UBS upgraded CHINA RES MIXC and LAOPU GOLD rating to "Buy", Nine Place to benefit from luxury goods recovery in the short term

According to a UBS research report, driven by the wealth effect from the stock market and rising gold prices, there are signs of recovery in luxury goods and jewelry sales in mainland China and Hong Kong. In mainland retail malls, the proportion of emerging brands under CHINA RES MIXC (01209.HK) is relatively high, such as LAOPU GOLD (06181.HK) and Pop Mart (09992.HK). The group is able to grasp the rapidly changing consumer habits, thus having a competitive advantage over Hong Kong developers.

As for local retail, the bank believes that luxury goods retail benefits from the strong performance of the Hong Kong stock market, which may be favorable for Wharf Real Estate Investment Company (01997.HK). However, the local retail industry still faces challenges, such as the rise of mainland brands making Shenzhen malls more attractive than those in Hong Kong. Additionally, in recent months, Shenzhen has added more tax refund facilities, attracting Hong Kong residents to shop northward. Furthermore, the penetration rate of mainland e-commerce platforms like Pinduoduo (PDD.US) and JD.com-SW (09618.HK) in Hong Kong is continuously increasing, which also affects local retail.

In terms of stocks, within the mainland retail industry, the bank is optimistic about China Resources Land (01109.HK), CHINA RES MIXC (01209.HK), Swire Properties (01972.HK), and Hang Lung Properties (00101.HK), with CHINA RES MIXC's rating upgraded from "Neutral" to "Buy," while the other stocks also received "Buy" ratings.

Regarding the Hong Kong retail industry, the bank believes that Wharf may benefit from the short-term recovery of luxury goods retail, while Link REIT (00823.HK) may be impacted by the increase in e-commerce penetration; they received "Neutral" and "Buy" ratings, respectively.

The bank has raised LAOPU GOLD's rating to "Buy," considering the valuation pressure and potential product price increases in the last quarter, which may support short-term sales and gross margins. UBS continues to recommend Pop Mart due to the upcoming peak season and the rising popularity of Twinkle Twinkle