Sinolink Securities released a research report indicating that the current performance of the light industrial manufacturing sector is diverging. The home furnishing and paper sectors have stabilized at their bottom, while new tobacco and packaging show steady upward trends. The trendy toys sector is showing positive turnaround signals, whereas the personal care segment faces some pressure.
**Key Views:** - **Home Furnishing:** The Central Economic Work Conference reiterated the focus on "boosting consumption to expand domestic demand," with follow-up measures to stimulate consumption. The NDRC emphasized stabilizing bulk consumption, trade-in programs, and green/smart upgrades, which will aid home furnishing demand recovery. - Exports: China’s furniture exports in November fell 8.83% YoY, narrowing to single-digit declines. Vietnam’s furniture exports rose 8.59% YoY, maintaining steady growth. - Regional breakdown: Exports to Southeast Asia grew steadily, remained stable to the EU, but softened to the U.S. (November shares: U.S. 10.23%, EU 14.27%, Southeast Asia 16.62%). - Outlook: Domestic demand remains weak but may recover with policy support. Overseas demand is expected to improve as the U.S. enters a rate-cut cycle.
- **New Tobacco:** - **Vapor Products:** BAT’s 2025 guidance noted 18 U.S. states have enacted vapor regulations, covering ~50% of tracked sales. Stricter enforcement against illegal products supports Vuse’s sales recovery. - **HNB:** BAT intensified promotions in Poland (e.g., Hilo starter kits at 1 PLN). Smoore, as BAT’s core supplier, stands to benefit from BAT’s smoke-free strategy. - **Oral Nicotine:** FDA approved ON! Plus nicotine pouches via PMTA, the second brand after ZYN to gain market access.
- **Paper & Packaging:** - **Pulp Prices:** As of Dec 18, domestic softwood/hardwood pulp prices rose to RMB 5,542/4,633 per ton (+40/+28 WoW). Global supply tightens as mills cut output to lift margins. - **Packaging:** Demand for food/beverage/tobacco packaging is recovering (Jan-Nov retail sales up 9.9%/1.0%/3.3% YoY). Metal packaging players like ORG Packaging benefit from industry consolidation and overseas capacity expansion.
- **Light Industrial Consumer Goods:** - **Personal Care:** Competition intensifies, with brands like Kans, Darlie, and Yunnan Baiyao leading in efficacy-focused segments. - **AI Glasses:** The sector is transitioning from niche to mass market, with Q3 global shipments up 74.1% YoY (audio glasses +287.5%).
- **Trendy Toys:** Leaders like Pop Mart (launching seasonal IPs) and Buluke (expanding adult segments) are deepening IP development and overseas expansion.
**Investment Recommendations:** - Home Furnishing: Oppein, Sophia, Kuka, DeRUCCI, ZBOM, Man Wah, Bull Group. - New Tobacco: Smoore, China Tobacco HK, U-trend. - Consumer Goods: Pop Mart, M&G, Dencare, Baiya. - Paper/Packaging: Yuto, Sun Paper, Yongxin, ORG Packaging. - Overseas Expansion: Jiangxin, Henglin, ZEUS, Loctek.
**Risks:** Slower-than-expected property completions, raw material price surges, weak new product adoption, FX volatility.
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