💰Reimagine Retail Sector with Yonghui Superstores, COST &Miniso

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China's retail sector is expected to benefit from policies and holiday shopping. Keep an eye on Gen Z's hype.

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Market recap

Over the past week, US stock markets experienced mixed results, with the S&P 500 declining by 0.64% while the Nasdaq rose by 0.34%.

• Market Watch: The upward momentum in US stocks is gradually weakening, as some investors are beginning to worry about overvaluation. Investors are closely monitoring the Fed's pace of rate cuts. On 13th, chip manufacturer $Broadcom(AVGO)$ 's stock soared over 24%, marking the largest increase in its history and becoming the ninth US listed company to surpass a marketcap of $1 trillion.

• Tech Tycoon: On 13th, $Apple(AAPL)$ CEO Tim Cook met with US President-elect Donald Trump at Mar-a-Lago for dinner. This was their first meeting since Trump's election victory. According to Bloomberg, to boost sales, Apple plans to introduce thinner iPhones (with downgraded camera lenses) and foldable products (to compete with Samsung and Huawei) starting next year.

• Upcoming Events: This Wednesday (December 18th), the Federal Open Market Committee will announce its interest rate decision, and on Friday (December 19th), the Fed's favored Core PCE Price Index will be released.

Timing's everything

Beijing has announced that China's GDP is expected to grow by approximately 5% this year, with domestic demand serving as the primary driver of economic growth. The Central Economic Work Conference has outlined that next year's focus will be on innovating diverse consumption scenarios and expanding service consumption.

Since the beginning of this year, the consumption market has shown a positive recovery trend, with various regions implementing policies to stimulate consumption. In the first 11 months, China's total retail sales of consumer goods reached 44.3 trillion yuan, an increase of 3.5% yoy.

Looking ahead, as policies to boost consumption gradually take effect, the retail sector is expected to continue benefiting. The macroeconomic environment and policy support provide favorable external conditions for the sector, making certain stocks highly valuable for investment.

Retail stores: to cope with recession

To whom it may concern: In China, Pangdonglai has been a sensation for the past two years. While traditional supermarkets struggle with low foot traffic, Pangdonglai stores are packed with crowds, including scalpers, personal shoppers, and regular customers. For Gen Z, Pangdonglai is more than just a supermarket; it's a cultural hype. Visiting Pangdonglai has become a trendy activity, with people shopping while live-streaming, creating a buzz both online and offline.

Yonghui Superstores (601933) $Yonghui Superstores Co.,Ltd.(601933)$ : The disciple

Yonghui has adopted the transformation model of the trendy supermarket brand Pangdonglai, revitalizing some of its stores and significantly boosting sales performance.

- This move has clearly contributed to a rebound in stock prices, with Yonghui Superstores' shares surging by over 145% since the beginning of the year.

- As of December 12th, Yonghui Superstores had only 790 stores nationwide, while 21 of them have been transformed and reopened across the country.

Miniso (9896.HK) $MINISO Group Holding Limited(MNSO)$ : The apostle

The group reported Q3 revenue of 4.52 billion yuan, marking a year-on-year increase of 19.29%. The gross margin was 44.9%, up by 3.1 percentage points, setting a new record.

- In September, Miniso acquired a 29.4% stake in Yonghui Superstores for 6.27 billion yuan.

- Miniso's founder, Ye Guofu, personally visited the transformed Yonghui stores influenced by Pangdonglai and, impressed by the customer enthusiasm and store renewal, recognized this as a key opportunity for Miniso's business model upgrade. Additionally, Ye Guofu has consistently expressed admiration for the American warehouse retail giant Costco, citing its high value-for-money and differentiated product strategy as keys to success.

Costco (COST) $Costco(COST)$ : The inspiration

Inspired by Costco, Pangdonglai is widely seen as benchmarks in the Chinese retail sector, its focus on consumer interests and exceptional operations achieving an outstanding level.

- This quarter, Costco's overall same-store sales growth was 5.2%. As a master of seasonal retail, the holiday season accounts for approximately 10.3% of the company's annual revenue. Costco's emphasis on trends and pricing has made it a go-to shopping destination for most households, with holidays boosting company performance.

- In Q3, Costco's sales grew 7.5% year-over-year to $61 billion. Membership fee revenue increased by about 8%. In September, Costco began raising its annual membership fees, and the 8% increase in fees is expected to have a positive impact on revenue.

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