Industrial Securities 25-Year Mid-Term Strategy for the Commercial Trade Sector: Domestic Demand Focuses on Business Innovation, External Demand Focuses on Non-U.S. Trade

According to the Zhitong Finance APP, Industrial Securities released a strategic research report stating that looking ahead to the second half of 2025, it is recommended to continue focusing on retail innovation businesses, adjustment progress, and targets related to non-U.S. exports. Firstly, on the external demand side, although the U.S. tariffs imposed in April 2025 have significantly decreased, non-U.S. markets remain important export channels with relatively low political risks, and related enterprises will continue to receive support from the market and policies. In addition, in the domestic demand sector, since late September 2024, incremental policies have been continuously deployed, and the determination to stabilize growth through policy efforts is strong. At the same time, most indicators have begun to show signs of improvement, and positive factors are continuously brewing.

Looking ahead, under changing external environments, domestic demand's role as a key driver of economic development is becoming more prominent. As the effects of policy implementation continue to manifest, expectations for economic improvement and the momentum for consumption recovery are expected to receive sustained support, with domestic demand likely to accelerate its improvement. The bank recommends positioning from the following dimensions: 1) Non-U.S. market export companies; 2) Supermarkets and department stores with adjustment expectations; 3) Maternal and infant retail companies actively developing new businesses.

The main viewpoints of Industrial Securities are as follows:

Cross-border E-commerce and Trade

The impact of tariffs on the U.S. market has significantly increased the importance of non-U.S. channels. The trend of sharply increasing U.S. tariffs has significantly decreased and left room for negotiation, leading cross-border e-commerce and trade enterprises that export heavily to the U.S. to experience operational fluctuations. Looking ahead to the second half of 2025, the bank believes that tariffs still carry uncertainties. Although the tax amount has significantly decreased, U.S. merchants may seek risk-sharing, and the importance of exports to regions such as the Belt and Road has increased, recommending Xiaogoods City. At the same time, it is suggested to pay attention to Saiwei Era, which has previously raised prices and digested overseas inventory while maintaining good revenue growth through brand operations.

Maternal and Infant Retail

Market structure improvement, focusing on α opportunities for new business expansion. In recent years, the domestic fertility rate has continued to decline but has shown slight rebounds. The maternal and infant retail industry faces significant pressure from reduced foot traffic and intensified online competition. However, the bank sees that, on one hand, market contraction has led to industry clearing and more reasonably valued assets, significantly increasing merger and acquisition opportunities for leading enterprises; on the other hand, promoting childbirth will be a long-term strategic direction for the country, providing support for leading companies from both operational and capital market perspectives. In addition, companies in the industry are actively seeking change, adding various businesses to create second and third growth curves. Recommended are AiYingShi, and it is suggested to pay attention to Kid King.

Retail Industry Adjustment

From change to qualitative change, corporate adjustments are ongoing. In the retail industry, especially in the supermarket sector, companies face significant operational pressure due to intensified industry competition and the impact of e-commerce. In recent years, leading companies have continuously upgraded and adjusted from various aspects such as stores, supply chains, and personnel systems, achieving significant improvements in indicators. The bank believes that supermarkets with a large channel retention rate and industry influence are likely to continue self-reforming through business adjustments and format improvements in the future. At the same time, the department store industry is undergoing adjustments through brand changes, renovations, and IP activities under operational pressure. It is recommended to pay attention to Yonghui Superstores, DS, Hongqi Chain, and Chongqing Department Store.

Risk Warning: Systemic risks in the trade industry, declining consumer willingness, overseas policy risks, and intensified market competition risks, etc