Baijiu sector: Based on the current Spring Festival business returns & Shipping & marketing, the market will be corrected to compare the 22Q1 performance of liquor companies. We are optimistic about the 22Q1 performance plus valuation with the performance of cost-effective targets, such as: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Shede Spirits Co.Ltd(600702) .
Food sector: this week, we carried out a series of visits to the food sector to go deep into the Juewei Food Co.Ltd(603517) of the halogen products sector; Aoyou and Beijing Sanyuan Foods Co.Ltd(600429) of dairy products; Ganyuan Foods Co.Ltd(002991) , Yanker Shop Food Co.Ltd(002847) and so on in the leisure snacks sector. Overall, we maintained our previous view that the 22Q1 Baijiu sector allocation opportunities outweigh the food, food concerns with catalytic and marginal improvement opportunities.
February 14th ~2 18, 5 trading days, Shanghai and Shenzhen 300 index rose 1.08%, food and beverage sector rose 2.97%, Baijiu sector rose more than Shanghai and Shenzhen 300, or 3.53%. Specifically, the increase of Anhui Golden Seed Winery Co.Ltd(600199) (+ 37.32%) and * ST Huangtai (+ 14.80) in the beverage sector this week was relatively large, Xiangpiaopiao Food Co.Ltd(603711) (- 2.37%) and Zhangyu B (- 1.29%) decreased relatively large; This week, the increase of Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) (+ 7.94%) and Beingmate Co.Ltd(002570) (+ 7.52%) in the food sector was relatively the top, while the increase of Namchow Food Group( Shanghai) Co.Ltd(605339) (- 6.15%) and Henan Kedi Dairy Co.Ltd(002770) (- 5.57%) were relatively the bottom.
This week’s view
[Baijiu sector]: optimistic about 22Q1 performance high elasticity + valuation with price target
Plate review: this week’s main line of action is &22Q1 catalytic activity, which is expected to exceed the expected 18 months in February 14th, and the Shanghai and Shenzhen 300 index rose 1.08% on the 5 trading day, while the food and beverage sector rose 2.97%. The Baijiu sector rose by more than 3.53% in the 300 Shanghai and Shenzhen 300. Baijiu sector, Anhui Golden Seed Winery Co.Ltd(600199) (+37.3%), Anhui Yingjia Distillery Co.Ltd(603198) (+11.5%), Shede Spirits Co.Ltd(600702) (+8.6%) and Jiugui Liquor Co.Ltd(000799) (+7.3%) are the top ones. The main source of this week’s event is the catalytic performance of &22Q1, which is mainly due to the introduction of war investment, while Anhui Yingjia Distillery Co.Ltd(603198) , Shede Spirits Co.Ltd(600702) and { Anhui Yingjia Distillery Co.Ltd(603198) are all high elastic targets with a growth rate of over 80%. Of which:
1) golden seed: the controlling shareholder of golden seed plans to introduce China Resources war investment and has strong determination to reform state-owned enterprises. Golden seed background: golden seed was listed in 1998. The existing “golden seed”, “Zui Sanqiu”, “Yingzhou” and other brands are Fuhe flavor liquor. In 2020, the company’s Baijiu business was 600 million (57%), pharmaceutical industry accounted for 400 million (42%), gross margin and net interest rate were 27.7% and 6.8% respectively. The company has made 2 billion + revenue in 2014, but since then, the scale of Baijiu business has slowed down obviously due to internal factors (strategic mistakes, missed important upgrading periods, etc.) and external causes.
The introduction of the development of the war seed Investment: the gold seeds can be promoted by Huarun to the national / high-end market, so as to achieve steady expansion of Baijiu business scale: in 2021, the company’s net profit is estimated to be -1.55 billion yuan to -1.85 billion (the main secondary and low end products are low). In the future, the company can use China Resources to solve the problems of expanded capital, brand and channel, so as to promote the coverage of medium and low-end liquor market / adjust the operation and production ideas, and then accelerate the process of high-end nationalization. In addition, the introduction of central enterprises by local state-owned enterprises as war investment shows the great determination to deepen the reform of state-owned enterprises.
Anhui Baijiu has little impact on the overall pattern of liquor production: same as below, Huarun seed performance is expected to be improved in the structure, channel and management mechanism of Huarun, so as to achieve strategic revival. But in the short term, the introduction of war events has little impact on the pattern of emblem, and Anhui Gujing Distillery Company Limited(000596) , Anhui Kouzi Distillery Co.Ltd(603589) and Anhui Yingjia Distillery Co.Ltd(603198) with strong brand strength and channel will remain the top three.
2) Anhui Yingjia Distillery Co.Ltd(603198) : the performance of 22q1 is expected to achieve higher than expected growth, and the potential energy of cave reservoir is not reduced.
Driving factors beyond expectations: the upgrading of Hui liquor consumption exceeds market expectations, the sub high-end price band continues to expand, and the market concentration continues to increase; In the short term, the strong rise of Dongzang series + channel thrust to consumption pull + group purchase (focusing on medium and high priced wines) has continued to increase, helping the driving profit performance exceed expectations; In the medium and long term, the Dongzang series with strong brand power, high channel profit, mainstream price band of card position, low consumer loyalty and strong channel strength will have a volume of 1 billion (revenue accounting for about 30%) in five years after listing. It is expected that the Dongzang series with doubled performance in 21 years will lead the company’s annual performance to exceed the expected period, and the Dongzang series may achieve more than expected development (revenue accounting for or exceeding 50%) in the next 3-5 years.
Smooth payment: it is expected that the payment collection in January will exceed 1 billion, which is close to completing the volume in the first quarter of last year. According to the historical delivery rhythm, considering the low base of 21q1, it is expected that the profit of 22q1 will increase greatly.
Excellent dynamic sales: benefiting from the continuous release of Dongzang series brands and high channel profits, more and more high-end liquor dealers have joined. The dynamic sales performance of main sales areas such as Hefei, Lu’an and some northern Anhui regions is better than that in previous years, which is one of the liquor enterprises with the best dynamic sales performance observed at present. At present, the channel inventory is at a low level and is about to enter the stage of price increase and goods control.
3) Shede Spirits Co.Ltd(600702) : the undervalued value superimposes the higher than expected increase of 22q1, giving it elastic space. Higher than expected driving factors: corresponding to the underestimated value of less than 35x in 22 years + 22q1 high growth rate, giving it greater upward flexibility. Considering: 1) in December, the company was willing to raise the price for taste and wisdom, and stopped the goods of Tuopai; 2) The proportion of payment received from some core regions is expected to reach 40%, and the amount of payment received in the first quarter is expected to increase by 100% over the same period last year; 3) The performance income and net profit of 21q1 are only 1 / 300 million, and the base is not high. It is expected that the revenue and profit of 22q1 company is expected to increase by more than 100%. Now the valuation is low and cost-effective. Based on the fact that the Spring Festival payment collection, delivery and dynamic sales of liquor enterprises are coming to an end, the market will correct and compare the 22q1 performance of liquor enterprises. Therefore, at this node, the targets with high performance increase of 22q1 + cost-effective valuation may have better performance, such as: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Shede Spirits Co.Ltd(600702) .
Wuliangye Yibin Co.Ltd(000858) : why do we recommend Wuliangye Yibin Co.Ltd(000858) at the current point in time?
We believe that Wuliangye Yibin Co.Ltd(000858) share price performance of Wuliangye Yibin Co.Ltd(000858) in the past year was flat, mainly due to the lower than expected performance of the eighth generation rating / series of wines (slight changes in internal management, stability and the implementation of some policies). In January, the share price also performed relatively flat under the market expectation that the management would change + the Spring Festival dynamic sales and rating feedback were flat. Wuliangye Yibin Co.Ltd(000858) is recommended at the current node. The main reasons are:
(I) from the perspective of operation, the management is smoothly changed (Zeng Congqin is the Secretary and chairman of the Party committee of the group company, the Secretary and chairman of the Party committee of the joint stock company; Zou Tao is the deputy secretary and general manager of the Party committee of the group company; Jiang Wenge is the deputy secretary, vice chairman and general manager of the Party committee of the joint stock company), and the stability and execution of internal governance are expected to be improved. This personnel change means that the stability of the management will be stronger, and the formulation and implementation of subsequent company policies will be faster and better conducted.
Under the background that the valuation has fully reflected the current business status & highly cost-effective (corresponding to less than 30x in 22 years), we believe that the current time point means that the adjustment and landing of the management will accelerate the high-quality sailing of the giant ship, and the current time point is the inflection point of the operation.
(II) in terms of performance, 22q1 has strong performance certainty. 2022q1 company has made steady progress in payment collection, normal dynamic sales and healthy inventory, laying a solid foundation for a good start; In 2023, based on the release of reform dividends, the performance achieved month on month growth with strong certainty.
(III) from a macro / policy perspective: the probability of consumption tax landing may be low. 1) We believe that the probability of short-term consumption tax landing is low. Even if it does, the consumption tax has the least impact on high-end wine; 2) Under the trend of higher US bond yields and the enhanced expectation of interest rate hike by the Federal Reserve, the current undervalued target is somewhat defensive.
(IV) from the configuration time point of view: the recent Wuliangye Yibin Co.Ltd(000858) callback is a good opportunity for additional configuration. Looking back on the three major adjustments in the past 21 years (after the Spring Festival, July and October), the adjustments triggered by the emotional side have rebounded significantly after being verified with good certainty, and there is a structural excess return market; Based on 22q1’s good start and strong certainty + the recent sector adjustment is mostly triggered at the emotional / financial level, we believe that the recent adjustment is a good opportunity for additional allocation.
Data update: the Kweichow Moutai Co.Ltd(600519) rating performance this week is stable and the overall inventory performance is healthy
Kweichow Moutai Co.Ltd(600519) : the wholesale price of Feitian bulk bottle is about 2750 yuan and the whole box is about 3150 yuan (normal fluctuation). The price increase of series wine and non-standard wine + the release of new 1935 + the launch of Chinese Zodiac wine earlier than last year + the dealers can implement the unplanned quota of non-standard products will contribute to the ton price of the first quarter; Wuliangye Yibin Co.Ltd(000858) : the approval price this week is stable at 970-980 yuan. Since the price increase of Wuliangye Yibin Co.Ltd(000858) , contracts for the coming year are being signed successively. It is expected that the payment will be collected by 40% before the Spring Festival, the delivery proportion will be 30% +, and the inventory will be healthy; Luzhou Laojiao Co.Ltd(000568) : the rated price is about 920-930 yuan. The payment collection of Guojiao in 21 years has been completed (+ 35%), and the growth target of Guojiao next year is 30%. The overall performance of the rated price is stable; About 40% of the new 1952 collection.
Investment suggestion: it is recommended to pay attention to Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Shede Spirits Co.Ltd(600702) . Based on the fact that the current Spring Festival payment collection, delivery and dynamic sales of wine enterprises are drawing to a close, the market will correct and compare the 22q1 performance of wine enterprises. We are optimistic about the performance increase of 22q1 + the performance of the target with cost performance, such as Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Shede Spirits Co.Ltd(600702) .
II. [food sector]: focus on individual stock targets with short-term catalysis or marginal improvement
Sector review: the food sector fell as a whole this week
Plate growth: food processing sector fell 1.67%, of which seasoning sector rose 1.95%, dairy sector rose 1.88%, meat sector fell 1.90%.
The rise and fall of individual stocks: Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) (+ 7.94%), Beingmate Co.Ltd(002570) (+ 7.52%), Royal Group Co.Ltd(002329) (+ 6.34%) ranked among the top three in the sector. Among meat products, Longda food (+ 2.79%) led the rise, Jiangxi Huangshanghuang Group Food Co.Ltd(002695) (+ 0.85%) and Shanghai Maling Aquarius Co.Ltd(600073) (+ 0.13%) rose slightly; In the seasoning sector, Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) (+ 4.35%), Qingdao Richen Food Co.Ltd(603755) (+ 4.14%) and Lotus Health Group Company(600186) (+ 3.41%) increased significantly; In the dairy sector, Beingmate Co.Ltd(002570) (+ 7.52%), Royal Group Co.Ltd(002329) (+ 6.34%) and Shanghai Milkground Food Tech Co.Ltd(600882) (+ 4.61%) led the increase; In the comprehensive food sector, Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) (+ 7.94%) led the rise, while Zuming Bean Products Co.Ltd(003030) (+ 6.12%) and Yantai Shuangta Food Co.Ltd(002481) (+ 4.74%) increased significantly.
Update this week: Changsha area of food sector: Juewei Food Co.Ltd(603517) , Beijing Sanyuan Foods Co.Ltd(600429) , Aoyou, Yanker Shop Food Co.Ltd(002847) , Ganyuan Foods Co.Ltd(002991) etc
1. Halogen products section: Juewei Food Co.Ltd(603517) update
In terms of revenue: 1) the performance target of 25% revenue growth was achieved in the whole year of 21, and the profit side was under certain pressure; 2) The level of dynamic sales in Q1 in the Spring Festival of 22 years is the same as that in 21 years, and Q1 is expected to be completed according to the growth rate of equity incentive income; ② The annual revenue growth target is 20%, the growth rate of stores is 10% +, and the other contributions are price adjustment in the same store and supply chain.
In terms of stores: 1) single store recovery is about 90%, community and street stores achieve positive growth, transportation stores recover about 60% – 70%, and high potential energy stores adjust according to the situation (self declaration of subsidies or direct operation); 2) The target of opening stores this year is 1000-1500, of which 1000 are expected to contribute to the plan of starting a prairie fire; 3) Assessment indicators of the plan of starting a prairie fire: ① increase the same store by 5% – 10% in three months, open a store in the local hometown and complete practical training; ② it is expected to reduce the turnover rate of clerks, reduce management costs and encourage franchisees to enter; 4) The layout of sunken stores is mainly the business center of the fifth and sixth tier cities, with a single store investment of about 50000; Each regional market is in a separate evaluation stage, focusing on logistics costs.
Price increase: 1) terminal impact: offline retail only raises prices by single digits, and consumers feel unclear; 2) Performance contribution: the cost side is controllable, the profit side ① 50% of the bonus is distributed to franchisees, ② the profit margin of takeout is improved, with a deduction of about 10% +.
Supply chain: 1) business: About 400-500 million in 21 years, and the volume of third-party business is rising; 2) Positioning: independent operation entity, mainly engaged in centralized procurement and OEM, and equity financing has been opened.
2. Dairy products segment: Beijing Sanyuan Foods Co.Ltd(600429) update
In 2021, the revenue increased by 3% – 6%, and the net profit attributable to the parent company was 234-273 million, an increase of 936% – 1100% at the same time. On the one hand, the company adheres to the profit orientation, optimizes the product structure, reduces costs and saves expenses, resulting in a significant increase in profitability. On the other hand, McDonald’s business basically recovered before the epidemic, and the investment income increased more year-on-year.
In the second half of 2021, we focused on the acquisition project of animal husbandry and equity incentive. Equity incentive is a goal based on the 14th five year plan of the company: it is planned to double revenue and significantly improve profits by the end of 2025. The company has emphasized profit orientation since 2021, so the profit has improved greatly in 21 years.
The core market will carry out more refined cost management and more accurate delivery costs. In the external market outside the core market, the external expansion will follow the principle of from near to far. North China market is the first choice. Expand the core circle in Beijing, Tianjin and Hebei, and then build the market in Shandong and Henan in North China. There will also be a gradual layout in the East China market, because Baxi also has a factory in Shanghai, and Jiangsu Lianyungang Port Co.Ltd(601008) factory will also provide some products to the East China market.
3. Dairy products: Aoyou update
1) Aoyou’s vision is to become the world’s most trusted formula and nutritional health company. Formula milk powder includes traditional business milk powder (multi capacity, haipunuokai) and sheep milk powder (jiabeiaite). At present, jiabeiaite has ranked first in the Chinese market, accounting for 60% of the sales of sheep milk powder.
2) golden decade strategic plan: make infant powder into a global advanced enterprise, make health products into a national advanced enterprise, and start personalized nutrition.
3) collaboration with Yili: the supply chain can be shared directly. Chinese market channels can be crossed, because Aoyou is mainly in mother and baby stores and Yili is mainly in supermarkets, which can realize complementarity. Market investment, advertising and publicity, including internal management, can also be coordinated.
4) improvement of management efficiency: the efficiency will be improved, and the cost rate should go down. Because Aoyou and Yili are all-round coordination, the management efficiency should also be in line with Yili. If they are in line, the efficiency will be improved. Therefore, it is expected that if the coordination is good, the rate will be reduced.
4. Leisure snacks: visit and update
This week, we visited the leisure and snack sector and believed that we should pay attention to the targets with subsequent catalysts or strong performance certainty. From the perspective of terminal movable pin, the movable pin of leisure snacks is still in the process of recovery; During the Spring Festival, the business supermarket data recovered slightly, but the business supermarket passenger flow still did not show a very obvious long-term recovery. By visiting Ganyuan, Qiaqia, Yanjin and other companies, we believe that there are opportunities for some leisure snacks in 2022, which need to be closely followed and paid attention to.
1) focus on the dynamic sales of new products: Ganyuan will launch new products soon, the second-generation flavor nuts have 6 categories, and the new products of Anyang factory will continue to be updated; For new products, we will also carry out new product investment in Chuntang. We need to pay close attention to the contribution of new product dynamic sales to the company’s performance.
2) pay attention to channel changes and exceed expectations: Although the supermarket channel is still relatively weak, the sinking channel and snack system perform well and Yanjin
