The Zhitong Finance App learned that Huaxi Securities released a research report saying that under the pressure of rational consumption+inventory, traditional retail formats are embracing discount retail. It is expected to show an accelerated expansion trend, and long-term space will continue to open up. Overseas inflation is high, residents' purchasing power is declining, and the competitiveness of China's products based on supply chain advantages has increased overseas. While cross-border e-commerce is booming, competition in the industry is intensifying, but the advantages of leading companies on the operational side will gradually expand. Currently, Amazon has launched AI applications in various areas such as product selection analysis, IP protection, pricing, customer service support, and inventory management, which are expected to further enhance quality and efficiency.

▍ The main views of Huaxi Securities are as follows:

(1) 2023 review of the social services retail industry

Feature 1: “rational+emotion” consumption goes hand in hand: Chinese residents are more willing to save, are more rational when purchasing products, and are more aware of price comparison. The “price power” competition is fully reflected in several major promotions. At the same time, consumers are paying more attention to the emotional value brought by consumption, and categories such as concerts, trendy games, and jewelry have risen.

Characteristics 2: China's export boom continued throughout the year: China's exports were under pressure this year, but there was no shortage of structural highlights: 1) The growth rate of “Belt and Road” exports was significantly higher than the overall level, and Miao's exhibition revenue and profits were high; 2) Overseas inflation+personal income growth slowed, cost-effective consumption rose, and cross-border e-commerce enterprises experienced high growth in revenue and cost.

Feature 3: AI applications are flourishing: With the release of large-scale models from domestic manufacturers, AI is widely used in various retail and service industries such as e-commerce, exhibition, human resources, OTA, etc., to improve operational efficiency.

(2) 2024 outlook for the social services retail industry

1) The trend of cost-effective consumption continues, and the affordable circuit shows high growth: under the pressure of rational consumption+inventory, traditional retail formats are embracing discount retail. It is expected to accelerate expansion, and long-term space will continue to open up. Overseas inflation is high, residents' purchasing power is declining, and the competitiveness of China's products based on supply chain advantages has increased overseas.

2) Cross-border e-commerce competition intensifies, and AI penetration rate continues to rise: While cross-border e-commerce is booming, industry competition is intensifying, but the advantages of leading companies on the operational side will gradually expand. Currently, Amazon has launched AI applications in various areas such as product selection analysis, IP protection, pricing, customer service support, and inventory management, which are expected to further enhance quality and efficiency.

3) The recovery of entry/exit is accelerating, and the incremental contribution is worth looking forward to: due to multiple factors such as complicated flight resumption procedures, insufficient security capacity at overseas airports, and overseas security incidents, the resumption of inbound and outbound flights has been slow this year. With the liberalization of inbound and outbound group tours and the start of a new season, international flights are recovering at an accelerated pace, and we are optimistic about the increase in business brought about by the resumption of entry and exit.

4) Service-oriented consumption remains resilient, and business recovery may exceed expectations: Referring to leading overseas hotels, hotel demand remained resilient two years after the epidemic, and the business gap gradually narrowed.

(3) Investment advice

It is recommended to focus on the four main investment lines: 1) The bottom of procyclical expectations, focus on management improvement and valuation repair, and related beneficiary Jinjiang Hotel (600754.SH), etc.;

2) Personalized demand drives the rise of segmented racetracks, focusing on gold jewelry with both growth and defensive attributes, and trendy gaming sectors where IP value is constantly increasing;

3) Domestic products based on supply chain advantages are expected to continue to be booming, related companies' performance growth is highly deterministic, performance delivery is expected to continue to be verified by the market, and related beneficiaries include Miao Exhibition (300795.SZ);

4) Cost-effective consumption+inventory pressure+declining offline costs. The new offline retail format is expected to lead a new round of retail channel transformation. I am optimistic that the discount retail business will empower and improve the efficiency of traditional supermarkets, and related targets such as Jiajiayue (603708.SH).

Risk warning:

Increased industry competition, changes in foreign trade policies, large exchange rate fluctuations, etc.