Hong Kong Stock Concept Tracking | Boosting Consumption Will Be a Top Priority for Economic Work, Institutions Say Beer Industry Valuation Is at Historical Lows (With Concept Stocks)

Among the nine key tasks for economic work next year, "vigorously boosting consumption, improving investment efficiency, and comprehensively expanding domestic demand" ranks first. Among them, "consumption" has been placed in a more important position. The Central Economic Work Conference pointed out that it is necessary to focus on key links to complete the key tasks of economic work next year, and to address the prominent issue of insufficient demand, with a focus on boosting domestic demand, especially residents' consumption demand. Zhao Bo, a long-term associate professor of economics at Peking University's National School of Development, pointed out that since the Third Plenary Session of the 11th Central Committee of the Communist Party, the proportion of residents' consumption in GDP in China has experienced a brief rise and a sustained decline, rebounding around 2009, and currently maintaining at about 40%. Zhou Qingjie, a professor at the School of Economics at Beijing Technology and Business University, stated in the article "Emphasizing the Key Role of Residents' Consumption in Expanding Domestic Demand" that according to the internationally accepted national economic accounting system, residents' consumption is one of the "four pillars" of GDP, alongside domestic private investment, government purchases and public investment, and net exports. In international comparison, the proportion of residents' consumption in GDP in China is relatively low. Therefore, in the process of building a new development pattern in China, the effective practice of the strategy to expand domestic demand relies more on the residents' sector to exert force from the "internal" side, allowing residents to have money to consume, consume with confidence, and consume freely. Guotai Junan's research report pointed out that the beer industry's performance is differentiated, and the beverage structure is prosperous. The summer peak season in the third quarter of 2024 shows a characteristic of volume exceeding price, with the number of travelers maintaining a recovery and growth trend. Beverages with low price/high frequency consumption characteristics benefit significantly, and demand resilience is prominent; the performance of beer is differentiated, with regional brands outperforming national brands. Under the low expectations for the sector in 2025, a recovery is expected, with the passive upgrade trend and regional brand advantages continuing. Haitong International pointed out that a combination of macro policies has been successively introduced. As subsequent policies to promote consumption and expand domestic demand gradually take effect, domestic consumption may usher in an accelerated recovery, especially benefiting from the recovery of the restaurant industry's prosperity, and the high-endization of beer will enter a new development stage. The industry's valuation is at a historical low, and from a long-term allocation perspective, it already has a certain safety margin. Moreover, major domestic beer manufacturers have all entered the late stage of capital expenditure, and stable cash flow lays the foundation for further increasing dividends. Related Hong Kong stocks in the beer sector: Tsingtao Brewery (00168), China Resources Beer (00291), Budweiser APAC (01876), Beijing Enterprises Holdings (00392)