In addition to overseas factors, the repeated epidemic is an important reason for the weakness of the sector. The market is worried that the scenario will not recover as expected, which will affect the fundamentals. We remain optimistic. The starting point of our logic is not the disappearance of the epidemic, but the orderly recovery of the scene under precise prevention and control. At the same time, the general direction is still good, and the scene recovery is still the main line of strong sector strength. Compared with 2020 and 2021, economic pressure and the promotion of the demonstration effect of precision prevention and control are the main driving forces of scenario recovery. On the one hand, there is economic pressure, on the other hand, there are examples that can be imitated. At this time, the recovery logic of the scene under precise prevention and control is still valid. We adhere to the early view that short-term repeated outbreaks will not lead to low expectations of fundamentals.
The recovery of scenes was more intense during the Spring Festival. The regional Baijiu represented a strong trend of recovery from the spring festival scene. We expect the market to continue but gradually differentiate, Jiangsu with a net population inflow or Anhui, which is stronger than the net outflow of population. The recovery of the scene is still in the loop of improvement in the year. The consumption of high-end Baijiu and catering will be correspondingly beneficial. We believe that there will be better investment opportunities as the callback reaches a reasonable location. During the Spring Festival, sporadic outbreaks occurred in various regions, resulting in a certain impact on sub high-end and other varieties that rely on the northern market, which is reflected in weak terminal dynamic sales, poor enthusiasm of channel distribution and pessimistic industrial sentiment, resulting in weak performance or more callback of stocks. We believe that with the gradual elimination of the epidemic and the continuous implementation of consumption stimulus policies, the logic of consumption month on month improvement will gradually appear in such areas. The large sales share in such markets is the catalyst for the month on month improvement of categories.
Recently, there have been many adjustments to sub high-end and other targets. Before the festival, we stressed that the market has fully absorbed the adverse impact of the “slowdown in growth stock growth”. The subsequent response is that the Spring Festival mobile sales are affected by the epidemic and the market is pessimistic about the economy. At present, these two expectations also have a relatively full response, The valuation is generally between 30-40 times (we don’t think it’s necessary to reduce the profit forecast this year). It is expected that the trend will become stronger under the catalysis of the subsequent improvement of market sentiment and the improvement of scene month on month. We still emphasize that this year’s external environment is not conducive to valuation expansion, and the recovery of demand is not easy to bring high performance elasticity. This year, the opportunities on the left are stronger than those on the right.
Investment strategy: we generally continue the previous view, that is, we believe that the scenario recovery logic can bring excess returns. The sub category of the scene relies on the scene to benefit from this, and we can achieve high prosperity. We are optimistic about the sub sectors of regional Baijiu, sub high end, beer, food and beverage supply chain (such as braised flavor, condiments, quick frozen, prefabricated vegetables, etc.) and snacks. Its investment rhythm is also related to the sequence of scene recovery. Specifically, (1) liquor, the region continues to recommend the revival of the regional Baijiu such as Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) , Anhui Kouzi Distillery Co.Ltd(603589) , etc., the second high-end has the scene of the ring to improve logic, reasonable valuation has entered the layout area, and continue to recommend Shede Spirits Co.Ltd(600702) , Sichuan Swellfun Co.Ltd(600779) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Jiugui Liquor Co.Ltd(000799) , etc., and continue to recommend high-end; Baijiu; (2) In terms of popular products, it is recommended to revive catering and recommend sub sections such as beer, condiments, stewed flavor and quick freezing, with specific targets such as Tsingtao Brewery Company Limited(600600) , Chongqing Brewery Co.Ltd(600132) , Qianhe Condiment And Food Co.Ltd(603027) , Foshan Haitian Flavouring And Food Company Ltd(603288) , Juewei Food Co.Ltd(603517) , Fu Jian Anjoy Foods Co.Ltd(603345) , etc.
Risk warning: the impact of the epidemic may be repeated; Demand recovery is not strong enough; Food safety issues, etc
