Collective surge, JIUMAOJIU and HAIDILAO lead the gains, is the consumer sector entering a major rebound?

On November 7th, the Hong Kong stock market's consumer sector surged strongly! Among them, various sub-sectors such as dining, beer, alcoholic beverages, travel, hotels and resorts, sports goods, and diversified retail advanced together, leading the gains. As of the time of writing, in the dining and alcoholic beverage stocks, JIUMAOJIU (09922.HK) surged 11.88%, HAIDILAO (06862.HK) rose 8.78%, YIHAI INTL (01579.HK) increased 8.59%, HELENS (09869.HK) climbed 7.85%, XIAOBAO XIAOBAO (00520.HK) went up 7.34%, NAIXUE'S TEA (02150.HK) gained 6.45%, YUM CHINA (09987.HK) rose 5.45%, CR BEER (00291.HK) increased 8.47%, Tsingtao Brewery Group (00168.HK) rose 6.18%, ZHENJIU LIDU (06979.HK) increased 5.61%, and Budweiser APAC (01876.HK) rose 4.65%. Additionally, representative companies in the travel and hotel sectors also performed actively. China Duty Free Group (01880.HK) surged 7.94%, Tongcheng Travel (00780.HK) rose 4.37%, Meituan-W (03690.HK) increased 4.97%, Fosun Tourism Culture (01992.HK) climbed 3.49%, and Huazhu Group-S (01179.HK) rose 3.55%. In terms of news, a series of new consumption-promoting policies are about to be introduced. Institutions state that the consumption sector is expected to benefit from both fundamental and sector sentiment perspectives. Recently, Sheng Qiuping, Deputy Minister of the Ministry of Commerce, stated that the Ministry of Commerce, in conjunction with five international consumption center cities including Shanghai, Beijing, Guangzhou, Tianjin, and Chongqing, will hold a consumption month in November. During the consumption month, the five major cities will host 237 events covering various aspects such as food, clothing, and entertainment. During the event period, a series of consumption-promoting favorable policies are expected to accelerate implementation. The Ministry of Commerce stated that it will work with relevant departments to study and introduce policies to promote the initial economic development, support the high-quality development of the wholesale and retail industry, assist 20 cities including Shanghai and Tianjin in carrying out pilot construction of modern commercial circulation systems, initiate pilot reforms in automobile circulation consumption, and promote special action plans for healthy consumption. At the same time, the five cities will also introduce supporting policies to expand the effectiveness of the activities. For example, Shanghai and Guangzhou will launch support and reward policies for first stores, first launches, first shows, and first exhibitions; Beijing, Tianjin, Shanghai, Chongqing, and Guangzhou will distribute service consumption vouchers for dining, cultural tourism, and sports According to the Ministry of Commerce, the total retail sales of social consumer goods in these five cities account for over 13% of the national total, the number of time-honored brands accounts for 32% of the national total, imports of consumer goods account for over 50% of the national total, and the sales amount of tax refunds for outbound tourists accounts for about 80% of the national total, indicating that consumption is of higher quality and more vibrant. Sheng Qiuping stated that this consumption month is the highlight of the 2024 "Year of Consumption Promotion," aimed at creating a landmark consumption event. Through the joint efforts of government departments, business associations, and numerous enterprises, it will fully leverage the synergistic effect of high-level consumption promotion activities in international consumer center cities, leading and driving the entire country, making the consumption month a landmark consumption event. In this regard, market analysis suggests that the "event + consumption promotion policy" dual-driven approach will help create a cumulative effect, promoting consumption growth. Looking ahead, considering the recent frequent issuance of consumption promotion measures, multiple institutions have strengthened their expectations for a gradual recovery of the consumption environment. Dahua Securities pointed out that due to the expectation of direct policy assistance and the manifestation of wealth effects, the confidence of Chinese consumers is expected to gradually rebound, which will improve the profit forecasts for Chinese consumer goods companies this year and may lead to a reassessment of valuations. Debon Securities also believes that the restaurant industry is currently in a cyclical low period, and a moderate recovery is expected in 2024, but revenue growth will slow down, and profits will face pressure. Nevertheless, by issuing consumption vouchers to boost consumer confidence, the leading companies' ability to withstand risks will become more prominent in the context of intensified industry competition.