中国消费（H/A）：BofA中国会议——人工智能 vs. 其他一切

elseIndustry OverviewWaning consumer interests; a bifurcated landscape During BofA China Conference in Shenzhen and Consumer Tour in Hangzhou/Qiandao Lake last week,we met >3o China consumer companies andvarious experts.Wehighlight key investor/expert feedback as follows. 1) Interests in China Consumer have China waned.Only two consumernames appeared in the Top 1o requested company list:BusyMing (#4) and Li Ning (#6), vs. six in our 2025 China Conference. Al/Tech, Industrials, EVand Materials dominated, each offering varying degrees of Al exposure. The marketappears to be bifurcated into two camps: Al vs. everything else. 2) Investors areconcerned with non-linear consumer recovery trajectory (especially weakness post CNYacross sectors) and rising cost pressures (from 2H26 onwards). 3) As easy comps willkick in soon, the market is anxiously monitoring high-frequency datapoints. 4) "Newconsumption" was a keymarket theme in 2025, while 2026 has been marked by a lack ofclear themes for China Consumer, though snack food discounters still appear to drawsignificant interest.Tidbits of different consumer segments ConsumerChen Luo, CFA >>ResearchAnalvstMerill Lynch (Hong Kong) +85235082009chen.luo@bofa.comLucy Yu >>Research AnalystMerrill Lynch (Singapore) +65 6678 0417lucy.yu@bofa.comRonald Leung, CFA >>Research AnalystMerill Lynch (Hong Kong) +852 3508 3728ronald.leung@bofa.comJack Chen >>Research AnalystMerrill Lynch (Hong Kong) 1)Snack food discounters, selected condiment/snacks and dairy companies are among from a low base from May, but conviction remains low given the current off-season,with the market seemingly awaiting peak-season sell-out by end-3Q. 3) Beveragerevenue trends differ by companies, while cost pressures are building from mid-2026. 4)Sportswear demand has remained weakpost CNY.5)Restaurant sales are volatile acrosscompanies, although YUMC's 2Q QTD SSSG has been solid (vs. many investorsmisconception of soft SSSG). 6) White goods1Q sales may mark the trough for FY26,although 2Q China sales are still likely to face pressures.2H should see much easiercomps, albeit alongside rising cost pressures. 7) Cost inflation has so far beenconcentrated in petro-chemical and non-ferrous inputs. Whether cost inflation willspread to soft commodities in the coming 6-12 months remains to be seen. Mostcompanies are not ruling out lower promotional intensity or modest price increases. Butaggressive price hikes are unlikely given weak demand and intense competition. 8)Cosmetics continue to see market share shifts from domestic to Western brands.Leading online platforms (e.g. Tmall and Douyin) increasingly are offering support toWestern brands. 9) Hotel: both HTHT/ATAT have seen resilient leisure travel demandYTD but have also highlighted volatility in recent RevPAR trends. For more details oncompany and expert meeting takeaways, please refer to the body of our report. +852 3508 8776ruofan.chen@bofa.comEthan Cui >>Research Analyst Merill Lynch (Hong Kong)+852 3508 8966ethan.cui@bofa.comAlice Ma >>Research Analyst Merrill Lynch (Hong Kong)+852 3508 8752alice.ma@bofa.comYoyo Pang >>Research Analyst Merrill Lynch (Hong Kong)+85235087607yoyo.pang@bofa.comJonas Yang >>Research Analyst Merill Lynch (Hong Kong)+852 3508 5834jonas.yang@bofa.com BofATopPicksIn our view, the China Consumer is now facing a dilemma: low positioning, low valuation, low base and low expectation vs.low EPS visibility.Against this uncertain sectorbackdrop, we are selective and we reiterate our Buy ratings in these 3 camps.1) Cyclicalrecovery. Mengniu, Moutai. 2) Structural growth. Wanchen, Busy Ming, Atour, Nongfu. 3)High dividend yields. YUMC, Midea, WH Group. YUMC: Yum ChinaCRB: China Resources BeerCNY: Chinese New YearQTD: quarter to dateYTD: year to dateSKU: stock keeping unitOEM: original equipmentmanufacturingSSSG:same store sales growthQSR: quick service restaurantRevPAR:revenueperavailableroomSee back of this report for tickers andcorresponding companynames >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules.Refer to'Other Important Disclosuresfor information on certain BofA Securities entities that takeresponsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 34 to 37. Analyst Certification on page 28. PriceObjective Basis/Risk on page 21.12975354 Covered company takeaways Experttakeaways14 Baijiu distributor in Central China14Beverage & dairy distributor in Central China14Baijiu consultant14Cosmetics industry expert15Consumer Al expert15 Photo gallery16 Stocks mentioned18 Covered compa