1. The market continued at the end of the year, and the plate rose for the fourth consecutive week. We recently stressed that the valuation switching market will be opened at the end of the year, and the market is vulnerable to positive events in the performance vacuum period. This week’s market continues to verify our previous judgment, Food and beverage rose 4% (5.24%) for the fourth consecutive week, winning 3.48 percentage points of the Shanghai Composite Index (1.86%), normalizing Moutai’s sales policy and raising prices by 100% of the price increase. In addition, all the thin plate sectors rose this week, and other wine, yellow wine, beer and Baijiu were among the top gainers, +16.37%, +9.69, +6.37% and +5.40% respectively. Led by (+ 26.72%), followed by Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) (+ 21.12%), Anhui Kouzi Distillery Co.Ltd(603589) (+ 19.90%), Weilong Grape Wine Co.Ltd(603779) (+ 19.69%) and Shanghai Bairun Investment Holding Group Co.Ltd(002568) (+ 19.67%).
2, Baijiu continued overall rebound trend, underestimated the value added, continue to look good at the end of the year market. This week, Feitian Maotai officially cancelled the unpacking sales policy, and the central government issued the policy of reducing the reserve requirement and stabilizing economic growth, which eased the market’s concern about the policy. In the context of favorable industry’s continued landing, Baijiu continued to rebound, Hebei Hengshui Laobaigan Liquor Co.Ltd(600559) , Anhui Kouzi Distillery Co.Ltd(603589) , Xinjiang Yilite Industry Co.Ltd(600197) , Anhui Golden Seed Winery Co.Ltd(600199) and so on. We continue to look at the year-end market of Baijiu, and the dealer conference and the Spring Festival peak season will also boost the plate performance. In the short term, the valuation of this year’s plate is basically digested, and the Baijiu performance in the 22 year is more deterministic. In the long run, although the growth rate of high-end leaders will shift in the future, there will still be steady and deterministic growth, and the management improvement bonus of Maotai will be released faster; At the same time, the sub high end is still the plate with the greatest opportunity in the future. The sub high end leader will take over the high end to achieve elastic growth, and continue to be optimistic about the regional leader whose base market is stable and whose profit elasticity can be released through structural upgrading and cost optimization.
3. Feitian Maotai officially cancelled unpacking, the company’s management is expected to improve, the performance next year is still flexible, and the advantage of pricing power is prominent. According to the national liquor time and space report, after the Chinese zodiac and boutiques stopped unpacking in October, Feitian Maotai officially cancelled the “unpacking order” on December 11; As of Sunday, the rated price of Xiangmao in some areas had fallen below 3500 yuan. The return of the whole box of Maotai marks the further marketization of the company under the leadership of the new management, which is also conducive to promoting the rational decline of Maotai liquor price; Meanwhile, the demand for investment and collection of Maotai liquor is expected to heat up again. The price of Maotai liquor is essentially affected by the relationship between supply and demand. In the first half of the year, the quantity of manufacturers’ delivery and secondary delivery decreased significantly, and the wholesale price of bulk bottles once stood at 3000 yuan. In the second half of the year, with the company’s large-scale volume, the wholesale price will gradually drop; It is expected that bulk bottles will still exist in the future, but the price difference between boxes and bulk bottles will gradually narrow. Considering the acceleration of Maotai’s large volume of e-commerce, supermarkets and the province at the end of the year, as well as the expansion of the proportion of direct sales, the improvement of product structure and the appearance of the effect of non-standard price increase, we look forward to the growth of the company in the fourth quarter; In 2022, with considerable volume increase and structural improvement, the company’s performance still has elastic space. Maotai’s price increase is expected to rise recently, which is mainly stimulated by many factors, such as the dealer’s 1479 yuan allocation of pumao and the withdrawal of puwu comprehensive payment to 969 yuan. We believe that the way and time of Maotai’s price increase can not be predicted, but the company has always had the ability and space to increase the price and continues to be optimistic about the steady development of the company in the future.
4. Popular products: under the catalysis of price increase, the goods are well prepared through Q4 channel, and the demand inflection point still needs to be verified. Due to the positive preparation of goods by the channel after the price increase and the early spring festival in 2022, many popular products companies have received good feedback on recent shipments, but it is still in the stage of channel inventory transfer, and it still needs time to test whether the terminal demand really ushers in the recovery. Since the beginning of this year, the food sector has been affected by five adverse factors: weak demand, Limited catering, channel reform, rising costs and high inventory. The central economic work conference held over the weekend clearly put forward that steady economic growth will drive employment, implement new tax reduction and fee reduction policies, and put promoting the common prosperity of all people in a more important position. The overall consumer demand is expected to pick up next year. The dark hour of the mass products sector has passed, and it is expected to usher in marginal improvement. Medium and long-term opportunities also depend on the judgment of demand recovery. We continue to recommend leading enterprises that pay attention to the optimization of industry structure, have pricing power, marginal improvement of performance and reasonable valuation, such as Angel Yeast Co.Ltd(600298) , Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Chacha Food Company Limited(002557) , Foshan Haitian Flavouring And Food Company Ltd(603288) . And the industry is ushering in high growth with the changes of consumer groups and consumption structure. Low alcohol beverage, high-end beer and catering industries in the early stage of rapid penetration focus on Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Chongqing Brewery Co.Ltd(600132) , Fu Jian Anjoy Foods Co.Ltd(603345) , Ligao Foods Co.Ltd(300973) .
5. Industry and company perspectives update:
1) Shanghai Bairun Investment Holding Group Co.Ltd(002568) : the rising cost drives the price increase, and the profit elasticity increases. The company’s announcement this week will adjust the factory price of the whole range of preprocessed wine and flavor products. The price range of the main products is 4%-10%. The new price has been implemented since December 25, 2021. The price increase is mainly due to the general rise in the prices of bulk raw materials and commodities, and the obvious rise in the costs of packaging, freight, labor and energy. Considering various factors, we believe that the price increase has a high probability of smooth transmission. If the cost returns to the normal level next year, it can contribute more performance flexibility.
2) Inner Mongolia Yili Industrial Group Co.Ltd(600887) : the company’s fixed growth plan was implemented this week. This additional offering is by far the largest bidding fixed increase financing in the consumer industry in the A-share market, At the same time, it is also the largest number (53) of fixed increase projects with a value of more than 10 billion since the issuance of the new refinancing regulations, the lowest issuance discount (5.46%) and the highest subscription multiple (3.4 times). The funds are mainly used to produce high-end liquid milk, high-end normal temperature yogurt, milk powder, health drinks and other categories with high growth potential and high added value, so as to help the company achieve the goal of No. 1 in each dairy industry segment.
6. Recommend stocks: Overall, the Baijiu industry will remain stable and the secondary high-end logic will continue to be fulfilled. 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: Kweichow Moutai Co.Ltd(600519) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Anhui Kouzi Distillery Co.Ltd(603589) , Luzhou Laojiao Co.Ltd(000568) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) , Wuliangye Yibin Co.Ltd(000858) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Sichuan Swellfun Co.Ltd(600779) , Anhui Yingjia Distillery Co.Ltd(603198) , Jinhui Liquor Co.Ltd(603919) .
Popular products: Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Angel Yeast Co.Ltd(600298) , Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Fu Jian Anjoy Foods Co.Ltd(603345) , Ligao Foods Co.Ltd(300973) , Foshan Haitian Flavouring And Food Company Ltd(603288) , Chongqing Brewery Co.Ltd(600132) , Chacha Food Company Limited(002557) etc. Short term suggestions: Kweichow Moutai Co.Ltd(600519) , Anhui Kouzi Distillery Co.Ltd(603589) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) etc.
7. Risk tips: 1) the recovery of catering channels affected by the epidemic is lower than expected; 2) Macroeconomic fluctuations hinder the pace of consumption upgrading; 3) Industry policy changes lead to increased competition; 4) Food safety incidents, etc.
