consumption expenditure [3][11] - The domestic tourism market is expected to see 6.522 billion trips in 2025, a year-on-year increase of 16.2% [3][14] - The ice and snow industry is projected to generate over 187.5 billion yuan in consumption during the 2024-2025 season, with a growth rate exceeding 25% [3][30] - The emotional economy market in China is expected to reach 23,077.67 billion yuan in 2024 and surpass 45,000 billion yuan by 2029 [3][36] Summary by Relevant Sections Service Consumption Growth - The "Work Plan" focuses on optimizing service supply and fostering new service consumption models, particularly in transportation, housekeeping, automotive aftermarket, online audio-visual services, travel services, and inbound consumption [3][6] - The report highlights the increasing contribution of final consumption expenditure to economic growth, projected to be 52% in 2025, up by 5 percentage points from 2024 [9] Market Performance - The median price-to-earnings (P/E) ratio for the North Exchange service consumption sector decreased from 48.2X to 47.7X, with a total market capitalization dropping from 114.684 billion yuan to 112.981 billion yuan [46][51] - The median market cap for companies in this sector fell from 2.038 billion yuan to 1.978 billion yuan [51] Company Insights - Notable companies in the service consumption sector include: - Elderly care: Zhisheng Information, Beiyikang - Sports: Huayang Racing, Kangbiter - Tourism: Meiya Technology - Emotional/experiential consumption: Taihu Snow, Lusi Co., Baixinglong - Education: Digital Human, Tonghui Information - Online audio-visual: Xiange International, Haifiman - Apparel: Zhongfangbiao, Tianfangbiao [3][40] Performance Highlights - The report indicates that 29% of companies in the North Exchange service consumption sector saw stock price increases, with the median stock price change being -2.41% [46] - Top performers included Qiule Seed Industry (+22.55%), Kangnong Seed Industry (+13.50%), and Oufu Egg Industry (+7.05%) [46][56]

Economic Policy and Consumer Trends - The Central Economic Work Conference prioritized expanding domestic demand, aiming to build a strong domestic market[2] - The "reward economy" is emerging as a new consumption model, particularly among younger consumers, driven by psychological needs and stress relief[9] - The emotional economy market in China is projected to reach 4.5 trillion yuan by 2029, growing from 2.3 trillion yuan in 2024[19] Market Performance - 88% of companies in the North Exchange's consumer service sector saw stock price increases, with a median price change of +3.64% during the week of December 15-19, 2025[2] - The median price-to-earnings (P/E) ratio for the consumer sector rose from 45.7X to 51.8X, indicating increased investor confidence[2] - The total market capitalization of consumer service companies increased from 115.28 billion yuan to 116.78 billion yuan, with a median market cap rise from 1.895 billion yuan to 2.047 billion yuan[2] Industry Insights - Key sectors benefiting from policy support include cultural IP, pet food, cosmetics, and food and beverage industries, with notable companies listed on the North Exchange[2] - The emotional economy is reshaping consumer behavior, leading to a demand for innovative products and services that provide emotional value[10] - The consumer sentiment is shifting towards experiences and emotional fulfillment, with nearly 30% of young consumers engaging in purchases for emotional healing[11]

Group 1: Policy Environment and Consumer Recovery - The national policy has been continuously enhancing support for service consumption, leading to a steady recovery in domestic demand, with a focus on sectors such as elderly care, tourism, and household services [13][15][17] - In October 2025, the retail sales of consumer goods increased by 2.9% year-on-year, with the catering sector boosted by the "Double Festival" effect, showing a 3.8% increase [17][22] - The consumer price index (CPI) turned positive at +0.2%, indicating a gradual recovery in consumer sentiment and a stable improvement in the overall consumption price system [22][24] Group 2: New Consumption Sectors Analysis - The pet food industry is characterized by high repurchase rates and a growing young pet owner demographic, with the market expected to reach approximately 175.5 billion yuan by 2025, reflecting a growth rate of 7.5% [30][31] - The new-style tea beverage market is projected to reach about 354.7 billion yuan in 2024, with a growth rate of 6.4%, driven by demand upgrades and brand differentiation [34][36] - The "Guzi Economy," which includes merchandise derived from IP such as anime and games, is rapidly expanding, connecting cultural and physical goods consumption among young consumers [40][41] Group 3: Key Companies in New Consumption - Taihu Snow, a leading brand in silk bedding, has established a strong market position through multi-channel strategies and brand recognition, transitioning towards a "new national silk lifestyle brand" [43][44] - Bixinglong, a creative packaging leader, has built significant barriers through a comprehensive service model and strong client relationships with high-end brands, enhancing its market presence [45][46] - Lusi Co., a prominent player in the pet food sector, is leveraging its dual-brand strategy and expanding its domestic market share while maintaining strong growth through its OEM/ODM model [47][48] - Yizhi Konjac, a leader in konjac processing, is capitalizing on its supply chain advantages and product premiumization, with a focus on expanding into functional applications and maintaining strong client relationships [50][51] Group 4: Investment Recommendations - The report suggests focusing on companies with clear brand positioning and category barriers, such as Taihu Snow in the silk bedding sector, which has maintained a leading position for years [54][55] - Companies that align with domestic trends and excel in capacity and channel development, like Lusi Co. in the pet food market, are also highlighted as strong investment opportunities [55] - Firms with supply chain advantages or functional raw material barriers, such as Yizhi Konjac, are recommended for their long-term growth potential in the context of domestic market upgrades [55]

Investment Rating - The report maintains an "Accumulate" rating for the industry [1] Core Insights - The North Exchange has shown fluctuating performance, with a total of 268 listed companies and an industry market capitalization of 858.43 billion [1][4] - The North Exchange 50 Index experienced a decline of 0.7% during the week of July 14-18, 2025, closing at 1418.61 points, while the Shanghai and Shenzhen 300 indices increased by 1.02% and 0.42%, respectively [4][13] - The average market capitalization of the North Exchange component stocks is 3.202 billion [4][13] - The average daily trading volume for the North Exchange component stocks reached 21.885 billion, reflecting a 1.55% increase from the previous week [4][16] Summary by Sections North Exchange Market Overview - As of July 18, 2025, the North Exchange comprises 268 component stocks, with an average market capitalization of 3.202 billion [4][13] - The North Exchange 50 Index saw a weekly decline of 0.7%, while the Shanghai and Shenzhen 300 indices posted gains of 1.02% and 0.42% respectively [4][13] - The daily average trading volume for the North Exchange component stocks was 21.885 billion, with a turnover rate of 25.26% [4][16] Industry Performance - The top five performing sectors in the A-share market during the week were pharmaceuticals and biotechnology, communications, national defense and military industry, computers, and banking, with respective gains of 21.25%, 20.08%, 19.06%, 17.35%, and 16.64% [4][21] Individual Stock Performance - Among the 268 stocks listed on the North Exchange, 100 stocks rose, 166 fell, and 2 remained flat, resulting in a rise ratio of 37.45% [4][24] New Stocks - No new stock issuances occurred during the week, but one company updated its review status to registration, while 30 companies moved to the inquiry stage [4][29] Key News - The North Exchange has strengthened its disclosure requirements and released the second-quarter ratings for securities firms, with 103 firms evaluated [4][32] Investment Strategy - The report expresses optimism for the North Exchange's performance in 2025, suggesting a focus on sectors such as data centers, robotics, semiconductors, consumer goods, and military information technology [4][33]