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China's Consumption Downturn: BofA Securities reports that China's consumption downturn has lasted nearly four years, aligning with historical trends, but the future remains uncertain due to ongoing pressures from employment, consumer confidence, and lack of stimulus policies.

Impact on Stock Prices: Despite the consumption challenges, BofA Securities believes that share prices may not be as negatively impacted, although they have lowered EPS forecasts for 15 Chinese consumer stocks and reduced their average target price.

Investment Recommendations: BofA Securities has initiated coverage on WANCHEN GROUP and identified top picks for 2026 that combine growth and yield, including HWORLD-S, POP MART, and YUM CHINA, among others.

Sector Ratings: The latest ratings and target prices for the consumer sector have been updated, with a focus on stocks that exhibit growth potential and high dividend yields amidst changing market conditions.

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.