Charting this…
From Jan to May, China’s household added 834.7 billion mid-to-long-term rmb debt.
This is only ~30% of 2021 level (near 3tn), and 40% of 2016 level (2tn rmb). This is the 4th year of decline of newly added debt; it’s only 3% below 2024 level though.
For the full year of 2016 and 2021, China’s household added 5.7 trillion and 6.1 trillion mid-to-long-term rmb debt.
Household’s mid-to-long-term debt is mostly for home buying.
See my previous posts on Baijiu here (Jun 2024) and here (Sep 2024) – concerns on volume growth and the ability to further increase profitability.
While premium Baijiu company like Moutai can still do ok, as key product’s market price is still higher than its ex-factory price, the price gap is narrowing, which means Moutai’s distributors are having a bad time.
The end demand is additionally weak after Chinese gov’s recent liquor ban.
Moutai’s stock price has declined by ~15% since mid-May (1645 -> 1401). Currently, Jun 16 is one of the lowest closing price in 2025, worse than Apr 7 when tariff hit.
However, this represent a buying opportunity I believe.
Besides Moutai, other Baijiu brands stock also declined. Wuliangye has declined about 15% from its peak this year. In fact, it’s more than 10% lower than end of 2019 level (~rmb 133 per share)!
Luzhou Laojiao has declined about 25% from its peak this year.
They are trading at 20x (5% earnings yield, Moutai) and 14x (7% earnings yield, Wuliangye), and 12x (8% earnings yield, Laojiao) LTM earnings, compared with ~1.6% China’s gov bond yield.
Following the previous near flattish China’s real estate price in February 2025, China is seeing weakening in Apr and May, despite the yoy comparison still looks okay.
Key cities’ MoM existing home price index % change was -0.3% and -0.7% in Apr and May 2025.
The yoy comparison shows decline of less than 2% – existing home price index is only down 1.8% and down 1.3% in Apr and May 2025.
In China, owners’ imputed rent at market rate was only adopted as of 2023 GDP figure – 2023 GDP upward, among which CNY 1.343 trillion (~1% of GDP) is due to market rent approach vs cost approach.
Some public/government sponsored consumption are not counted as household consumption, such as public schools, healthcare etc. Therefore the split will make household % lower, but this won’t change total GDP figure. These are both valued on cost basis in China and EU.
US existing home inventory is going up to a higher level and month to clear is expected to reach 4.4 month, a slightly higher number.
US new home price is down yoy, but volume was strong. Some explains that “less expensive homes are driving sales activity“.
Homebuilder’s sentiment is running at low levels, while builders reported the average price reduction unchanged from the previous month.
Reading Buffet’s early investments in Union Street Railway in the 1950s.
Company’s business is not going well, and its stock is cheap – $30–$35 per share despite roughly $60 per share in cash and bonds.
Simply by distributing dividends, the company can give $50 per share to shareholders.
While the company being cheap is important, the management’s willingness to give shareholder return is even more crucial.
A distant $50 is different from a near-term $50; not to mention other ways to destroy equity value.
Oh btw, Union Street Railway also needed local regulator’s approval to distribute it seems – so ultimately it’s also up to the change of thoughts from regulators.
In the first quarter of 2025, China’s renewable generated more 816 bn kWh, 816 gwh, about similar the consumption of households and the service sector combined.
Detective Conan IP generated less than 1500mn rmb revenue in a year, with film being the largest contribution (~50%).
PopMart’s Labubu generated over 3000mn rmb revenue last year, while most people don’t know Labubu’s stories, its origin, its value, etc.
UPS and FedEx reported revenue per piece/package is ~$13-$14 (1q25).
SF Express, the most premium express in China, reported ASP of 15.5 rmb in 2024 and ASP of 14.6 rmb in 1q25.
Other express delivery companies in China reported ASP of 2.3 rmb (YTO) and 2.05 rmb (STO and Yunda) in 2024.
Meanwhile, ZTO+YTO+STO+Yuanda+SF -> 330k package per day!
FedEx +UPS is ~40k package per day.