China Consumer_ Pulse Check_ Less downside risk in 4Q24 if policy boost benefits continue

Summary of Key Points from the Conference Call Industry Overview - The focus is on the China Consumer sector, particularly in light of recent policy measures aimed at boosting consumption and stabilizing the economy [1][2][3]. Core Insights and Arguments - Consumer Stock Rebound: China consumer stocks have rebounded approximately 32% on average following easing measures from the September Politburo meeting [1]. - Policy Measures: The People's Bank of China (PBOC) has implemented direct stimulus measures, including consumption vouchers and trade-in programs, which have shown initial positive effects [1][2]. - Employment and Consumption: Policymakers emphasized the need to boost consumption and improve livelihoods, particularly for low and middle-income groups, and to enhance employment opportunities for key demographics [2][5]. - Property Market Support: New requirements have been introduced to stabilize the property market, which is expected to indirectly support consumer confidence and spending [1][2]. - Sales Growth Forecast: A year-over-year improvement in sales of 12% is anticipated for 4Q24, compared to 5% and 9% in 2Q and 3Q respectively, with an average sales growth of 9% projected for 2025 [5][6]. Additional Important Content - Valuation Context: Despite the recent rebound, most sectors are trading at the lower end of their 5-year or 10-year averages, indicating potential undervaluation [6]. - Employment Strategy: The State Council has introduced a 24-point guideline aimed at ensuring stable urban employment and expanding the middle-income group, which includes measures for new graduates and migrant workers [5]. - Liquidity Measures: The PBOC has announced liquidity provisions and relending programs to support the equity market and listed companies, which could enhance consumer wealth and spending [3][4]. Conclusion - The overall sentiment is cautiously optimistic, with expectations that policy changes could reverse the downward trend in earnings revisions observed year-to-date. Investors are likely to start adjusting their valuation bases to reflect improved earnings visibility for 2025 [5].