Investment suggestions:
Thinking at the end of the year: how to view the food and beverage investment opportunities in 2022? In 2021, the food and beverage sector was affected by macro-economy, epidemic fluctuation and other aspects. The valuation of the sector was at a historical high at the beginning of the year. The digestion of valuation or performance adjustment led to periodic pressure on the stock price. Looking forward to 2022, the valuation of the sector will return to a reasonable and cost-effective range, and the fundamentals are expected to accelerate the improvement. In addition, high-quality leaders continue to prove their moat in economic fluctuations. We are more confident in the investment opportunities of the sector next year. We suggest thinking about investment opportunities from three dimensions – “enterprise business model, prosperity improvement speed, valuation and cost performance”.
In the past 22 years, the moat has been recommended for the first half of the year, with a good business model and a high price for valuation baijiu. The performance of high-end enterprises in the past 22 years has accelerated month on month, and the competition pattern has remained stable; Although the base of the secondary high-end is high and the growth rate slows down, the performance remains highly flexible, and the goals of some companies are expected to exceed expectations; The upgrading speed of real estate liquor is obvious, driven by equity incentive and reform. In this round of industry recovery, listed leading enterprises have made great efforts to consolidate their brand strength and benign channels, and the upgrading of industry consumption continues. We believe that the industry cycle is expected to take longer. Considering certainty and enterprise potential energy, the first high-end and sub high-end reform companies are recommended.
In the second half of the year, we will focus on the mass products sector with improved fundamentals and recovery of prosperity. This year, the mass products sector also bears the dual pressure of increased costs + weak demand: 1) at the demand level, the economic downturn + repeated epidemics + rainstorm weather restrict catering consumption, and the sales volume of catering related industries such as beer and condiments is lower than expected. 2) At the supply level, rising raw material costs and production power rationing all suppress the gross profit margin. In 22 years, the mass products sector is expected to usher in the double improvement of cost and demand side, and the fundamentals are better month on month. On the demand side, the central economic work conference was held this week, emphasizing the “implementation of the strategy of expanding domestic demand”, which is expected to give consumption support from the policy level, and mass products will benefit first. On the supply side, the price of leading enterprises will be raised intensively at the end of the year, and PPI is expected to transmit to CPI. The popular products sector currently recommends beer, dairy products and small food companies with improved fundamentals, focusing on tracking the recovery rate of condiment prosperity.
Baijiu: we continue to judge the structural and price rise of famous liquor companies. The first thing is the high-end target with strong performance. The high end brand itself has a brand moat. The new entrants can not shake their head position. At the same time, it is also suggested to pay attention to the subject matter of secondary high-end reform, and move up the high-end price belt to give more space to the subject matter of secondary high-end. In addition, it is still recommended to pay attention to the dealer conference in the short term, set the volume and price strategy and performance objectives for the coming year, and the equity incentive expectations of medium and long-term liquor enterprises.
Beer: pay attention to the double improvement of demand and cost in the peak season next year: 1) from the sales base, H1 is normal and Q3 is low. After the epidemic situation improves, the dynamic sales in the peak season next year can be expected to be better. 2) From the perspective of price increase transmission, the price of leading enterprises in the peak season next year is sorted out, which is expected to usher in the release of profits. 3) From the perspective of cost, we judge that the cost of 22h1 is heavier or month on month, and H2 observes when the cost inflection point appears. In the medium and long term, the main line of “high-end + improvement of business efficiency” remains unchanged.
Condiment: since the third quarter, the catering industry has gradually recovered, driving the recovery of condiment demand. At the same time, the channel de inventory of the condiment industry has continued, the dynamic sales of channel terminals have gradually improved, and the operation of each head company has improved month on month. With the gradual transmission of price increases by leading enterprises such as Haitian, Angel Yeast Co.Ltd(600298) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , continue to observe the improvement of prosperity and the elasticity of price increases on profit transmission.
Food: first of all, we are optimistic about the dairy sector. The elasticity of next year’s performance is mainly reflected in the profit side. Both the top two have begun to take into account the profit. If Yili can achieve the goal of increasing the net interest rate by 0.5pct per year, we predict that the profit growth rate of the company will reach more than 15% in the next two years, which is greatly improved compared with the profit growth rate in 17-20 years. At present, the PE of Yili in the past 22 years is 25 times, and it still has a strong safety margin, which is mainly recommended. In the comprehensive food sector, we believe that we mainly grasp two main lines: one is the companies with stable operation and relatively smooth price increase transmission or profit elasticity (Qiaqia and some quick-frozen enterprises), and the other is the marginal improvement of some pressure bearing companies this year.
Risk warning: macroeconomic downside risk / continuous and repeated epidemic risk / regional market competition risk.
