Hong Kong Stock Market Performance: The Hong Kong bourse experienced a rally on the 28th, with the HSI reaching a 4.5-year high of 27,757, up 630 points or 2.3%, and a turnover of HK$176.495 million.

MIXUE GROUP Stock Decline: MIXUE GROUP's stock opened 2.5% lower and fell to HK$396, down 10.6%, following a downgrade by UBS, which cited potential short-term pressures and reduced profit forecasts.

Pressure on Tea Beverage Stocks: Several tea beverage stocks, including CHABAIDAO and GUMING, faced declines of 2-3%, diverging from the overall market trend.

Short Selling Activity: The short selling ratios for various stocks, including MIXUE GROUP and others in the tea beverage sector, indicate increased market skepticism, with significant short selling reported.

Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with ZIJIN GOLD INTL and MINIMAX-WP experiencing significant gains, while others like GUMING and CHERY AUTO faced declines.

Short Selling Data: Short selling activity varied across stocks, with FWD showing a high short selling ratio of 16.999%, while NANSHAN AL INTL had a notably low ratio of 0.135%.

Market Capitalization Insights: The market capitalization at the end of the lock-up periods for these stocks ranges from 21.4 billion to 406.6 billion, indicating varying levels of investor interest and company valuations.

Future Lock-up Dates: Key lock-up expiration dates for these stocks are set between early 2026 and late 2026, which may impact trading strategies and stock performance as these dates approach.

Investment Themes for China's Consumer Sector: Key themes for 2026 include lukewarm end-demand with potential policy stimulus, accelerated industry consolidation due to price deflation, a focus on design and social value among younger consumers, overseas expansion to counter domestic growth weaknesses, and challenges/opportunities from an aging population.

Top Buy Picks by JPMorgan: Recommended stocks include LAOPU GOLD for its gold price and expansion potential, Luckin Coffee for market share and digitization, GUMING for regional diversification, MNSO for strong products and store expansion, Yum China for robust performance, and POP MART for its growth potential and valuation.

Stocks to Avoid: JPMorgan advises against investing in BUD APAC and YANGHE due to their poor performance and high short-selling ratios.

Market Insights: The report highlights the importance of understanding market dynamics, including short-selling data and stock performance, to make informed investment decisions in the evolving consumer landscape.

Downgrade and Valuation Changes: Daiwa downgraded MIXUE GROUP from Outperform to Hold, reducing its target price from $535 to $427 and lowering the projected 2026 PE ratio from 28x to 22x due to concerns over future earnings growth and the validation of its overseas market expansion.

Sales Growth and Market Expectations: Despite a resilient same-store sales growth post-subsidy wave, Daiwa believes the market may have overly high expectations for MIXUE GROUP's second growth engine, which is yet to be proven.

Market Positioning and Innovation Limitations: Daiwa noted that MIXUE GROUP's mass market positioning restricts its product innovation and pricing flexibility compared to mid-tier competitors like GUMING and Luckin Coffee.

Business Model Comparison: The report likened MIXUE GROUP's business model and long-term advantages to TINGYI, highlighting its strong franchisee network and supply chain benefits, particularly in lower-tier cities.

Expert Meeting on Beverage Market: A recent expert meeting highlighted expectations that subsidies in China's fresh beverage market will phase out over time, with niche brands potentially achieving profitability within 6-8 months.

Food Delivery Losses Forecast: Goldman Sachs predicts that losses for food delivery companies like Alibaba and Meituan will decrease by the end of December 2026, despite a reduction in subsidies impacting same-store sales.

Sales Projections for GUMING and MIXUE: The report forecasts a decline in same-store sales for GUMING and MIXUE Group by 6% and 4% respectively in 2026, while both companies are expected to open thousands of new stores in untapped markets.

Investment Ratings: Goldman Sachs maintains a Buy rating for both GUMING and MIXUE Group, setting target prices of HKD32 and HKD579 respectively for the next 12 months.