中国复苏态势良好

1、Table of ContentsChina back to spend 2: Recovery in better shape 3 HYPERLINK l _TOC_250003 On track to recover, but not even 3 HYPERLINK l _TOC_250002 Chinese twitter hot words reveal consumption trends 3 HYPERLINK l _TOC_250001 Consumption recovery at different paces 3 HYPERLINK l _TOC_250000 Accum

2、ulate on recovery 3On track to recover but not even 5Chinese Twitter hot words reveal consumption trends 8Consumption recovery at different paces 10E-commerce: strong recovery in March 11Delivery: Moderate recovery with caution 13China aviation: Traffic is gradually restoring 16Travel 18Auto 21Consu

3、mer 25Accumulate on recovery 33On track to recover but not evenJinfeng Shi of Credit Suisse Founder Securities Limited (“CSFS”) provided administrative and other support in the preparation of this research report that do not require a licence. CSFS is a Sino-Foreign joint venture between Founder Sec

4、urities Co., Ltd. and Credit Suisse AG. CSFS is not licensed to provide investment advisory service by the China Securities Regulatory Commission in the Peoples Republic of China.Gradual recovery of China consumption is on track, although there are still uncertainties related to the pandemic. After

5、the virus outbreak was brought under control, self-quarantine and travel restrictions have been gradually lifted, leading to huge pent-up consumption demand emerging. A V-shaped recovery, like the one seen post the SARS outbreak in 2003, is possible but still has many moving parts at this point, as

6、Chinas economic size and structure are very different from that of 17 years ago. China is much more connected with the rest of the world. If the SARS experience can offer any historical reference, retaliatory consumption, if any, would take at least 2-3 months to get in shape when consumer confidenc

7、e is restored.Due to the coronavirus outbreak and stringent social-distancing lockdowns, China Retail sales suffered the biggest decline on record in 1Q20. However, China has come up with plenty of stimulus packages to boost consumption at both the central and local levels, such as auto stimulus pac

8、kages, voucher handover, the trade-in of automobiles and household appliances.Nevertheless, caution remains given the economic challenges arising from the virus outbreak. According to a recent survey carried out by CS CQi team, consumers are still cautious on spending. Compared to February, consumer

9、s intention to dine out, travel, order food delivery or buy discretionary goods has seen little change in late March and early April. The share of respondents planning to purchase a big-ticket item in the next six months slid slightly to 18% in March. As of 9 April, CQis tabulation shows 48 provinci

10、al, city or county-level governments have announced voucher plans, amounting to Rmb6.4 bn in total with a focus on retail, dining- out, accommodation and tourism. However, CQi checks of actual spending by the panel indicated a limited multiplier effect, with the average leverage around 1.2.Figure 8:

11、 When the epidemic is over, you want to the following spending YoY Source: CQi is a product of Credit Suisse APAC Equities and not part of Credit Suisse Equity ResearchNBS released quarterly economic data on 17-Apr. Chinas 1Q20 GDP growth contracted by 6.8% YoY, missing the consensus of a 6% drop. I

12、t was the worst performance since at least 1992. However, some key economic indicators showed gradual recovery in March as work resumption accelerated. Industrial output declined by just 1.1% YoY in March, with remarkable improvement from 13.5% of decline in the first two months in 2020. Fixed-asset

13、 investment decreased 16.1% in the first three months, having narrowed from 24.5% drop in the first twomonths. We also saw a slow recovery of consumption, with contraction in retail sales narrowing to 15.8% YoY in March, from 20.5% YoY in 2M20. In inflation adjusted real terms, retail sales slumped

14、18.1% YoY, having narrowed by 5.6 percentage points compared to -23.7% drop of 2M20.Four out of five major sectors in retail sales demonstrated improvement in March versus the first two months in 2020, despite still being in negative territory. Gradual recovery of automobiles (accounting for 10% in

15、retail sales) helped but catering was still struggling.Auto gradually recovering but catering still struggling.Figure 9: Breakdown of total retail salesFigure 10: Monthly change of retail sales YoY growth in various sectorsSource: NBS, as of end-2019Source: NBSSix out of 15 subsectors in total regis

16、tered positive growth in March. Cereals oils & foodstuffs, beverage and daily necessities in consumer staples sector grew by 19.2%, 6.3% and 0.3% YoY respectively in March. Besides, medicine and office stationery also performed well with positive growth at 8.0% and 6.1%.More encouragingly, we observ

17、e a decent rebound in most of the subsectors, with overall retail sales improved by 3.3% in March from the first two months. Six out of 15 experienced a monthly improvement of over 10 percentage points in March YoY growth compared to 2M20s YoY figure, including auto, building & decoration materials,

18、 communication equipment, office stationery, gold & silver jewellery and furniture, with YoY growth rate changing by 18.9%, 16.6%, 15.3%, 15.0%, 11.0% and 10.8% respectively in March from the trough in 2M 20. Another five subsectorscereals oils & foodstuffs, medicine, petroleum products, daily neces

19、sities and tobacco & alcoholalso improved by over 5 percentage points from the previous two months.However, the catering and apparel sectors deteriorated in March, as government control measures were still in place and consumers concerns over safety still exist. The catering sector (accounting for 1

20、1.3% of total retail sales as of end-2019) further slumped to -46.8% YoY in March from -43.1% in 2M 20 YoY The apparel sector worsened with a plunge of 34.8% YoY in March, a further drop from the 30.9% YoY seen in 2M 20.Figure 11: Breakdown of consumer goods retail sales (above designated level)Figu

21、re 12: Monthly change of consumer goods retail sales (above designated level) YoY growth in various subsectorsSource: NBS, as of end-2019Source: NBSIt is worth mentioning that the online retail sales of consumer goods increased by 5.9% YoY in 1Q20, compared with 3.3% YoY in 2M20, reflecting the secu

22、lar trend of consumer behaviour in a shift from offline to online. Meanwhile, online retail sales accounted for 23.5% of total in 1Q20, 2 percentage points higher than Feb-2020. Online food retail rose by 32.7% for the first three months. An increasing number of retail and catering businesses will h

23、ave to develop their on-line business to offset the impact on off-line consumption.Shift from offline to online reinforced in March.Chinese Twitter hot words reveal consumption trendsTopics on Weibo, the Chinese-version Twitter, also reveal interesting and diverging trends in consumer behaviour and

24、demand. We tracked the frequency trend of six consumption-related words from1 January to date in “hot weibo”, which are automatically tagged by the system based on multiple factors including the number of forwards and likes.Obviously after being grounded or locked down for weeks, people cannot wait

25、to go out to play and shop when it is allowed. Suppressed consumer demand is gradually coming back. After mid-March, people started to talk more and more about short tours (“周边游”). This has come back to, or even exceeded, the pre-CNY level after April, particularly around the Ching Ming Festival, a

26、traditional festival for outings and mourning the deceased in the family. The recovery in short-haul tours could continue and lead the recovery of the whole leisure tourism industry. People are also doing more offline shopping. Similar to “short tours”, the frequency of the word “exploring shops” (“

27、探店”) also rebounded after 17 March, though it has not fully recovered to the pre-CNY level.Weibo keyword posts indicate suppressed consumer demand is gradually coming back.Figure 13: Keyword search周边游 (short tours)Figure 14: Keyword search探店 (exploring shops)Source: Weibo, Credit Suisse estimates re

28、searchSource: Weibo, Credit Suisse estimates researchFigure 15: Keyword search眼影 (eye shadow)Figure 16: Keyword search买车 (car purchase)Source: Weibo, Credit Suisse researchSource: Weibo, Credit Suisse researchSome consumer demand, like cosmetics, is more resilient. The word “eye shadow” (“眼影”) has r

29、ebounded continuously, having reached around the pre-CNY level after a fast decline in January. Our empirical experience is that KOLs (key opinion leaders) have big influence overcosmetics purchases now. When people spent more time online during the Covid-19 outbreak, their online cosmetics purchase

30、s were not impacted as much as the off-line after the initial shock.Rising keyword posts of “car purchase” ( “ 买车” ) demonstrates that people are responding positively to the stimulus policies announced in February and March, in spite of still sluggish car sales up to March. The word count bottomed

31、during the week of CNY and then steadily recovered afterwards, with two surges in the week of 17 March and 7 April. Understandably more people would like to purchase their own vehicles instead of taking public transportation, for increasing health and safety reasons. The ease of quota control in cer

32、tain regions has apparently sparked a desire for car purchases. We observed the word “plate drawing” (“摇号”) is also a hot word on Weibo and often appears together with “car purchase”. We believe that stimulus policies targeting car purchase will work well.Figure 17: Keyword search烤箱 (ovens)Figure 18

33、: Keyword search点外卖 (ordering food delivery)Source: Weibo, Credit Suisse researchSource: Weibo, Credit Suisse researchConsumption recovery at different pacesThe e-commerce space has seen a pretty strong recovery in March, at a pace faster than expected. MAUs on all major platforms exceeded the level

34、s in Dec-2019, more so MAUs of Taobao and JD which nearly match the November peak (Double-11), according to QuestMobile. State Postal Bureau reported parcel volume growth of 23% YoY in March, a strong rebound from a 10% YoY decline in 2M20, lifting 1Q20 volume to Rmb12.5 bn (or +3% YoY). Among the i

35、tems purchased, personal care/health products, consumer electronics and sportswear products were more resilient than discretionary consumption including apparel, footwear and luxury products.The delivery sectors user traffic has gradually started to pick up after the CNY week and is now back to 75-8

36、0% of the pre-breakout level, with order demand gradually back to par in April and likely to resume growth in May. We observe several structural benefits including more user acquisition, more restaurants onboard the platform, new ways for food delivery (contact-fee delivery) that improves efficiency

37、, digitalisation of the restaurant industry and grocery delivery as a new opportunity.Air traffic is on the way to normalising from here and passenger yield should gradually recover into 2H when more flights are operating back at economic load factors. Domestic traffic is set to pick up from May and

38、 recover in August while international recovery will likely take more time. Capacity is set to gradually recover to no more than 75% in April, and then 85% by late June and 95% by August, from about 47% currently. We see some pent-up demand for upcoming holidays. Domestic standard ticket prices are

39、stabilising from deep discounts. Airports will also benefit from domestic recovery but weak international traffic will continue to drag the non-aero segment. We see travel recovery (with base case assumption of timeline) in the order of: (1) intra-city leisure tour, (2) domestic short haul (May/June

40、), (3) domestic long haul (3Q20), and(4) lastly outbound (4Q20 at the earliest).Chinas passenger vehicle sector sales enjoyed sequential improvement in March, thanks to fast recovery in dealer level retail demand as different local governments gradually lifted the lockdown and restrictions. We expec

41、t auto demand to rebound strongly when stimulus policies come out after the COVID-19 situation is under control. China Passenger Car Association (CPCA) also forecasts the YoY growth to further improve to 10-20% YoY decline in April, and back to positive growth from May onwards. As a result of the ce

42、ntral governments encouragement, local governments have launched a wave of stimulus polices to boost local auto consumption. Looking ahead, more stimulus measures at the central government level are in the pipeline including easing purchase quota control in select cities, vehicle purchase tax reduct

43、ion for small engine vehicles, phasing out heavily polluting vehicles. Thus, we expect passenger vehicle demand growth to bottom out from 2Q20, resulting in a sharp margin recovery for car makers.Sportswear is still in the recovery phase though top brands like Li Ning and Anta have already had a goo

44、d run from the tough times during the pandemics peak given their strong brand momentum, superior channel distribution, financial strength and the potential to gain market share through consolidation. Baiju should be the biggest beneficiary and the most defensive player in the infrastructure-related

45、theme. Consumers are becoming more health-conscious and shifting from dine-out to eating at home, benefiting small kitchen appliances. The white goods subsector may need stronger stimulus packages on home appliance or property market to trigger outperformance, with overseas as the recent weak spot.E

46、-commerce: strong recovery in MarchIn general, the e-commerce space has seen pretty strong recovery in March, at a pace faster than expected. MAUs on all major platforms exceeded the levels in Dec-2019, more so the MAUs of Taobao and JD which nearly match the Nov peak (Double-11), according to Quest

47、Mobile. State Postal Bureau reported parcel volume growth of 23% YoY in March, a strong rebound from a 10% decline in 2M20, lifting 1Q20 volume to Rmb12.5 bn (+3% YoY).By category, we think personal care/health products, consumer electronics and sportswear are the more resilient categories throughou

48、t the pandemic. In particular, demand of working/learning/cooking at home during the quarantine drove a sales surge of electronic products, such as iPad and small home appliances; Nike reported over 30% YoY growth in China online sales from Dec-2019 to Feb-2020. That said, discretionary consumption,

49、 including apparel and footwear, as well as luxury products, has been weak and will still take time to recover. According to NBS data, apparel sales (from enterprises above designated size) fell 33% in 2M20, and stayed depressed at -34.8% YoY in March.Tina Long852 2101 7197 HYPERLINK mailto:tina.lon

50、g tina.longE-commerces recovery faster than expected.Figure 19: Weekly active usersFigure 20: Weekly average daily active usersSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchFigure 21: Weekly total time spentFigure 22: Average time

51、 spent per active userSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchE-commerceindividual platforms TaobaoFigure 23: Weekly active usersFigure 24: Weekly total time spentSource: Quest Mobile, company data, Credit Suisse researchSou

52、rce: Quest Mobile, company data, Credit Suisse researchTmallFigure 25: Weekly active usersFigure 26: Weekly total time spentSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchJDFigure 27: Weekly active usersFigure 28: Weekly total time

53、 spentSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchPinduoduoFigure 29: Weekly active usersFigure 30: Weekly total time spentSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suis

54、se researchVipshopFigure 31: Weekly active usersFigure 32: Weekly total time spentSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchDelivery: Moderate recovery with cautionThe delivery sector overall has seen active users and total ti

55、me spent plunging since CNY this year post the COVID-19 outbreak due to the shutdown of restaurants and worries about food contamination. User traffic gradually started to pick up after the CNY week and is now back to 75-80% of the pre-breakout level. We expect order demand to gradually go back to p

56、ar in April and likely resume growth in May. On the supply side, the majority of chain restaurants have already re-opened despite some of them only being able to provide a limited dining-in service. So, they are relying more on food delivery to be their revenue source. On top of the recovery of traf

57、fic, we believe there are several structural benefits including more user acquisition, more restaurants onboard the food delivery platform, new ways for food delivery (contact-fee delivery) that improves efficiency, digitalisation of the restaurant industry and grocery delivery as a new opportunity.

58、 It is worth noting that the user for grocery delivery traffic remains strong even into late March as people gradually got back to work.Kenneth Fong852 2101 6395 HYPERLINK mailto:kenneth.kc.fong kenneth.kc.fongOrder demand gradually back to par in April and likely to resume growth in May.Figure 33:

59、Weekly active usersFigure 34: Weekly average daily active usersSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchFigure 35: Weekly total time spentFigure 36: Average time spent per active userSource: Quest Mobile, company data, Credit

60、 Suisse researchSource: Quest Mobile, company data, Credit Suisse researchDeliveryindividual platforms Meituan WaimaiFigure 37: Weekly active usersFigure 38: Weekly total time spentSource: Quest Mobile, company data, Credit Suisse researchSource: Quest Mobile, company data, Credit Suisse researchEle