Investment Rating - The report maintains an "Overweight" rating for the retail sector, emphasizing investment opportunities in both high and low-end consumer segments [1]. Core Insights - The retail sector is currently experiencing low valuations across multiple sub-sectors, providing a favorable environment for medium to long-term investments. As of March 20, 2026, several core companies in segments such as gold and jewelry, travel chains, education services, and retail have seen their valuations drop to below the historical 10th percentile, indicating high investment value [5][10]. - The retail sector is characterized by companies with light asset operations and low capital expenditure needs, resulting in strong cash flows and high dividend payouts. As of March 20, 2026, leading companies in sectors like gold and jewelry, education, retail, and dining have dividend yields ranging from 5% to nearly 10%, making them attractive for investors [5][10]. Summary by Sections Investment Opportunities - The report highlights a selection of 10 companies that exhibit both low valuations and high dividend yields, including: 1. Shangmei Co., Ltd. (2145.HK): PE of 15.3x, dividend yield of 5.0% 2. China Oriental Education (0667.HK): PE of 11.4x, dividend yield of 7.6% 3. Action Education (605098.SH): dividend payout ratio near 100%, yield of 5.6% 4. Beijing Renli (600861.SH): PE of 8.9x, yield of 5.6% 5. Xiaomen Xiangyu (600057.SH): PE of 9.2x, yield of 5.3% 6. Zhou Dasheng (002867.SZ): yield of 9.8%, PE of 10.4x 7. Liufu Group (0590.HK): yield of 8.6%, PE of 8.6x 8. Chow Tai Fook (1929.HK): yield of 7.9%, payout ratio over 90% 9. Haidilao (6862.HK): yield of 5.9%, improving turnover rate [5][10]. Market Performance Review - From March 16 to March 20, 2026, the Shenwan Retail Index decreased by 4.55%, while the Shanghai Composite Index fell by 3.38%. Year-to-date, the Shenwan Retail Index has declined by 12.57% [5][10].

Investment Rating - The report maintains an "Overweight" rating for the retail sector, emphasizing investment opportunities in both high-end and low-end consumer segments [1]. Core Insights - The retail sector is currently experiencing a weak overall sentiment, but many sub-sectors are at historically low valuation levels, providing a good safety margin for medium to long-term investments. Key segments such as gold and jewelry, travel chains, education services, and retail are noted to have core companies that have fallen below the historical 10th percentile in terms of PE-TTM ratios, indicating high investment value [5][10]. - The retail sector is characterized by companies with light asset operations and low capital expenditure needs, resulting in strong cash flows and high dividend payouts. As of March 20, 2026, several leading companies in the sector have attractive dividend yields, with some reaching as high as 10% [5][10]. - A selection of 10 recommended stocks with low valuations and high dividend yields has been identified, including companies like Shangmei Co. (PE 15.3, dividend yield 5.0%), China Oriental Education (PE 11.4, dividend yield 7.6%), and others, showcasing the potential for defensive investment strategies [5][10]. Summary by Sections Industry Trends - The report highlights that multiple sub-sectors within the retail industry are currently undervalued, with many companies showing a PE-TTM ratio below the historical 10th percentile, indicating a favorable entry point for investors [5][10]. Dividend Observations - The retail sector's companies generally maintain high dividend payout ratios due to their stable business models and strong cash flows. As of March 20, 2026, several leading firms exhibit dividend yields of 5% to nearly 10%, making them attractive for income-focused investors [5][10]. Recommended Stocks - The report lists 10 stocks that combine low valuation with high dividend characteristics, including: 1. Shangmei Co. (2145.HK): PE 15.3, dividend yield 5.0% 2. China Oriental Education (0667.HK): PE 11.4, dividend yield 7.6% 3. Action Education (605098.SH): dividend payout ratio near 100%, yield 5.6% 4. Beijing Renli (600861.SH): PE 8.9, yield 5.6% 5. Xiaomen Xiangyu (600057.SH): PE 9.2, yield 5.3% 6. Zhou Daxing (002867.SZ): yield 9.8% 7. Liufu Group (0590.HK): yield 8.6% 8. Zhou Dafu (1929.HK): yield 7.9% 9. Haidilao (6862.HK): yield 5.9% [5][10].

Group 1: Company Overview - China Oriental Education (00667) has a strong recovery in mature professional enrollment and profitability, with emerging programs steadily being developed to create new growth momentum [1] - The company is a leading vocational education group in China, with well-known brands such as New Oriental Cooking, Xinhua Computer, and Wantong Automotive Repair, covering four mature fields: culinary arts, western cuisine, information technology, and automotive services [1] Group 2: Financial Projections - The company is expected to achieve a net profit attributable to shareholders of 790 million, 1.1 billion, and 1.38 billion yuan for the years 2025-2027, reflecting growth rates of 53%, 39%, and 26% respectively [1] - The reasonable valuation for the company is estimated to be between 6.89 and 7.95 HKD per share, maintaining an "outperform" rating [1] Group 3: Industry Trends - The vocational education industry in China is in a golden expansion phase, with a projected compound annual growth rate of 17% from 2025 to 2029, potentially exceeding 2 trillion yuan by 2029 [2] - The adjustment in the secondary vocational education sector has seen a decline in high school enrollment from 51% to 34% from 2010 to 2024, but there is a potential for a new balance as skilled talent demand remains strong [2] Group 4: Mature Programs - The company's proactive adjustments since 2024, including shutting down inefficient campuses and enhancing course structures, have led to a net profit margin of 19.0% in the first half of 2025, an increase of 5.0 percentage points [3] - The recovery in mature program enrollment has resulted in a 7% year-on-year increase in new training participants, with expectations of maintaining a 7-8% growth rate in new enrollments for 2026-2027 [3] Group 5: Emerging Programs - The beauty industry is projected to reach a market size of 380 billion yuan by 2025, with characteristics similar to the culinary sector, indicating potential for replicating past successes [4] - The company’s beauty brand achieved an average of 6,000 training participants in the first half of 2025, surpassing the total for 2024, with expectations for beauty revenue to reach 700 million yuan by 2027 [4] - The pet and wellness sectors are also identified as high-potential areas for long-term growth, with pilot programs already underway in the pet education field [4]

Group 1 - The core viewpoint of the report is that China Oriental Education (00667) is experiencing a strong recovery in its mature professional enrollment and profitability, while steadily expanding into emerging fields, which is expected to create new growth momentum [1] - The company is a leading vocational education group in China, with a diverse portfolio including well-known brands such as New Oriental Cooking, Xinhua Computer, and Wantong Automotive Repair, and has been operating in the vocational education sector for nearly 40 years [1] - The company is projected to achieve net profits of 790 million, 1.1 billion, and 1.38 billion yuan for the years 2025-2027, reflecting growth rates of 53%, 39%, and 26% respectively [1] Group 2 - The vocational education industry in China is in a golden expansion phase, with a projected compound annual growth rate of 17% from 2025 to 2029, potentially exceeding 2 trillion yuan by 2029 [2] - The company has actively adjusted its operations since 2024, including shutting down inefficient campuses and upgrading course structures, which has led to an increase in net profit margin to 19% in the first half of 2025, with expectations of approaching 24% [3] - Emerging fields such as beauty, pet care, and health management are expected to become new growth drivers, with the beauty market projected to reach 380 billion yuan by 2025 [4]