Core view
21 year review: the performance of the sector is under pressure, and the stock price is more sensitive to supply side reform than to demand side reform. In terms of fundamentals, the industry as a whole is under pressure under the influence of weak consumption, community impact, repeated epidemic, upward cost side and so on; In terms of market performance, on the one hand, the stock price of the industry has continued to callback since the second quarter. In September, the stock price has been repaired due to the price increase of Companies in the industry; On the other hand, at present, the sensitivity of the industry's stock price to the supply side reform is greater than that of the demand side. The stock price has a low response to the relevant events on the demand side of the industry, such as the repeated epidemic and the release of social zero data, but pays more attention to the supply side. In particular, the price rise wave that has been continuously interpreted since the end of September has ushered in the largest rise in the overall stock price of the food sector since Q2.
22 year Outlook: weak recovery on the demand side, continuous reform on the supply side, and marginal improvement in the industry driven by the reform. On the demand side, we believe that the industry demand will still show a twists and turns, medium and weak recovery trend under the influence of the epidemic in 2022; On the supply side, under the pressure of 21 years, various sub sectors in the industry have generally set off a tide of reform, such as the tide of price rise, the resistance to community group buying from resistance to embrace, a series of reforms carried out by snack food enterprises, the counter trend expansion of halogen products enterprises, etc. driven by the supply side, we believe that the industry is expected to show marginal improvement.
Investment advice
First, under the overall background of weak recovery of industry demand, we suggest starting from the supply side and paying attention to various reform themes. 1) Industry price increase theme: at present, the price increase industry has gradually entered the deduction of stages 2 and 3. In terms of stage 2, we suggest paying attention to the individual stocks whose price increase implementation is relatively smooth due to the industry pattern and product characteristics, has little impact on sales, and the price increase is expected to cover the rising cost, such as Angel Yeast Co.Ltd(600298) , Chacha Food Company Limited(002557) ; In terms of phase 3, we suggest to pay attention to the individual stocks with high possibility of cost reduction, large profit elasticity after cost reduction and expected retention of price increase effect. Among them, from the perspective of cost reduction, the cost of green vegetables is highly deterministic, the cost of soybeans and packaging materials remains to be seen, and the cost of honey is expected to increase. In phase 2 and 3, we suggest to focus on Angel Yeast Co.Ltd(600298) (600298, buy), Chacha Food Company Limited(002557) (002557, buy), Toly Bread Co.Ltd(603866) (603866, buy), Chongqing Fuling Zhacai Group Co.Ltd(002507) (002507, not rated). 2) Reform the leisure food sector at the right time: the industry is actively changing under the pressure of the decline of business supermarket passenger flow, channel policy change and weak consumption. It is suggested to actively pay attention to individual stocks with initial effect of reform and strong certainty of reform effect, such as Chacha Food Company Limited(002557) (002557, buy), Yanker Shop Food Co.Ltd(002847) (002847, buy), Three Squirrels Inc(300783) (300783, Unrated), Bestore Co.Ltd(603719) (603719, overweight). 3) Halogen products sector determined to reform: industry leaders expanded against the trend in the epidemic situation, and the store network sank and encrypted to seize market share; In addition, integrate market resources through investment and M & A to open the upper limit of long-term development space; It is recommended to pay attention to leading enterprises Juewei Food Co.Ltd(603517) (603517, buy).
Second, if the demand side of the industry recovers more than expected, we suggest paying attention to individual stocks with greater elasticity to demand recovery. It is suggested to pay attention to the stocks with a high proportion of catering. On the one hand, there is still much room for recovery of current catering revenue compared with commodity sales revenue. On the other hand, catering shows stronger recovery elasticity compared with commodity sales revenue (e.g. repair in September). We suggest paying attention to some stocks with high catering proportion and damaged revenue due to slow catering recovery, such as Foshan Haitian Flavouring And Food Company Ltd(603288) (603288, not rated) and Qingdao Richen Food Co.Ltd(603755) (603755, not rated). In addition, we also suggest paying attention to Toly Bread Co.Ltd(603866) (603866, buy) with stronger optional consumption attributes and the marginal improvement of dynamic sales driven by the recovery of business travel.
Third, it is suggested to grasp the allocation opportunities from the perspectives of clear growth logic and 22-year fundamental improvement. 1) Quick frozen faucet Sanquan Food Co.Ltd(002216) (002216, buy), Fu Jian Anjoy Foods Co.Ltd(603345) (603345, overweight); 2) Individual stocks in the re adjustment sector, such as Yihai International (01579, Unrated), Zhongjing Food Co.Ltd(300908) (300908, Unrated).
Risk statement
Repeated epidemics, consumption recovery less than expected, raw material cost pressure, food safety, reform less than expected, measurement error
