February 23, 2026 01:41 PM GMT China/Hong Kong Consumer | Asia Pacific Post-CNY F&B and Gold & Jewelry Channel Check Takeaways The call with a multi-categories distributor reflects improvement in demand in this CNY holiday season, which is in line with market expectation and our previous pre-CNY channel checks. Key Takeaways Liquor - Moutai and WLY saw growth YTD in the distributor's regions as lower pricing drove good volume. They have completed their Feitian Moutai orders for 1Q (40% of annual budget). La ...

Summary of China/Hong Kong Consumer Strategy Conference Call Industry Overview - The consumer sector in China/Hong Kong entered 2026 with a mixed setup after three years of underperformance, with no immediate catalysts for a broad-based turnaround [1][3] - Headline consumption is expected to remain soft, necessitating flexible strategies across different sub-categories [1][3] Core Insights - **Macro Environment**: The macroeconomic backdrop has not turned decisively, with policy expected to be reactive rather than proactive regarding property and consumption. A property shock is anticipated to moderate but not end in 2026 [3][22] - **Consumer Dynamics**: Wage and employment levels remain subdued, contributing to ongoing household deleveraging and a drag on labor income dynamics. High precautionary savings and low spending confidence are prevalent [3][22] - **Consumption Growth**: Consumption in 2026 is likely to stabilize at a low growth rate rather than re-accelerate significantly. Focus is on selective segment pricing improvements and better supply discipline [3][23] Market Expectations - **Sales Growth**: Overall consumer sales growth is expected to be around 6% in 2026, with a mixed margin profile due to rising costs in certain areas like hard commodities [4][31] - **Valuation**: Consumer stocks' average P/E ratio is stabilizing around 16x, reflecting a cautious market outlook for 2026 [4][31] Investment Opportunities - Four key investment areas identified: 1. Recovery in offline services consumption (restaurants and beer in Q2-Q3 2026) 2. Supply recalibration in upstream dairy and likely liquor in H2 2026 3. Pricing recovery in restaurants, beer in H1 2026, and sports/cosmetics/liquor in H2 2026 4. Overseas growth in OEM and IP products in H1 2026 [5][21] Key Stock Picks - Recommended stocks include: - **YUMC**: Positive same-store sales growth and traffic - **Haidilao**: Recovery in dine-in demand - **CRB**: Expected growth driven by Heineken's market share gains - **Mengniu and Yili**: Anticipated margin improvements due to reduced raw milk supply [9][13] Macro Indicators - **CPI Trends**: Headline CPI is expected to show low inflation, with selective segments starting to see mild upward pricing revisions [24][27] - **Wealth Effect**: The wealth effect is differentiated across income cohorts, with higher-income groups showing improved spending intentions due to healthier balance sheets [27][31] Risks and Challenges - **Consumer Confidence**: The overall consumer sentiment remains fragile, with market sensitivity to marginal changes [20][22] - **Policy Limitations**: Current consumption-related policies are focused on protecting downside rather than stimulating growth, with limited fiscal support expected [22][27] Conclusion - The consumer sector is navigating a challenging macro environment with cautious optimism for selective recovery in certain segments. Investment strategies should focus on identifying pockets of resilience and potential growth areas while being mindful of the broader economic constraints.

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Summary of the Conference Call Industry Overview - **Sector**: China Consumer Sector - **Key Themes for 2026**: 1. **Lukewarm Demand**: Overall retail sales growth slowed to 1.3% YoY in November 2025, down from 2.9% in October 2025, with forecasts of 2.6% growth in 2026 and 2.5% in 2027, reflecting a deceleration in GDP growth to 4.5% in 2026 and 4.1% in 2027 [10][10] 2. **Price Deflation**: Persistent price deflation in consumer products, with significant price drops in categories like apparel and catering, impacting overall industry profitability [10][10] 3. **Consumer Preferences**: Young adults are prioritizing differentiated design, experience, and social value in their purchases [2][2] 4. **Overseas Expansion**: Companies are expected to expand internationally to counteract slow domestic growth, facing operational risks such as tariffs and supply chain management [10][10] 5. **Aging Demographics**: Challenges and opportunities arise from an aging population, with a decline in birth rates and a growing proportion of individuals over 65 years old [10][10] Financial Projections - **Earnings Growth**: Sector sales and earnings are projected to grow by 7.1% and 12.2% YoY in 2026, respectively, with a projected earnings CAGR of 10.3% from 2025 to 2027 [6][6] - **Valuation**: China consumer stocks are trading at 17x 2026E P/E, compared to ASEAN's 19x, Japan's 28x, and India's 54x, with a dividend yield of 4.2% [6][6] Investment Recommendations - **Top Picks**: - **Laopu**: Expected to benefit from experience-led growth with a disciplined store count and strong earnings growth of 40% in 2026 [20][20] - **Luckin**: Forecasted to achieve a 28% increase in net profit, driven by a consumer-centered vision and strong digitalization [20][20] - **Guming**: Anticipated to net add 3.3k stores in 2026, with a 20% YoY increase in core net profit [20][20] - **Mao Ge Ping (MGP)**: Positioned to benefit from experience-driven consumption trends, expecting 30% earnings growth in 2026 [20][20] - **YUMC**: Strong growth expected from KFC and a turnaround for Pizza Hut, with a target of 30K stores by 2030 [20][20] - **Pop Mart**: Despite recent stock price declines, expected to maintain strong earnings with a focus on new product launches [20][20] - **Top Avoids**: - **Bud APAC**: Concerns over weak consumption sentiment and high-end market exposure, with forecasts of declining sales and EBITDA [27][27] - **Yanghe**: Risks associated with channel inventory build-up and rising competition [27][27] Additional Insights - **Consumer Behavior**: Consumers are expected to continue spending on affordable treats and differentiated products, with a focus on experiences rather than price [10][10] - **Market Dynamics**: Increased competition is leading to accelerated consolidation within the industry, with leaders expected to gain market share through cost-saving initiatives and digital technologies [10][10] - **Demographic Trends**: Marriage registrations dropped significantly, indicating a shrinking young population and potential further declines in birth rates [12][12] This summary encapsulates the key points from the conference call, highlighting the current state and future outlook of the China consumer sector, along with specific investment recommendations and potential risks.

Summary of Conference Call Records Industry Overview: China Consumer Staples Key Themes and Trends 1. **Cautious Outlook for 2026**: The industry is observing a cautious outlook into 2026, with a focus on the trends surrounding the Chinese New Year (CNY) [2] 2. **Mixed Performance in Beverages**: - Nongfu and Eastroc maintained strong momentum with double-digit growth despite being in a slack season, driven by strong product cycles [1] - Tingyi and UPC beverages experienced a decline in December due to heightened competition, although subsidies for freshly-made drinks have retreated [1] 3. **Beer Demand**: - Overall beer demand remains subdued, particularly in on-trade channels, with Bud China seeing a deeper sequential decline [1] - CR Beer and Chongqing Brewery managed slight volume growth, while Tsingtao's volume increased by 12% on easier comparisons [1] 4. **Condiments and Frozen Foods Recovery**: - Haitian reported sustained growth in the mid-single to high-single digits, with a faster quarter-on-quarter growth in Q4 [1] - Anjoy's growth accelerated in December despite a higher base, indicating a favorable setup for Q1 [1] 5. **Dairy Sector Stabilization**: - Liquid milk demand is stabilizing after a period of destocking, with herd downsizing settling at a 4.5% year-over-year decline [1] - Raw milk prices held steady at approximately Rmb3.03/kg in December, with a 3.0% year-over-year decline in average prices for Q4 [1][24] Company-Specific Insights 1. **Yili**: - Management highlighted an improving raw milk supply-demand balance supported by herd downsizing, although demand remains lackluster [2] - The company is focusing on channel inventory discipline and targeted marketing to sustain performance [8] 2. **Haitian**: - Noted a sequential acceleration in Q4 and sees potential for consumption upgrading in chained restaurants [2] 3. **Anjoy**: - Resumed double-digit sales growth since September, driven by enhanced execution and channel strategies [8] 4. **CR Beer**: - Expects no incremental SG&A investment impact in 2026, focusing on maintaining margins amid cost pressures [8] Market Dynamics 1. **Expense Outlook**: - The expense outlook remains cautious, with a focus on margin expansion for beer, dairy, and food & beverage sectors amid diminishing cost benefits [8] 2. **Channel Health**: - Companies are making efforts to sustain channel health throughout 2025, which is expected to underpin recovery in 2026 [8] 3. **New Product Cycles**: - A sequentially improving outlook for both Yili and Mengniu is anticipated, supporting volume and margin accretion [8] Investment Preferences 1. **Preferred Sectors**: - Beverage, pet foods, and condiments/prepared foods are highlighted as sectors with potential for growth [9] 2. **Key Stock Ideas**: - Recommendations include Eastroc, Nongfu, Weilong for visible growth, and Haitian H-shares/Anjoy as early beneficiaries of on-trade recovery [9] Additional Insights 1. **Snacks Performance**: - Weilong sustained strong sales growth in December, with vegetable snacks up over 30% year-over-year [1] 2. **Pet Foods**: - China Pet Foods led in year-over-year growth in December, while other covered names weakened compared to previous months [32] This summary encapsulates the key points from the conference call records, providing insights into the current state and future outlook of the China consumer staples industry.

Summary of the Conference Call on China Consumer Sector Outlook 2026 Industry Overview - The focus is on the **China consumer sector** with an emphasis on stock picking strategies for 2026E, balancing "value" vs "growth" investments [1][11] - Anticipation of a less inflationary environment and low expectations for immediate consumption boosts from government policies [1][11] Key Investment Themes 1. **Shift Towards Experience/Service Consumption** - Consumers are increasingly valuing emotional experiences over basic needs, seeking happiness and self-expression [2][23] - 66% of respondents in a survey indicated a willingness to spend more for special moments [23] - Notable examples include Pop Mart's affordable entertainment options and Haidilao's casual dining as social venues [2][23] 2. **Focus on Well-being** - Increased spending on wellness, including health, fitness, and nutrition [3] - Growth potential identified in sportswear (Anta), health supplements (H&H), beauty care (Mao Geping), and tourism (Atour) [3] 3. **Rising "Silver" Economy** - The aging population is creating demand for leisure and cultural experiences [4] - Industries like tourism (Atour, H World), sportswear (Anta), and health supplements (H&H) are expected to benefit [4] 4. **Emerging New Channels** - Growth in omni-channel operations and new offline channels such as membership stores and snack specialty chains [5] - Food companies like Eastroc and Nongfu are adapting to these changes [5] 5. **Multi-brand Strategy** - Industry leaders are expanding brand portfolios to meet diversified consumer demands [6] - Companies like Anta and Midea are revising growth targets to ease channel inventory pressure [6] Top Buys in Consumer Sector - **Consumer Discretionary**: Anta (2020.HK), Pop Mart (9992.HK), Haidilao (6862.HK), Atour (ATAT.O), Midea (300.HK) [1][14] - **Consumer Staples**: CR Beer (291.HK), Eastroc (605499.SS), Mao Geping (1318.HK) [1][14] Additional Insights - The report emphasizes the importance of sustainable profit growth amid a dynamic marketplace [1][11] - The analysis includes a pecking order of various consumer sub-sectors, highlighting the relative strengths of companies within those sectors [1][14] - The report also notes the potential for companies like Li Ning and Haitian to outperform in case of a better-than-expected recovery in consumption [1] Conclusion - The China consumer sector is poised for a transformation driven by changing consumer preferences towards emotional and experiential consumption, with significant opportunities identified across various industries and companies. The focus on well-being, the aging population, and the emergence of new channels are critical factors influencing investment strategies for 2026E [1][2][3][4][5][6]

Core Viewpoint - Constellation Brands is showing signs of recovery in early 2026 after a challenging 2025, with a notable rebound in stock performance and better-than-expected earnings results [2][6]. Financial Performance - In Q3 FY2026, Constellation reported net revenue of $2.22 billion, a decline of 10% year-over-year, but exceeded analysts' expectations by approximately $52 million [4]. - The company reported comparable earnings per share of $3.06, down about 6% from the previous year, yet significantly better than the consensus estimate of $2.63, which anticipated a 19% drop [4]. - The beer segment, which constitutes around 90% of revenue, experienced a sales drop of 1%, but this was an improvement compared to the broader beer industry, allowing Constellation to gain market share [5]. Market Dynamics - Despite a general weakness in the beer market, Constellation's beer business has consistently outperformed, leading the beer category in dollar share gains during Q1 and Q2 FY2026 [5]. - The operating margin for the beer segment increased by 10 basis points, indicating effective cost management amidst declining sales [5]. Investor Sentiment - Berkshire Hathaway has increased its stake in Constellation Brands, reflecting long-term confidence in the company's recovery potential despite the stock's previous downturn [6]. - As of January 8, 2026, Constellation shares have risen over 7% in the new year and have rebounded approximately 16% since hitting a low of around $128 in November 2025 [3].

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Economic Outlook - Richmond Fed President Tom Barkin indicated a "delicate balance" in monetary policy due to rising unemployment and elevated inflation [1] - Fed Governor Stephen Miran suggested that interest rates need to be lowered by more than a percentage point this year, claiming current monetary policy is "holding the economy back" [1] - The U.S. December S&P Global services PMI was revised down to 52.5 from 52.9 [1] Stock Market Performance - Wall Street's major indexes closed higher, with the S&P 500 and Dow reaching record highs [2] - Data storage companies saw significant gains, with Sandisk (SNDK) rising over 27% and Western Digital (WDC) climbing more than 16% [2] - Microchip Technology (MCHP) surged over 11% after raising its Q3 revenue guidance [2] - OneStream (OS) soared over 28% following a buyout agreement with Hg Capital for approximately $6.4 billion [2] - American International Group (AIG) fell more than 7% after announcing CEO Peter Zaffino's retirement [2] Oil Market - Oil prices declined after President Trump announced that Venezuela would turn over 30 million to 50 million barrels of crude to the U.S., contributing to an oversupplied market [3] Futures and Economic Data - March S&P 500 E-Mini futures were trending down 0.12% ahead of U.S. jobs data [4] - U.S. rate futures indicated an 83.9% chance of no rate change and a 16.1% chance of a 25 basis point rate cut at the January FOMC meeting [4] Employment Reports - The U.S. ADP private payrolls report is anticipated, with economists forecasting a December Nonfarm Employment Change of 49K, compared to November's -32K [5] - The November JOLTs Job Openings are expected to be 7.610 million, slightly down from October's 7.670 million [5] Manufacturing and Services Data - The U.S. ISM Non-Manufacturing PMI is expected to be 52.2 for December, down from the previous value of 52.6 [6] - Factory Orders data for October is anticipated to drop 1.1% month-over-month, following a 0.2% rise in September [6] Crude Oil Inventories - The EIA's weekly crude oil inventories report is expected to show a decrease of 1.2 million barrels, compared to last week's decrease of 1.9 million barrels [7] Earnings Reports - Companies such as Constellation Brands (STZ), Jefferies Financial (JEF), and Applied Digital (APLD) are set to report quarterly figures [8] European Market Insights - The Euro Stoxx 50 Index fell 0.12% as energy stocks declined following a drop in oil prices [9] - Eurozone's annual inflation rate fell to the European Central Bank's target in December, suggesting stable monetary policy [10] - Germany's unemployment rate remained unchanged at 6.3% in December, with jobless numbers slightly increasing [10] Asian Market Developments - China's Shanghai Composite Index closed slightly higher, supported by increased trading volumes [13] - Semiconductor stocks outperformed, with analysts predicting significant gains for the MSCI China Index and CSI 300 Index in 2026 [13] - Japan's Nikkei 225 Index closed lower as investors took profits after a recent rally [14]

Core Insights - Molson Coors Beverage Company's outlook is primarily influenced by declining volumes in the beer industry, particularly in the United States, leading to a 3.3% year-over-year decline in consolidated net sales for Q3 2025 [1][10] - The company reported brand volumes fell approximately 4%-5% in Q3 2025, while the U.S. beer industry experienced a decline of about 4.7% [2][10] - Despite a net price realization improvement of around 1%-2%, it was insufficient to counterbalance the volume declines, prompting management to guide for a 3%-4% decline in net sales and a 12%-15% drop in underlying pretax income for 2025 [3][10] Industry Context - The volume challenges faced by Molson Coors are reflective of broader industry trends, including shifting consumer preferences, increased living costs, and reduced demand among lower-income consumers, alongside sluggish European markets [4][5] - The beer consumption landscape in the U.S. continues to be pressured, indicating that the industry slowdown may not be solely cyclical but could persist if demand does not improve [4][5] Strategic Response - In response to these challenges, Molson Coors is focusing on restructuring, prioritizing its portfolio, and investing in core and premium brands to stabilize performance [5] - However, unless there is a significant improvement in industry volumes, the ongoing volume decline is expected to remain the primary obstacle to the company's outlook for 2025, overshadowing effective pricing and cost control measures [5] Stock Performance - Molson Coors shares have decreased by 4.6% over the past six months, which is better than the Zacks Beverages - Soft Drinks industry's decline of 8.4% and the broader Consumer Staples sector's fall of 6.3% [6]