China Consumer Strategy_Nov retail sales up 3%, behind consensus of 5%; suggest a balanced stock portfolio

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the China consumer industry, highlighting key players such as Haier, Midea, YUMC, Anta, Tsingtao (H), and CRB [2] - November 2024 offline retail sales increased by 6.1% year-over-year (yoy), while online retail sales decreased by 2.7% yoy due to the early start of 11.11 promotions [2] Performance by Category - Best performing categories in November 2024: - Home appliances: +22% yoy (driven by trade-in policy) - Furniture: +11% yoy (related to home appliances) - Staple foods: +10% yoy - Autos: +7% yoy - Sporting goods: +4% yoy [2] - Worst performing categories in November 2024: - Cosmetics: -26% yoy (compared to +40% in October and -4.5% in September) - Telecom: -8% yoy - Oil & gas: -7% yoy - Office staples: -6% yoy - Gold & jewelry: -6% yoy [2] Economic Indicators - The overall unemployment rate in November 2024 was 5.0%, remaining flat yoy and month-over-month (m/m) [2] - The Consumer Price Index (CPI) in November 2024 increased by 0.2% yoy, compared to 0.3%, 0.4%, and 0.6% in the previous months (October, September, and August respectively) [2] - Food CPI rose by 1.0% yoy, primarily due to price inflation in vegetables and pork, while non-food CPI remained flat yoy [2] Market Performance - The China consumer staples/discretionary sector (represented by 160 major consumer companies, excluding internet and auto names) saw an increase of 1%/4% over the past month, with a forward P/E multiple rerating of 4%/13%, reaching 20.0x/17.4x respectively [2] - In comparison, MSCI China/HSI increased by 2%/3%, with a P/E rerating of 2%/3%, reaching 11.0x/9.6x [2] Retail Sales Data - Retail sales data for 2023 and projections for 2024 indicate fluctuations in growth rates: - 1Q23: 5.7% yoy - 2Q23: 10.7% yoy - 3Q23: 4.2% yoy - 4Q23: 8.3% yoy - 2023 overall: 7.2% yoy [5] Additional Notes - The data presented is sourced from the National Bureau of Statistics and includes various notes on the definitions and calculations of retail sales and CPI [4][10][11] - The unemployment rate for the 16-24 years old demographic has shown significant fluctuations, peaking at 22.0% in recent months [7]