The consumer sector is weak, Nomura highlights sticking to defensive and cost-effective targets (Nomura)
The June China Consumption Report released by Nomura Securities pointed out that the CPI in June slowed to 1.0% year-on-year and dropped 0.3% month-on-month.
The June China Consumption Report released by Nomura Securities pointed out that the CPI in June slowed to 1.0% year-on-year and dropped 0.3% month-on-month. The consumer sector continued to be under pressure, mainly due to the geopolitical situation easing inflation and weather factors suppressing consumer activities. Official multi-department jointly issued retail innovation opinions, aiming to build a modern retail system by 2030 and allocate resources to physical retail. In this context, Nomura highlights adopting a defensive strategy and preferring targets with clear strategies and attractive valuations. The report maintains "buy" ratings on Anta Sports (ANTA) and Laopu Gold. The current market is fully aware of the weak consumption, and the relative advantages of the defensive sector are emerging. The potential trading opportunity is that when consumption data shows marginal improvement, these companies with brand power and attractive valuations may be the first to rebound. One-sentence conclusion: Macro consumption data is weak, but leading companies still have defensive value through the cycle with clear strategies and reasonable valuations. Positive/negative: Positive for Anta Sports (ANTA) and Laopu Gold. Part of this expectation has been reflected in the current valuation, but if consumption stimulus policies are introduced in the second half of the year or CPI data picks up, it will constitute a new catalyst. Catalysts: 1) Whether the CPI and social zero data in the second half of the year can stabilize and recover; 2) The government’s specific support policies for physical retail are implemented; 3) Anta Sports and Laopu Gold’s second half performance guidance.