Morgan Stanley reported that leading mall operators in China saw same-store sales growth - excluding auto sales - slip to flat or low single digits in June, marking a deceleration from the previous month.
The investment bank attributed the moderation to three main factors: a high comparison base from the prior year, unfavorable weather conditions during the month, and promotional seasonality effects that weighed on the month-on-month reading.
On a broader retail measure, Morgan Stanley said adjusted offline retail sales excluding autos accelerated to 2.6% year-over-year in June, up from 0.5% in May when rebased across categories. Total retail sales for June expanded 1% year-over-year, reversing a 0.6% decline recorded in May.
Within mall-related categories, food and beverage, cosmetics and mobile devices were the strongest contributors to the recovery, showing positive growth in June. Gold and jewelry, and electronics and home appliances recorded narrower year-on-year declines versus prior months. Restaurant sales growth increased to 1.2% year-over-year in June from 0.6% in May.
Company-level updates
China Resources Land (CR Land) reported 11% rental growth in June, a slight deceleration from 12% in May, bringing its first-half rental growth to 13% year-over-year. The firm’s June same-store sales remained positive when excluding auto sales but turned slightly negative once auto sales were included.
Longfor recorded a 15% increase in rentals in June versus 4% in May, a jump Morgan Stanley said was partly due to a low base stemming from a one-time amortization in the prior year. That produced 4% rental growth for the first half. Longfor’s June same-store sales growth excluding autos was in the low single digits, down from more than 10% in May.
Seazen posted modest rental gains, with rentals up 0.3% year-over-year in June and first-half rental growth at 2% year-over-year.
Morgan Stanley maintained an overweight rating on CR Mixc, citing the company’s market consolidation capability and a dividend yield of approximately 5%.
Overall, the bank’s monthly read indicates that while certain mall categories showed recovery in June, aggregate same-store sales growth cooled relative to May amid base effects, weather disruptions and seasonal promotional patterns.