Key investment points:
1. There is a strong demand for catering and gifts during the Spring Festival, and the leading brands of Hui liquor and Su liquor have a strong performance. Food and beverage rose 0.31% this week, 2.71 percentage points lower than the Shanghai Composite Index (3.02%). This year’s Spring Festival explicitly banned one size fits all and overweight at all levels. Most residents returned home smoothly, driving the strong demand for catering and gifts during the Spring Festival. Gifts such as dairy snacks and health products gift boxes sold well during the Spring Festival. Dairy products (3.76%), snacks (3.64%) and health products (3.17%) rose higher this week. Meanwhile, the post channel liquor industry channel information intensive feedback, terminal dynamic marketing differentiation, regional real estate leader performance strong, overlay the market style influence, this week Baijiu sector trend Baijiu (slightly down 0.35%). In terms of individual stocks, the regional real estate wine leader Anhui Gujing Distillery Company Limited(000596) led the rise this week, with an increase of 13.75%, followed by Ganyuan Foods Co.Ltd(002991) (+ 13.14%), Meihua Holdings Group Co.Ltd(600873) (+ 11.14%), Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) (+ 9.84%), St Cody (+ 9.54%), Anhui Kouzi Distillery Co.Ltd(603589) (+ 9.07%) and Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) (+ 8.46%).
2, Baijiu Spring Festival season as scheduled, 2022 market trend is expected to differentiate, the first quarter is a good start. From the channel research information of intensive feedback after the festival, our judgment before the festival has been continuously verified. The peak season of the Spring Festival this year has been fulfilled as scheduled, and the terminal mobile sales are still strong. Under the influence of the epidemic, the industry price band and regional differentiation are obvious. The performance of high-end leaders is slightly flat compared with that of last year. The performance of sub high-end regional leaders such as Hui liquor ( Anhui Gujing Distillery Company Limited(000596) , Anhui Kouzi Distillery Co.Ltd(603589) , Anhui Yingjia Distillery Co.Ltd(603198) ) and Su liquor ( Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) ) is the best. Meanwhile, the current leading Baijiu enterprises have higher repayment rates, and the first quarter results are expected to be protected. (see the February 7, 2022 issue of the “Spring Festival season”: the Spring Festival season is scheduled to be cashed, the epidemic affects differentiation, and the wine is strong.
3, look at the long term trend, Baijiu is changing from the first growth stage to the second growth stage, the second highest level is the biggest opportunity, the industry boom will continue, and continue to be optimistic about the regional high-end high-end. In view of the current market concern about the prosperity of the industry, we put forward the view that “looking at the long-term trend, the industry is transforming from the first growth stage to the second growth stage” through field research and logical deduction as early as last autumn’s sugar and Wine Fair. We believe that after years of growth, the base and market expectations of the high-end price belt have been raised to a high level. In the future, it is normal for the high-end price belt to slow down and shift gears and return to steady growth. There is no need to worry too much about the outlook; The expansion of secondary high-end is the biggest trend opportunity of the industry in the future. Baijiu upward trend in 2022 is clearer, but the sector is still a structural market, and the demand for stock selection is even higher. It is recommended to pay attention to the sub high end regional leader in the stable base market and steadily release the profit elasticity (see the annual strategy report of the outbound industry in December 17, 2021, “ride the momentum and recover”). From the perspective of fundamentals, valuation, performance certainty and market expectations, we continue to be optimistic about the performance of Kweichow Moutai Co.Ltd(600519) and regional sub high-end leaders.
4. The demand for catering gifts in the Spring Festival increased, and the investment opportunity of leading stocks appeared under the decline of valuation. According to the data of the State Railway Group, the National Railways sent 86.16 million passengers 15 days before the Spring Festival transportation, a year-on-year increase of 65%. Most passengers return home after two years and have some compensation consumption psychology. On the one hand, the catering demand has recovered year-on-year, and the payment amount of catering merchants during the Spring Festival in 2022 (January 31 to February 6) has increased by 29.6% compared with the same period last year. On the other hand, the sales of gifts are booming, and the attributes of nutritional and healthy gifts such as high-end normal temperature dairy products, plant protein drinks, nuts and health products are strong, During the Spring Festival, the feedback of mobile sales was good. Yili, Mengniu, Lulu and other brands were out of stock at some terminals, and the sales of annual goods festivals such as Qiaqia and Three Squirrels Inc(300783) also increased rapidly. However, due to the early spring festival this year, many companies included the Spring Festival revenue in 2021q4. Superimposed on the high base of last year, the growth rate of 2022q1 may be low. It is suggested to conduct a comprehensive investigation in combination with the Q4 performance of last year. Since December last year, the prices of raw materials and packaging materials such as soybean meal and pet have continued to rise, squeezing the profit space. Food enterprises are facing the dual challenges of weak demand and high cost. The short-term market sentiment is weak, and most sectors continue to fall. However, in the long run, the market share is expected to continue to concentrate on leading enterprises, and the industry competition pattern is expected to be optimized. After the valuation falls, the investment value of leading enterprises is prominent, and the layout time point has come. We are optimistic about the industry leading stocks with reasonable valuation and pricing power. We recommend Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Angel Yeast Co.Ltd(600298) , and pay attention to Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Chacha Food Company Limited(002557) , Fu Jian Anjoy Foods Co.Ltd(603345) .
5. Update of industry and company views:
(1) Chongqing Brewery Co.Ltd(600132) : the profit performance exceeded expectations, and Wusu continued the process of nationalization. This week, the company released its annual performance express for 2021. In 2021, the company achieved a revenue of 13.12 billion yuan (the same as + 19.9%) and a net profit attributable to the parent company of 1.17 billion yuan (the same as + 38.8%); In Q4 in 2021, the company achieved a revenue of 1.933 billion yuan (the same as + 1.1%), and a net profit attributable to the parent company of 120 million yuan (230 million yuan in the same period last year); Overall, the company’s revenue is slightly lower than expected, and the profit performance is higher than expected (the above data are for reference). In 2021, the company continued the high-end process, Wusu terminal brand rallied, and the development of blank market accelerated. Recently, Carlsberg group, the parent company of heavy beer, announced the sailing 27 plan, which will continue to increase the Chinese market in the future. At present, the adjustment of the company’s internal channels and organizations has been gradually straightened out, and it continues to be optimistic about the continuous promotion of the company’s high-end + nationalization.
(2) Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) : Q4 net profit improved month on month. There is still pressure on short-term operation, and it is expected to improve in the medium and long term. The company expects that the revenue of Q4 in 2021 will be 1.704 billion yuan, with a year-on-year increase of 29.8%, and the net profit attributable to the parent company will be 386 million yuan, with a year-on-year increase of 73.9%. Among them, the revenue of Meiweixian company in 2021q4 will be 1.34 billion yuan, with a year-on-year increase of 6.7%, and the net profit attributable to the parent company will be 209 million yuan, with a year-on-year increase of 10.6%. In addition, the revenue recognized by the real estate projects of the parent company will contribute to. The company’s 2021q4 inventory was light loaded and the price increase was promoted, and the 2021q4 net profit of Meiweixian company increased month on month. In 2021q3, aiming at the recovery of household demand, the company continues to destock to adjust the channel rhythm and stabilize the overall price system. At the same time, because Ka accounts for a large proportion in the company’s channel structure, the company boosts channel confidence by giving rebate support to the second batch of dealers, and focuses on the development of BC super terminals. At present, the company’s channel inventory remains benign, and the superposition of price increases is boosted. It is expected to usher in elastic growth in 2022. However, considering that the company is still in the adjustment period, the repeated epidemic situation and the impact of weak consumption, there is still some pressure in the short term, and it is expected to improve in the medium and long term.
6, industry rating and investment strategy: Overall, the trend of steady and steady improvement of Baijiu industry is maintained. The dark hour of popular products has passed, and the price increase has brought about marginal improvement in the performance of the sector, so we can choose the best layout. Based on this, we maintain the rating of the food and beverage industry as “recommended”.
Baijiu sector: Kweichow Moutai Co.Ltd(600519) (recommended), Anhui Kouzi Distillery Co.Ltd(603589) (recommended), Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (recommended), Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) (concern), Anhui Gujing Distillery Company Limited(000596) (concern), Luzhou Laojiao Co.Ltd(000568) (attention), Wuliangye Yibin Co.Ltd(000858) (recommended), Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) (recommended), Sichuan Swellfun Co.Ltd(600779) (recommended), Anhui Yingjia Distillery Co.Ltd(603198) (attention), Jinhui Liquor Co.Ltd(603919) (attention), etc.
Popular products segment: Shanghai Bairun Investment Holding Group Co.Ltd(002568) (recommended), Angel Yeast Co.Ltd(600298) (recommended), Inner Mongolia Yili Industrial Group Co.Ltd(600887) (concerned), Fu Jian Anjoy Foods Co.Ltd(603345) (concerned), Ligao Foods Co.Ltd(300973) (recommended), Foshan Haitian Flavouring And Food Company Ltd(603288) (concerned), Chongqing Brewery Co.Ltd(600132) (concerned), Chacha Food Company Limited(002557) (concerned), etc.
Short term recommendations Kweichow Moutai Co.Ltd(600519) , Anhui Kouzi Distillery Co.Ltd(603589) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , etc.
7. Risk Tips 1) the recovery of catering channels affected by the epidemic is lower than expected; 2) Macroeconomic fluctuations have hindered the pace of consumption upgrading; 3) Industry policy changes lead to increased competition; 4) The price of raw materials has risen sharply; 5) Focus on the company’s performance or less than expected; 6) Food safety incidents, etc.
