Key investment points
Baijiu: Moutai is constantly strengthening its market reform. 1) After President Ding took office, market-oriented reforms occurred frequently: we believe that the solution to Maotai’s price contradiction lies more on the supply side. In the future, administrative means will be gradually transformed into market-oriented and legal system. The core of market-oriented reform lies in the reform of price system. The reform measures such as increasing investment and fine investment in the Mid Autumn Festival and allocating 1479 yuan to dealers at the end of the year reflect the new management’s deeper understanding of supply and the gradual reduction of administrative means. It is expected to further promote market-oriented reform in the future. The most effective way of market-oriented reform and commercialization of Maotai is to narrow the large price difference between retail price and real wholesale price. 3) the high specification “Mao five meeting” will further improve the industry structure: Kweichow Moutai Co.Ltd(600519) official account shows that in December 10th, Moutai chairman Ding Xiongjun led the team to Wuliangye Yibin Co.Ltd(000858) exchange, the core management of both sides attended the meeting, and the former chairman of Moutai, Li Baofang and Ji Keliang, also visited Yibin. This specification of Mao five exchanges is very rare in history, or means that Mao five will lead the Baijiu industry to further improve the competition pattern, and also reflects Moutai’s becoming more open. 4) The Wuliangye Yibin Co.Ltd(000858) rating continued to rise this week, and channel confidence gradually recovered: the rating of the eighth generation and fifth generation rose from 950 yuan to about 980 yuan this week, which verified our previous judgment that the Wuliangye Yibin Co.Ltd(000858) rating will rise higher than expected according to the low inventory of the channel and the annual sales volume is better than the report. Both channels and mobile sales provide strong support for the rationalization of price bands and the gradual recovery of channel profits. The pressure of price increase on channels is expected to be better than expected, and 2022 can start well.
This week, we released the special study on Maotai price increase, “people’s minds are rising, and the feasibility of Maotai price increase”: 1) at present, the prices of international spirits and tobacco are rising. Maotai rationally responds to the price increase and complies with the market, so as to better stand in the queue of international brands. We think the time is ripe to raise the price. From the history of Maotai price increase, it can be clearly seen that the previous price increases have a large range, and the guide price is usually close to the actual market price. Considering the current market situation, the price increase range may exceed expectations. 2) In terms of price increase methods, direct price increase is the most effective, and channel reform is based on the long-term. Calculation of potential price increase range: Historically, channel price difference is the key to price increase range. The price increase range / channel price difference of Feitian each time is more than 18%, and the ex factory price is expected to be increased to 1299 based on the actual batch price of 3000; The two track system of ex factory price is relatively to treat the symptoms rather than the root causes. The foundation of the new Maotai cloud business is more solid, and it is expected to recover part of the channel profits in the long run. 3) Potential impact of price increase: it is estimated that if the price is increased, the profit will be significantly increased. After the price increase, the channel profit is still rich enough to support the next price increase; With the deregulation of price control, Maotai can balance price increase and volume to achieve more flexible long-term steady growth; At the same time, it is also conducive to Maotai channel reform and market-oriented operation, straighten out the price belt for Maotai 1935 new products, and is expected to contribute to the second growth curve. 4) industry opportunities: Kweichow Moutai Co.Ltd(600519) as a leader has a significant role in promoting the Baijiu industry. If the price increases smoothly, it will open up price space for other high-end and high-end Baijiu brands, and enhance channel confidence. The industry will enter the business cycle of increasing inventories, and next year, there will be rare opportunities for industrial investment.
Inner Mongolia Yili Industrial Group Co.Ltd(600887) : fixed increase is implemented, and it is optimistic about the logic of continuous realization of long-term profits. The company announced the results of fixed increase issuance, The issue price is 37.89 yuan / share (discount rate 5.46%), the number of shares issued was 318 million, raising a total of 12.047 billion yuan. There were 22 issuing objects, including 1.488 billion yuan allocated to Barclays and 1.415 billion yuan allocated to Goldman Sachs. 1) long term optimistic about the profit cashing logic. First, the competition for liquid milk will gradually become rational in the future. On the supply side, with the increase of the threshold of environmental protection policies, the fluctuation of upstream raw milk supply will gradually narrow; at the same time, longlong The price war between the two sides has only a negative impact on the profit side, but no positive impact on the income or share side. Therefore, the input of competitive expenses may be more rational in the future. Second, product structure optimization continued to improve gross profit margin. one side, High end liquid milk continued to maintain a rapid growth rate (Jindian organic, dream cover and other series), the proportion of high-end products is increasing; on the other hand, the gross profit margin of the company’s milk powder and cheese business categories is higher, and the optimization of product structure improves the overall gross profit margin. 2) recent tracking: according to the feedback from East China and North China, we expect the company’s liquid milk to grow steadily year-on-year in November, which is expected to be close to double-digit growth, and the inventory is at a healthy level 。
Fu Jian Anjoy Foods Co.Ltd(603345) : make efforts to prepare vegetables and promote the development of the second growth curve. 1) This year, the company began to position the prefabricated dishes as the second growth curve in the future. First, the company quickly entered the market with the OEM mode of Mr. frozen products, and recently launched the medium and high-end private brand gift box of Anji. Channel operation, the company is using the Kwai Chi special way to operate, and distributors together to invest in counters, open up markets, in the wholesale markets of farmers, vegetable farms, BC super grade as a consumer guide. We believe that the strategic objectives and planning of the company are clear, and strong execution and efficiency have been verified in history. This step will further consolidate the channel power of Anji and lay a solid foundation for the development of the second growth curve in the future. 2) Recent tracking: according to the channel survey feedback, since the price increase in November, the growth rate in some regions has decreased month on month due to the impact of early hoarding, but many places still maintain a rapid growth rate, and the growth rate in some regions is still more than 30%. We expect the main industry to maintain a growth rate of 20% + from October to November.
Recommended combination in December: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Juewei Food Co.Ltd(603517) , Luzhou Laojiao Co.Ltd(000568) . The rise and fall ranges were Wuliangye Yibin Co.Ltd(000858) (13.30%), Chongqing Fuling Zhacai Group Co.Ltd(002507) (11.66%), Luzhou Laojiao Co.Ltd(000568) (9.62%), Kweichow Moutai Co.Ltd(600519) (8.25%), Juewei Food Co.Ltd(603517) (4.70%) respectively, and the portfolio yield was 9.51%. Over the same period, the Shanghai Composite Index rose 2.88%, and the portfolio rose 6.63% higher than the Shanghai Composite Index.
Investment strategy: the layout is at the right time. In the first half of this year, despite the repeated epidemic in 2020-2021, although the consumption is expected to cool down, the growth of food and beverage is stable. The catering industry chain has been greatly affected by the epidemic. By the end of October, catering has recovered to the 19-year level. With the effective control of the epidemic, catering is expected to be gradually repaired. The price of raw materials has risen sharply, the performance of food and beverage Q3 is under pressure, and the price of manufacturer Q4 is intensively adjusted. The performance is expected to accelerate next year. The layout is just right. Baijiu liquor holds high grade liquor and embraces the high-end elastic standard. Recently, the price increase of Baijiu leading enterprises has exceeded the expected possibility during the intensive business price increase. Pickled mustard, Anjing, Jue Wei, Qiaqia, Yili, Tsingtao Brewery Company Limited(600600) are mainly recommended for food, and Chenguang, Aipu and Liguo can also be considered.
Risk tips: risk of global and Chinese epidemic spread, risk of large outflow of foreign capital, sauce and wine inventory and policy.
