CITIC Construction Investment: Cultivating a Long-term Consumption Environment to Promote Service Industry Upgrading and Innovation

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that the continuous improvement of the social security system at this stage will help all consumer industries focus on putting people first and common prosperity, which is conducive to a moderate increase in price levels. From a long-term perspective, increasing residents' optimism about future expectations can promote an increase in the return rate of the service industry, help create a consumer environment, and promote a marginal increase in consumption tendencies from an internal circulation perspective. Consumption is still dominated by supply-side logic at this stage. Increased concentration is conducive to a recovery in return on assets and ultimately a positive cycle of shareholder returns.

CITIC Construction Investment's main views are as follows:

At this stage, the social security fund pool is abundant, and the policy design has a multi-pillar system

Both pension insurance and medical insurance have been actively reformed in recent years to advance the basic direction of poverty alleviation and mutual prosperity. Urban workers' basic pension insurance currently has a rollover balance of 7.4 trillion yuan, an enterprise annuity balance of 4.5 trillion yuan, a provident fund of 10.9 trillion yuan, and a national social security fund of 3.8 trillion yuan. Personal pensions have also been promoted nationwide, all of which provide a wide range of multi-pillar designs for urban social groups.

Create a good consumer interaction environment and enhance long-term consumer confidence

Along with the trend of industrial upgrading in China, some industries with low labor costs as the core need to be transformed, which is in line with the central government's general direction of improving quality and efficiency and counteracting internal circulation, and enterprises themselves have begun to pay attention to the positive externalities of society. The fairness of the competitive environment has improved from a cost perspective, and the treatment of high-quality enterprises and employees can also enter a virtuous cycle. Consumer demand has already transitioned from cost performance to quality to price. Fat Donglai and Sam also showed that demand for high-quality products and services still has great potential. The mutual achievement of the consumer environment and expectations can promote an increase in consumer tendencies and a steady increase in price levels.

Standardized enterprises continue to expand their competitive advantage, and business factors are skewed towards management and technology

In the past, the service industry had problems with many changes in enterprises and large turnover of personnel, but with the development of operational specialization, chainization and branding are inevitable trends. Product/service premiums brought by enterprises that can achieve a positive cycle through modern management and technology, and continuously improve scale advantages and healthy downstream relationships are the key to winning within the current consumer system.

Investment advice

1. Focus on the standardized and highly standardized chain business format, which can give full play to management advantages and scale effects in competition: Yum Sheng China, Huazhu Group, Yaduo, Guming, Bawang Chaji, Haidilao, and Ming Ming are very busy; 2. Focus on supply-side improvements and enter segments where barriers are gradually rising: Langzi Shares, Beautiful Garden.