Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The retail industry is undergoing an evolution in the "people, goods, and scene" framework, driven by emotional consumption, which presents new opportunities for growth [3][25] - High-end gold and fashion jewelry are gaining traction among consumers, with a focus on product differentiation and cultural significance [3][32] - The cosmetics industry is innovating through the IP of technical ingredients and cultural confidence, enhancing product appeal and market competitiveness [3][37] - Offline retail is shifting from selling "goods" to offering "services and experiences," with companies like Yonghui Supermarket leading the transformation [3][41] Summary by Sections Retail Market Overview - In 2025, the retail sector index closed at 2422.59 points, with an annual increase of 8.21%, underperforming the Shanghai Composite Index, which rose by 18.41% [5][14] - The retail industry ranked 23rd among 31 sectors in terms of performance [15] Industry Dynamics - The emotional value is driving consumer intentions, with a focus on "research-based consumption," "self-satisfaction," and "long-termism" as key decision-making trends [25][28] - High-end gold is becoming a preferred asset for wealth preservation, while fashion gold is appealing to younger consumers through innovative designs and social media engagement [32] - The cosmetics sector is witnessing a shift towards self-developed core ingredients and cultural narratives, enhancing brand value [37] Investment Recommendations - Focus on high-quality companies in the emotional consumption theme, particularly in the gold jewelry sector, with recommendations for brands like Chao Hong Ji and Lao Pu Gold [6][50] - Emphasize offline retail companies adapting to market changes, such as Yonghui Supermarket and Ai Ying Shi [6][48] - Highlight cosmetics brands that innovate in emotional value and safety, including Mao Ge Ping and Po Lai Ya [6][48] - Consider differentiated medical beauty product manufacturers and leading medical beauty institutions, recommending companies like Ai Mei Ke and Ke Di-B [6][48]

Investment Rating - The investment rating for the retail industry is "Positive" (maintained) [1] Core Insights - The retail industry index rose by 6.66% in the week of December 15-19, 2025, outperforming the Shanghai Composite Index by 6.63 percentage points, ranking first among 31 primary industries [6][15] - The launch of the Hainan Free Trade Port has shown promising initial results, with duty-free sales reaching 118 million yuan on the first day and a significant increase in the number of zero-tariff goods [4][25][26] - The report emphasizes the importance of consumer sentiment and the potential for high-growth sectors within the retail space, particularly in jewelry, offline retail, cosmetics, and medical aesthetics [7][30][31] Summary by Sections Retail Market Review - The retail industry index closed at 2458.79 points, with a weekly increase of 6.66% [6][15] - The supermarket sector saw the highest weekly increase of 14.18%, while the commercial property sector led with a year-to-date increase of 22.51% [17][19] Industry Dynamics - The Hainan Free Trade Port officially commenced operations on December 18, 2025, with a focus on "one line open, two lines controlled, and free trade within the island" [4][25] - The proportion of zero-tariff goods increased from 21% to 74%, covering approximately 6,600 items, which is expected to reduce import tax burdens by about 20% for related enterprises [26][25] Investment Themes - Investment Theme 1: Focus on high-end jewelry brands with differentiated product offerings, recommending companies like Chow Tai Fook and Lao Pu Gold [7][30] - Investment Theme 2: Emphasize offline retail companies adapting to trends and AI-enabled cross-border e-commerce leaders, recommending Yonghui Supermarket and Aiying Room [7][30] - Investment Theme 3: Highlight domestic cosmetics brands that meet emotional value and safety ingredient innovations, recommending brands like Maogeping and Proya [7][31] - Investment Theme 4: Focus on differentiated medical aesthetics product manufacturers and leading chain medical institutions, recommending Aimeike and Kedi-B [7][31] Company-Specific Insights - Chow Tai Fook reported a revenue of 38.986 billion HKD for FY2026H1, with a slight decline of 1.1% year-on-year, while net profit increased by 0.1% [37] - Lao Pu Gold achieved a revenue of 12.354 billion HKD for FY2025H1, marking a significant increase of 250.9% year-on-year, with net profit rising by 285.8% [36] - Yonghui Supermarket's revenue for the first three quarters of 2025 was 42.434 billion yuan, down 22.2% year-on-year, with net profit showing a significant loss [44]

Investment Rating - The investment rating for the retail industry is "Positive" (maintained) [1] Core Insights - The Ministry of Commerce has set a positive tone for the retail industry, emphasizing the importance of quality and service-driven transformation. Retailers with strong supply chain advantages and the ability to adapt are expected to benefit [25][27] - Yonghui Supermarket is undergoing a significant transformation focused on product centralization, with 222 stores modified by the end of September 2025. The company has seen a recovery in same-store sales and is enhancing its product quality and differentiation [27][29] Industry Overview - The retail industry index closed at 2305.32 points, down 0.21% for the week, outperforming the Shanghai Composite Index, which fell 0.34% [5][14] - The supermarket sector showed the highest increase among retail sub-sectors, with a weekly rise of 10.73% [17][20] Investment Recommendations - Focus on high-quality companies in sectors benefiting from emotional consumption themes, including: - **Gold and Jewelry**: Recommend brands like Chow Tai Fook and Chow Hong Kee, which are expected to benefit from differentiated product offerings [6][29] - **Offline Retail**: Highlight companies like Yonghui Supermarket and Ai Ying Shi, which are adapting to market changes [6][29] - **Cosmetics**: Recommend domestic brands that emphasize emotional value and innovative safe ingredients, such as Maogeping and Proya [6][29] - **Medical Aesthetics**: Focus on differentiated product manufacturers and expanding medical chains, recommending companies like Aimeike and Kedi-B [6][29] Company-Specific Insights - **Yonghui Supermarket**: The company reported a revenue of 424.34 billion yuan for the first three quarters of 2025, down 22.2% year-on-year, with a net loss of 7.10 billion yuan. The company is in a transformation phase aimed at quality retail [31][43] - **Chow Tai Fook**: The company achieved a revenue of 389.86 billion HKD for FY2026H1, down 1.1%, with a net profit of 25.34 billion HKD, up 0.1%. The company is optimizing its product structure and store quality [36][38] - **Chow Hong Kee**: The company reported a revenue of 62.37 billion yuan for the first three quarters of 2025, up 28.4%, with a net profit of 3.17 billion yuan, up 0.3%. The company is expanding its franchise model and enhancing product differentiation [39][40]

Investment Rating - The industry investment rating is optimistic (maintained) [1] Core Insights - The report highlights the rapid growth of high-end skincare products in China, with a projected compound annual growth rate (CAGR) of 13.8% from 2024 to 2029 [28] - Lin Qingxuan, a high-end domestic skincare brand, is positioned to capitalize on this growth, having updated its IPO prospectus, indicating a potential acceleration in its capital process [25][28] - The report emphasizes the importance of emotional consumption themes and recommends focusing on high-quality companies in high-growth sectors [6][32] Summary by Sections Retail Market Overview - The retail industry index closed at 2310.07 points, down 0.83%, underperforming the Shanghai Composite Index, which rose by 0.37% [5][14] - Among the retail sub-sectors, the professional chain segment saw the largest increase, while the jewelry sector led the year-to-date performance with a 20.56% rise [17][20] Company Focus: Lin Qingxuan - Lin Qingxuan achieved a revenue of 1.05 billion yuan in H1 2025, representing a year-on-year increase of 98.3%, with a net profit of 180 million yuan, up 109.9% [25][28] - The brand's core product, camellia oil, has dominated the facial oil sales market for 11 consecutive years, establishing a strong market presence [25][28] - Lin Qingxuan's online and offline revenue contributions were 65.4% and 34.6%, respectively, with a total of 554 stores, the highest among domestic and international high-end skincare brands [25][28] Investment Themes - Investment Theme 1: Focus on high-end jewelry brands with differentiated product offerings, recommending companies like Chow Tai Fook and Lao Pu Gold [6][32] - Investment Theme 2: Emphasize offline retail companies adapting to market changes and AI-enabled cross-border e-commerce leaders, recommending Yonghui Supermarket and Aiyingshi [6][32] - Investment Theme 3: Highlight domestic beauty brands that meet emotional value and safety ingredient innovations, recommending brands like Maogeping and Proya [6][32] - Investment Theme 4: Target differentiated medical beauty product manufacturers and expanding chain medical beauty institutions, recommending Aimeike and Kedi-B [6][32] Company Performance Highlights - Chow Tai Fook reported a revenue of 38.986 billion HKD in FY2026H1, a slight decline of 1.1%, but a net profit increase of 0.1% [39][40] - Chao Hong Ji achieved a revenue of 6.237 billion yuan in Q1-Q3 2025, up 28.4%, with a net profit increase of 0.3% [42] - The report notes that companies like Proya and Marubi have shown strong performance in the beauty sector, with Proya's revenue reaching 7.098 billion yuan in Q3 2025, up 1.9% [34][35]