CMSC: Clear Main Trends for Cost-effective Consumption and Consumer Overseas Expansion in 2024

Zhitong App learned that CMSC has released a research report stating that the main trends of cost-effective consumption and consumption going global in 2024 are clear, with strong growth potential and certainty. In the e-commerce sector, there is optimism about the growth space of online penetration driven by long-term technological innovation. PDD (PDD.US), Vipshop (VIPS.US), JD-SWR (09618), and Alibaba (09988) are recommended. In the retail sector, the high-speed expansion of bulk snack stores and the integration of the market landscape are recommended to be actively monitored, with a focus on Wanchen Group (300972.SZ). In the cross-border e-commerce sector, there is a prosperous market, and there is a vast market space for platform boutique sellers to build brand awareness and fully manage the blue ocean market. In the social services sector, there is a strong demand and accelerated recovery, and it is recommended to pay attention to opportunities for overseas and sinking market layouts.

The main points of CMSC are as follows:

The main trends of cost-effective consumption and consumption going global are gradually becoming clear, with strong growth potential and certainty. In 2023, domestic social retail will steadily recover, and the travel chain will be fully repaired, with short-distance and long-distance trips accelerating their recovery during the summer. In 2024, we should grasp the two main trends of cost-effective consumption and consumption going global: under the weak macroeconomic recovery in China this year, cost-effective consumption has become popular, and companies such as PDD, Luckin Coffee, and bulk snack stores have shown impressive growth in the cost-effective segment. The essence lies in optimizing the supply chain and improving overall efficiency to benefit consumers. The long-term growth potential of the cost-effective segment is promising. The cross-border market is recovering with high prosperity, and platforms and supply chain companies going global are significantly benefiting. The long-term growth space of the going global segment is driven by the vast market space of the cross-border market and the cost advantage supported by a strong domestic supply chain.

E-commerce: Steady improvement in penetration rate, price competitiveness becomes the focus, and technological innovation is expected to drive long-term growth. Since the beginning of this year, the e-commerce market has steadily recovered, and the online penetration rate has continued to increase year-on-year. The fundamentals of e-commerce companies have gradually improved. At the same time, under the trend of cost-effective consumption, low-price competition in the industry has intensified. From the perspective of market landscape, the impact of price competition on platform profits is generally controllable. It is expected that the overall stable pattern will be maintained. From the perspective of development space, the continuous improvement of technology and fulfillment efficiency will drive the growth of e-commerce penetration rate. PDD, Vipshop, JD-SWR, and Alibaba are recommended.

Bulk Snacks: High-speed expansion, market landscape integration, and active attention to Wanchen Group. From the perspective of the market, bulk snack stores are highly profitable and easy to replicate, meeting the multi-dimensional customer value of "more, fast, and save", and combining efficiency and growth potential. The industry currently has nearly 25,000 stores and is expected to maintain high-speed development next year. At the same time, the industry landscape is accelerating integration, and the long-term industry landscape is expected to become clear. It is recommended to pay attention to Wanchen Group, which is currently the leader in terms of scale, with significant advantages in supply chain and warehousing, and obvious brand potential after brand integration.

Cross-border E-commerce: Building brand awareness for platform boutique sellers, and the rise of fully managed models. The penetration rate of overseas e-commerce continues to increase, and China's export cross-border e-commerce is growing rapidly. In terms of models, platform sellers with the support of domestic supply chain advantages are vigorously going global, and there is a vast market space for fully managed models. From the trend perspective, China's supply chain advantages are solid, and policies and external environments continue to improve. It is recommended to build brand operation infrastructure through the construction of a large middle platform and small front-end architecture, and to construct the Alpha era of replicable brand incubation methodology, as well as to focus on research and development innovation and deepen the boutique strategy of the one-stop home brand for Zhiou Technology. Social Services: Strong supply and demand accelerate recovery, focus on opportunities for overseas and sinking market layout. With the comprehensive recovery of domestic travel demand in the past 23 years, OTA revenue has quickly recovered. It is recommended to continue to pay attention to the recovery of outbound tourism and the expansion of overseas markets. In terms of hotels, driven by leisure travel demand, the RevPAR of the hotel market in Q3 has recovered by 9-10% compared to 2019, with significant MoM increases in OCC and ADR. Chain hotel groups are leading in revpar among their peers, and the proportion of mid-to-high-end hotels continues to increase, with structural upgrades expected to drive long-term performance growth. In terms of catering, the business climate of chain catering has slightly declined since September, with a slight pressure on average customer spending. It is recommended to pay attention to the expansion of chain catering brands in the sinking market and the recovery of same-store sales.

Risk Warning: Macroeconomic risks, intensified industry competition, and systematic risks in the tourism industry.