According to a research report by Caitong Securities, the light industry's growth next year will primarily stem from overseas capacity expansion and increased penetration of global new consumption categories. Some sectors, after rapid overseas capacity expansion in 2024-2025, may achieve operational improvements by 2026, driving revenue and profit back to growth. Meanwhile, new consumption categories, due to their inherent alpha attributes, are less affected by macroeconomic factors. Domestic business-related industries will significantly benefit from the recovery of the real estate market; if the property market bottoms out and stabilizes next year, the related supply chain is expected to see a broad-based rebound.
Key insights from Caitong Securities include: - **Pet Industry**: The pet sector remains highly prosperous, with alpha opportunities emerging amid high growth. Companies like Yuanfei Pet focus on brand breakthroughs, while Yiyi Co. accelerates brand coverage through M&A, both showing promising potential. - **Personal Care**: The domestic market is growing steadily, with product strength becoming critical. Companies with diversified product portfolios are more likely to create hit products and convert traffic. Overseas, shifts in global supply chains by P&G and Kimberly-Clark present opportunities for Chinese suppliers to become global partners. - **Export Chain**: Capacity ramp-up and overseas new consumption offer growth avenues. Due to supply chain stability demands, overseas clients are urging manufacturers to expand production abroad, benefiting select firms. Cost-effective and innovative new consumption categories are also gaining traction. - **Real Estate Chain**: Premiumization and overseas expansion are key growth drivers. Zhibang Home has partially offset domestic declines with overseas development, while Holike Home's premiumization efforts are paying off. - **Paper Industry**: Recent price recovery is driven by apparent demand and rising costs, but weak end-demand and inventory buildup may lead to corrections. The sector remains in a capacity digestion phase, with supply-demand balance expected around 2027. Effective "anti-involution" policies could accelerate the inflection point.
Recommended stocks: - **Paper**: Sun Paper, Bohui Paper, Xianhe Paper, Yuto Packaging. - **Home Furnishing**: Oppein, Kuka Home, Sophia, Zhibang Home, Golden Home, Holike Home. - **Others**: Jiangxin Home, Jieya Co., Henglin Home, Yongyi Co., Yiyi Co., Yuanfei Pet, Jiayi Co., Haers. - **Tobacco & Tech**: Smoore International, China Tobacco Hong Kong, RLX Technology. - **E-Vehicles**: Yadea, Aima Tech, Ninebot, Niu Technologies. - **Consumer Goods**: Dengkang Oral Care, Baiya Shares, Winner Medical.
Risks include slower-than-expected overseas capacity ramp-up, changes in international trade policies, intensified competition, and weaker-than-anticipated real estate demand recovery.
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