In-depth Analysis of Investment Value in Discretionary Consumer Goods Amid Weak Chinese Consumption

2025年11月中国经济数据呈现出令人担忧的消费疲软态势：

• Total Retail Sales of Consumer Goods
  : Only 1.3% year-on-year growth, hitting a new low since the pandemic impact [3]
• Industrial Value Added
  : 4.8% growth, the lowest level in recent months [1]
• Segmented Consumption Data
  : Auto category down 8.3%, home appliances and audio down 19.4%, furniture down 3.8% [1]

These data reflect that China is facing the core challenge of

, as stated in official statistics: “There are many external unstable and uncertain factors, insufficient domestic effective demand, and the economic operation faces many challenges” [3].

China’s economy has faced

, with both consumer prices and producer prices experiencing persistent deflation [1]. This deflationary environment poses a double blow to discretionary consumer goods:

1. Consumers postpone purchases, expecting lower prices in the future
2. Corporate profit margins are compressed, affecting long-term investment and product innovation

From the chart, the differentiated performance of different discretionary consumer goods segments can be clearly seen:

• Stock Price Performance: Down 16.44% since 2024, significantly underperforming the market [0]
• Current Valuation: P/E ratio of 19.94x, market capitalization of 1.80 trillion yuan [0]
• Financial Health: ROE as high as 36.48%, net profit margin of 51.51%, showing strong profitability [0]

• Current Valuation: P/E ratio of 13.47x, relatively more reasonable than Moutai [0]
• Market Capitalization: 440.16 billion yuan, about 1/4 of Moutai [0]

The core challenges facing the liquor industry are:

1. Shrinkage of Social Consumption
   : Traditional scenarios like business banquets and gift consumption are shrinking
2. Consumption Downgrade Trend
   : Consumers are shifting from high-end to mid-end products
3. Inventory Pressure
   : Distributors have high inventory levels, and channel confidence is insufficient

• Stock Price Performance: Up 47.30% since 2024, excellent performance [0]
• Valuation Level: P/E ratio of13.60x, in a reasonable range [0]
• International Layout: Overseas business contributes significantly, hedging against weak domestic consumption

• Valuation Advantage: P/E ratio of only7.20x, with strong safety margin [0]
• Business Concentration: Relatively dependent on the domestic market, more directly affected by weak consumption

The home appliance industry shows stronger resilience compared to the liquor industry, mainly due to:

1. Stronger Rigid Demand Attribute
   : Replacement demand is relatively stable
2. Significant Overseas Expansion Results
   : Companies like Midea have successfully implemented global layouts
3. Product Innovation Driven
   : New growth points like smart home and energy conservation and environmental protection

Since June 2024, the A-share market has had an independent trend, with the Shanghai Composite Index rising from 3085.98 points to3870.28 points, an increase of25.41% [0]. However, this rise mainly relies on:

1. Policy Expectation Support
   : Market’s continuous expectation of steady growth policies
2. Relatively Ample Liquidity
   : The central bank maintains a moderately loose monetary policy
3. Valuation Repair Demand
   : Value regression after long-term undervaluation

According to the latest policy signals, China’s economic policies in 2026 will have the following characteristics [4]:

:

• Fiscal deficit ratio may remain around 4%
• Full-year interest rate cut space is about 20 basis points
• Scale of consumer goods trade-in remains at about 300 billion yuan [4]

:

• Shift from “unconventional counter-cyclical adjustment” to “increase counter-cyclical and cross-cyclical adjustment efforts”
• Emphasize the “sustainability” and “long-term effects” of policies [4]

:

• New emphasis on the “expectation management mechanism”
• Reflects the decision-makers’ high attention to insufficient demand and low confidence [4]

:

1. Irreplaceable Brand Premium
   : Solid status as the national liquor
2. Supply Scarcity
   : Capacity expansion is limited, and supply-demand structure is relatively healthy
3. Ample Cash Flow
   : Financial analysis shows low debt risk and strong cash flow [0]

:

• Short-term: Focus on the actual effect of volume control and price protection strategies
• Medium-term: Focus on consumption scenario recovery and channel inventory de-stocking
• Long-term: Moutai has the ability to cross cycles, but requires entry at a reasonable valuation

:

1. Increased Share of Overseas Revenue
   : Effectively hedges against weak domestic consumption
2. Complete Product Matrix
   : Complete layout from small home appliances to industrial automation
3. Excellent Management Efficiency
   : ROE reaches20.25%, showing excellent management capabilities [0]

:

• Optimistic about leading enterprises with global capabilities
• Focus on new growth points brought by intelligent and green transformation
• Relatively reasonable valuation, with allocation value

Current market expectations for policies have been fully reflected in stock prices, and the marginal effect of future policies may decline:

1. Limited Policy Space
   : Fiscal deficit ratio is already at a relatively high level, and there is limited room for further significant easing
2. Declining Transmission Efficiency
   : The transmission efficiency of monetary easing to the real economy decreases in a deflationary environment
3. Prominent Structural Problems
   : Weak consumption is more structural than cyclical

It is expected that the market may see re-calibration between fundamentals and stock prices at the following time nodes:

1. Q1 2026
   : Two Sessions policy implementation, market expectations are verified or revised
2. Q2 2026
   : Consumption peak season arrives, testing the actual strength of consumption recovery
3. H2 2026
   : Real estate policy effects appear, and related consumption chains may benefit

:

1. Reduce over-reliance on policy-driven factors
2. Focus on leading companies with strong performance certainty
3. Control positions to prevent risks of expectation failure

:

1. Layout consumer goods leaders with global capabilities
2. Focus on structural opportunities brought by consumption upgrade and product innovation
3. Focus on enterprises with reasonable valuation and stable cash flow

:

1. Liquor: Moutai has long-term allocation value, but needs to wait for a reasonable valuation
2. Home Appliances: Optimistic about companies like Midea that have succeeded in overseas expansion, focus on technological upgrade dividends
3. New Consumption: Focus on cost-effective brands and emerging consumption scenarios amid consumption downgrade

1. Policy Effect Below Expectations
   : Steady growth policies are not transmitted smoothly, and consumption recovery is slow
2. Global Economic Recession Risk
   : Deteriorating external demand affects export-oriented consumer goods enterprises
3. Geopolitical Risk
   : Intensified trade frictions affect global layout
4. Real Estate Risk Transmission
   : Persistent real estate downturn affects related consumption chains

Against the background of current weak consumption and divergence between policy expectations and fundamentals, investors need to:

1. Re-evaluate Valuation Framework
   : Shift from policy-driven to fundamental-driven
2. Focus on Structural Opportunities
   : Seek opportunities in segmented fields amid overall weakness
3. Value Cash Flow and Dividends
   : Choose targets with higher certainty in an uncertain environment
4. Balance Short-term and Long-term
   : Prevent short-term volatility risks while seizing long-term investment opportunities

: Consumer goods leaders with global capabilities like Midea Group, and Kweichow Moutai at a reasonable valuation level. At the same time, maintain a cautious position to prevent market adjustment risks caused by policy expectation failure.

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[0] Gilin API Data - Real-time stock quotes, historical price data, financial indicators, market indices, etc.
[1] Yahoo Finance - “Nomura says China’s November economic data is worse than expected, GDP to slow to 4.1% in H1 next year” (https://hk.finance.yahoo.com/news/野村指內地11月經濟數據遜預期-料明年上半年gdp放緩至4-1-082547301.html)
[2] Yahoo Finance - “Calls for RMB appreciation surge, exchange rate management triggers rare public discussion” (https://hk.finance.yahoo.com/news/人民幣升值呼聲高漲-匯率管理引發罕見公開討論-010421339.html)
[3] Yahoo Finance - “China’s November retail sales slow to 1.3%, lowest record since pandemic impact” (https://hk.finance.yahoo.com/news/中國11月零售銷售減速至1-3-疫情衝擊以來最低紀錄-024729839.html)
[4] Yahoo Finance - “Analysis expects China’s policy stimulus intensity next year to be similar to this year, economic growth target maintained at about 5%” (https://hk.finance.yahoo.com/news/分析料內地明年政策刺激力度與今年相若-經濟增長目標維持約5-223208005.html)
[5] Bloomberg - “China’s Consumer Frailty Leaves Economy Exposed to Trade Jitters” (https://www.bloomberg.com/news/articles/2025-12-15/china-s-retail-sales-weaken-to-worst-since-covid-as-growth-slows)
[6] WSJ - “China’s Economy Is Deteriorating on Several Fronts” (https://www.wsj.com/world/asia/chinas-economy-is-deteriorating-on-several-fronts-6d0a4a9b)