Market review of the week before the festival:
In the week before the festival (January 24, 2022-january 28, 2022), the food and beverage sector (Shenwan) fell 6.37%, the Shanghai Composite Index fell 4.57%, the Shenzhen Component Index fell 5.00%, and the Shanghai and Shenzhen 300 fell 4.51%. The food and beverage sector lost 1.80 percentage points to the Shanghai Composite Index in the week before the festival, ranking 27th among the weekly rises and falls of Shenwan’s 31 tier one subsidiaries. All the sub sectors fell, and the Baijiu sector fell by 6.28%.
Core view: consumption is stable during the Spring Festival, and high-end Baijiu market is dependent.
Baijiu sector: Baijiu consumption is stable during the Spring Festival, and the market of high-end Baijiu is dependent. According to the information of China Wine Association, the consumption of Baijiu market in the Spring Festival in 2022 was stable. In 2021, the wholesale price of the original Moutai and bulk flying Moutai was stable at around 3170 yuan / bottle and 2750 yuan / bottle. Wuliangye Yibin Co.Ltd(000858) the wholesale price of puwu (eighth generation) is stable at 965 yuan / bottle; The wholesale price is stable at 9203 yuan / bottle in Guojiao. On the one hand, under the trend of consumption upgrading, Baijiu consumers tend to be rational. In the past, the trend of “drinking more” has changed to “good wine”, and the overall sales volume has stabilized. On the other hand, even under the repeated short-term disturbance of the epidemic, the logic of industrial consumption upgrading and price upgrading remains unchanged, and it is optimistic about the improvement of manufacturers’ profitability brought by structural optimization.
Baijiu industry continues to differentiate. At present, China’s economic development is steadily advancing, the trend of consumption upgrading continues, and the per capita disposable income and high net worth population steadily increase. The demand for Baijiu, especially high-end and secondary Baijiu, is determinate. Baijiu Baijiu Baijiu Baijiu is a highly differentiated wine industry. The high-end liquor has improved its brand strength and performance through raising prices, while the second high-end liquor enjoys the blank price band after the high-end Baijiu price rises. The upgrading of the secondary and high-end liquor products has the growth space of volume and price rising. Under the promotion of the strategy of upgrading products and selling the whole nation, the industry of high-end Baijiu has continued to improve.
Beer sector: the performance of China Resources beer is expected to maintain high growth in 2022, and the upgrading of the product structure of the beer industry continues. On the eve of the Spring Festival, China Resources beer released a performance forecast for 2021. It is expected to realize a net profit attributable to the parent company of 4.4-4.7 billion yuan in 2021, with a year-on-year increase of 110% – 124%. The performance growth is in line with market expectations. There are three reasons for the high growth of the company’s annual performance: 1) the after tax income from land transfer is about RMB 1.3 billion; 2) The rise of product price promotes the increase of gross profit margin; 3) The impairment loss of fixed assets and the decrease of one-time recognition of employee compensation and resettlement expenses contributed to the decrease of administrative and other expenses to offset the increase of sales and distribution expenses. Under the pressure of cost in 2021, the company chooses to increase the price to cover the cost side. In 2022, with the release of the profit elasticity of price increase, the company’s performance is expected to maintain high growth. Under the trend of high-end and diversified consumption upgrading, beer manufacturers will continue to launch high-end products and raise the price of original products. The trend of product structural upgrading of beer industry in 2022 is expected to continue.
Investment advice
Plate allocation: Baijiu > beer > dairy products > snack food > condiment;
Baijiu: we should pay attention to the high potential Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) and Jiugui Liquor Co.Ltd(000799) of high-end liquor enterprises Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) and sub high end wine enterprises.
Beer: it is suggested to pay attention to Tsingtao Brewery Company Limited(600600) with high growth expectation in future performance;
Dairy products: it is suggested to focus on Inner Mongolia Yili Industrial Group Co.Ltd(600887) in the three aspects of production capacity, channels and products.
Risk tips:
Baijiu price rise less than expected, terminal demand fell, food safety issues.
