The valuation of the sector fell below the average level in recent three years. Since 2021, the Hang Seng Index has underperformed A shares. In addition, due to the weak public consumption, the Hang Seng essential consumption index is under pressure. The industry valuation has fallen below the average valuation level in recent three years, and the valuation of core stocks has generally been adjusted in 2021. In the context of the weakness of the overall sector, stocks with high performance certainty received more capital holdings, while stocks with certain pressure on fundamentals were under the pressure of capital holdings to the south. In 2021, the proportion of Tsingtao Brewery Company Limited(600600) shares / jiumaojiu / China Resources beer / modern animal husbandry / Mengniu Dairy increased significantly, and the shareholding proportion of Hong Kong stock connect at the end of the year increased by 8.7/4.4/2.6/2.0/1.6pcts respectively compared with that at the beginning of the year.
The epidemic has repeatedly dragged down the growth rate of 21h2 income, and the food and beverage sector has started the tide of price increase under the pressure of cost side. 1) Revenue side: 21h2 epidemic reappears in many places, some consumption scenes are limited, and consumers and terminals are cautious in preparing goods, among which catering, condiment and beer companies are affected to varying degrees; 2) Profit side: in 2021, food and beverage enterprises are facing greater pressure on the cost side, resulting in pressure on the profit side of enterprises. In this regard, enterprises in the food and beverage industry have successively started to raise prices to hedge the cost side pressure.
Although the profit forecasts of most companies in 2021 face the risk of downward revision, we believe that the early market adjustment has been included in the performance adjustment expectation. At present, the valuation of the sector has returned to a reasonable range. With the mitigation of the epidemic and the gradual improvement of the consumption margin, it is suggested to strengthen the allocation of Hong Kong stock consumption sector.
Investment suggestion: at the current time point, we are the first to promote the beer and dairy products sector with strong fundamentals. It is suggested to pay attention to the leading companies in the catering, condiment and beverage industries.
Beer: the high-end trend of the industry is clear, and the price band of 8-12 yuan is rapidly expanded, driving the improvement of enterprise income and profit. China Resources beer (0291. HK), the leading high-end beer, is the first. It is suggested to pay attention to Budweiser Asia Pacific (1876. HK);
Dairy products: the competition of dairy giants is expected to slow down marginally, the price of raw milk on the cost side is expected to remain stable or rise moderately, and the pressure on the cost side is significantly relieved. Mengniu Dairy (02319. HK), with high performance certainty, is the first to be promoted, and China Feihe (6186. HK), the leader of infant powder with historically low valuation, is recommended;
Catering: if the epidemic situation is well controlled and the catering demand gradually warms up, the sector will release a certain elasticity. The platform company jiumaojiu (9922. HK) is the first. It is suggested to pay attention to Haidilao (6862. HK) in the period of operation adjustment;
Condiment: the competition pattern of the polyphonic industry has improved. With the continuous recovery of terminal demand, the industry is expected to get out of the dilemma. It is suggested to pay attention to the polyphonic leader Yihai International (1579. HK);
Beverages: consumers began to pursue high-quality and healthy diet, the acceptance of high-priced products is increasing, and the industry shows a high-end trend. It is suggested to pay attention to nongnongshanquan (9633. HK), a beverage leader with strong single product cultivation ability.
Risk warning: the rise of raw material cost is higher than expected; Risk of recurrent outbreaks; Market competition intensifies.
