According to the Zhitong Finance APP, Xinda Securities released a research report stating that the current stage of the A-share market still leans towards policy, growth, and thematic styles. If value targets experience a pullback, it is recommended to actively allocate. It is expected that low valuation strategies will continue to dominate next year, with dividend strategies still expected to be effective, and the valuation center for growth is likely to improve. Attention should be paid to four allocation directions in the light industry sector: 1. Low-position cyclical: home furnishings greater than paper making, 2. Scarce growth and consumption stocks with market share improvement, 3. Overseas stocks with outstanding global resource allocation capabilities, 4. Stable dividend assets.

Key points from Xinda Securities are as follows:

Home Furnishings: Real estate pressure weakens, industrial chain reconstruction, and old-for-new drives recovery

The real estate cycle is bottoming out, focusing on the recovery of second-hand housing and increased real estate policies; under linear predictions, the firm expects the industry to remain in an adjustment period in 2025-2026, with stabilization and positive growth expected in 2027. The industry landscape will continue to change in 2023-2024, reflecting trends of channel diversification and industrial chain business integration, with leading companies actively transforming channels and continuously honing their internal capabilities. With the implementation of national subsidy policies, leading companies are expected to benefit from industry total growth + price correction + landscape improvement; according to the firm's calculations, if home furnishing subsidies reach 20 billion/30 billion, leading companies are expected to achieve positive growth/ double-digit growth for the year.

It is recommended to pay attention to companies with high renewal demand such as Kejia Home (603816.SH), Minhua Holdings (01999), Xilinmen (603008.SH), Mu Si Co., Ltd. (001323.SZ), Haotaitai (603848.SH), and Ruilite (002790.SZ), as well as Oppein (603833.SH) and Sophia (002572.SZ) which lead in the execution of old-for-new, and companies like Zhibang Home (603801.SH) and Jinpai Home (603180.SH) that are in an upward growth cycle, along with Qumei Home (603818.SH) which sees improvement in both overseas and domestic markets.

Paper Making: Bottom of the cycle, resources are king

Global wood chip supply is shrinking, and demand is expected to continue to rise due to downstream pulp production. The tightness of wood chip resources may become the norm, supporting a rise in pulp prices in the medium to long term. In 2024, there will be a mismatch in pulp supply and demand, with high opening and low closing; in 2025, global interest rate cuts and demand are expected to stabilize, coupled with limited new commodity pulp production capacity, supply and demand may basically balance, and prices are expected to rise moderately. In terms of finished paper, the short-term competitive landscape is improving moderately, and paper prices are rebounding gently; in the medium term, the supply-demand relationship for boxboard/corrugated paper is expected to ease, with price centers expected to stabilize and rise, while supply-demand pressures in the pulp and paper sector still exist, with leading companies expected to continue to expand their competitive advantages through integrated forestry, pulp, and paper operations.

Bulk Paper: It is recommended to pay attention to Sun Paper (002078.SZ) which is solidifying its underlying profits, and to focus on Nine Dragons Paper (02689), Shanying International (600567.SH), Bohui Paper (600966.SH), Yueyang Forest and Paper (600963.SH), and Chenming Paper (01812,000488.SZ).

Specialty Paper: It is recommended to pay attention to Xianhe Co., Ltd. (603733.SH), Huawang Technology (605377.SH), and Wuzhou Special Paper (605007.SH) which have diverse products, excellent anti-cyclical capabilities, and strong growth momentum, as well as Guanhao High-tech (600433.SH), Hengda New Materials (301469.SZ), and Qifeng New Materials (002521.SZ) Consumption: Seizing the Growth of Scarce Prosperity and Share-Enhancing Consumer Stocks

With pro-cyclical policies in effect, traditional consumption is expected to stabilize and recover; amidst structural changes, self-indulgent consumption is gradually rising, with consumers' demand for emotional consumption, intelligence, and health rapidly increasing. Trends in trendy toys, millet, and pets are flourishing. We are optimistic about share-enhancing directions, as domestic brands in sanitary napkins, toothpaste, pet food, and baby care achieve share leaps through quality products, meticulous channel control, and precise marketing.

We recommend paying attention to Bull Group (603195.SH) and Morning Light Co., Ltd. (603899.SH) for the expected recovery of traditional consumption, and to Baiya Co., Ltd. (003006.SZ), Dengkang Oral (001328.SZ), Yadea Holdings (01585), Aima Technology (603529.SH), Mingyue Lens (301101.SZ), GuaiBao Pet (301498.SZ), Smoore International (06969), KANAT Optical (02276), Ninebot Company-WD (689009.SH), Doctor Glasses (300622.SZ), Runben Co., Ltd. (603193.SH), Zhongchong Co., Ltd. (002891.SZ), Beijia Clean (603059.SH), Petty Co., Ltd. (300673.SZ), Haoyue Nursing (605009.SH), and Qixin Group (002301.SZ), among others.

Exports: Orders Continue to Improve, Global Supply Structure Reshaped

In the short term, the certainty of export performance realization is high. The overseas terminal demand in 2025 is robust, and replenishment demand is expected. The bank anticipates that companies capable of upgrading performance expectations or strengthening growth logic will still have upward valuation space. In the cycle of de-globalization, individual stock valuations are expected to diverge. Companies that rely on efficient global supply chain layouts and brand expansion will continue to increase their share of global manufacturing, with expected upward adjustments in valuation centers.

For quality targets on pullbacks, we suggest focusing on Yongyi Co., Ltd. (603600.SH), Craft Home (301061.SZ), Gongchuang Lawn (605099.SH), which have sufficient overseas layouts, as well as Jiayi Co., Ltd. (301004.SZ), Hars (002615.SZ), Zhiou Technology (301376.SZ), Henglin Co., Ltd. (603661.SH), and others with enhanced overseas layouts, including Xidamen (605155.SH), Yiyi Co., Ltd. (001206.SZ), Yuma Sunshade (300993.SZ), Haoyang Co., Ltd. (300833.SZ), Tianzhen Co., Ltd. (301356.SZ), Yingpais (002899.SZ), and Yingke Recycling (688087.SH) for structural growth.

Packaging: Metal Packaging Integration Approaches, Yutong Technology & Yongxin Co., Ltd. Steady Dividends

Metal Packaging: The capital expenditure and profitability of the two-piece can industry are at a cyclical low, and industry consolidation is expected to catalyze pattern improvement. Short-term profitability is still affected by weak downstream demand, while mid-term industry synergy is expected to drive an increase in profitability centers.

Paper Packaging: With the nationwide coverage of the old-for-new exchange increasing, the 3C packaging industry is expected to benefit. Yutong Technology (002831.SZ) continues to show steady growth in various businesses in the short term, with the mid-term 3C new product cycle and old-for-new exchange driving a rebound. Long-term overseas layout deepening, digital intelligence capability enhancement, and business boundary expansion are all expected to drive the company's share increase Plastic Packaging: Yongxin Co., Ltd. (002014.SZ) has diversified downstream industries and customers, accompanied by gradual improvement in consumer demand and strengthened high dividend attributes. It is recommended to pay attention to Yongxin Co., Ltd., Yutong Technology, Baosteel Packaging (601968.SH), Shengxing Co., Ltd. (002752.SZ), Aorijun (002701.SZ), Xinjufeng (301296.SZ), and Jiamei Packaging (002969.SZ).

New Tobacco Products: Positive policy outlook, accelerated product iteration, core suppliers benefit

Leading tobacco companies continue to increase investment in the new tobacco sector, expanding their product matrix, accelerating the iteration of product types/technology paths, and continuously expanding coverage areas (BAT launched the HNB upgraded series GloHilo; PMI expects IQOSILUMA25H2 to obtain FDA authorization). Future growth is expected to be better, and the market share of leading brands/manufacturers is likely to continue to rise.

It is recommended to pay attention to Smoore International (06969), which is deeply bound to global major customers and has strong technical barriers, as well as Yingqu Technology (002925.SZ), which is deeply bound to global HNB leader Philip Morris International and has upgraded its supply position.

Risk Factors: Domestic and overseas consumption recovery may be less than expected, global trade frictions intensify, real estate sales recovery is below expectations, raw material prices fluctuate significantly, and new tobacco policy risks