Haitong International's must-choose consumer investment strategy for January: it is recommended to follow the rise in the short term and prefer the dairy industry in the long term

The Zhitong Finance App learned that Haitong International released a research report saying that during New Year's Day and the first trading day of the new year, the A and H markets rose markedly, and investors' risk appetite rebounded. If the style continues, the essential consumer sector is expected to follow the rise, but overall fundamentals lack a catalyst. Judging from the monthly data tracked, there were more worries than joys in the fourth quarter of '25, mainly reflected in the continued slump in demand in most industries and the gradual decline in cost dividends. Looking ahead to '26, the bank believes most industry fundamentals will continue these trends in the first half of the year. Among them, the dairy industry is expected to take the lead in recovering from the bottom, ushering in a “Davis double blow” in terms of performance and valuation; the bottom demand for liquor and the impact of leading strategies are uncertain, and purchases are still risky. Looking ahead to January, the bank suggests focusing on two main lines: one is in line with the high-risk appetite style; the other is in line with fundamentals and dividend rate improvement logic.

Haitong International's main views are as follows:

demand

Of the 8 must-choose consumer industries that we focused on tracking in December, 4 maintained positive growth and 4 maintained negative growth. Among them, the growing industries include condiments, frozen food, soft drinks, and restaurants; the declining industries include sub-high-end liquor, popular and lower liquor, dairy products, and beer. Compared with last month, with the exception of sub-high-end liquor and above, the year-on-year growth rate of all other industries improved in a single month. Among them, the condiments, soft drinks and catering industries are growing at an accelerated pace, mainly benefiting from policy support and rising consumer health awareness and demand for convenience. However, traditional categories such as liquor, beer, and dairy products continue to be under pressure due to weakening consumption intentions, competition for alternatives, and seasonal factors.

price

Most liquor prices stabilized in December. At the end of the month, the batch price of the Feitian full box, loose bottle, and Maotai 1935 was 1,600/1,590/640 yuan, compared to -50/+5 yuan last month, and -720/-660/-30 yuan in the same period last year. The general five batch price was 820 yuan, +20 yuan compared to the previous month, and -100 yuan compared to the same period last year. The batch price of Guojiao 1,573 was 850 yuan, compared to -5 yuan last month and -10 yuan compared to the same period last year. In December, condiments and soft drinks represented a decrease in product discounts, and increased discounts on liquid milk and convenience foods. Discounts on infant formula and beer have been stable.

cost

The December 6 consumer goods cost index had mixed ups and downs. The spot cost index for soft drinks/instant noodles/condiments/dairy products/frozen food/beer changed +1.06%/-0.29%/-0.45%/-0.54%/-1.05%, respectively, and the futures cost index changed +0.99%/-0.51%/-0.47%/+0.39%/-1.13%/+0.88%, respectively. Prices of cans/paper/plastic/glass changed +12.5%/+9.8%/-1.3%/-18.0% year over year. Vegetables/soybeans/sugar/palm oil prices were +10.7%/+9.8%/-14.2%/-14.6% year-on-year. The price of raw milk remained at 3.03 yuan/kg.

Funding

By the end of December, Hong Kong Stock Connect had a net capital inflow of 20.825 billion yuan in the same month (net inflow of $111,576 billion last month), and the essential consumer sector accounted for 5.61% of the market value, an increase of 0.2 pct over the previous month. Dairy products accounted for 16.7% of the market value of Hong Kong Stock Connect, an increase of 0.38 pct over the previous month; the food additives industry had a share of 13.7%, ranking second, with an increase of 0.48 pct over the previous month. According to the Hong Kong Stock Connect shareholding ratio, Tsingtao Brewery (48.4%) has the highest share of Hong Kong Stock Connect, followed by Youran Animal Husbandry (24.5%) and Andeley Juice (23.8%).

valuation

The historical PE quantile for A-share food and beverages at the end of December was 16% (20.3x), down 5 pcts from the end of the previous month. The lower sub-sectors were beer (0%, 19.9x) and liquor (11%, 18.0x), respectively. The median valuation of A-share food and beverage leaders was 22x (same as last month). The historical PE quartile of the H share essential consumer sector was 21% (18.1x), ranking 12th (flat) out of 12 tier 1 industries. The lower subsectors include packaged food (3%, 10.1x), alcoholic beverages (4%, 16.4x), etc. The median valuation of the H-share food and beverage leader was 15x (down 1x from the previous month).

Risk warning: Consumption is recovering slowly, foreign trade conflicts are affecting the economy, and the RMB is clearly depreciating.