Resumption 2021: currently at the end of the downturn, the choice is uncertain. 2021h2 can be called the downturn of the food and beverage industry. In the face of the double pressure of consumption and cost in the second half of this year, each subdivided industry of food and beverage is more or less tired in operation. Baijiu has stepped into the sensitive period of shift and beer has not fully demonstrated the strong potential energy brought by structural upgrading due to epidemic and cost pressures. The catering industry chain and condiment leading enterprises have been actively adjusting in the winter, showing differences in anti pressure, dairy products showing structural boom, and the largest volume of liquid milk has entered a mature stage. The development of the booming track needs time to be tested.
Outlook 2022: there are differences in consistency expectations. Looking for stability will become the main investment strategy next year. We believe that the current market has the following differences on the food and beverage sector: 1) the time of consumption recovery, 2) the smoothness of price increase transmission, 3) the impact of new channels on consumption, and 4) the competition of popular tracks. However, we believe that although there are still many uncertain factors in 2022 and there is no clear conclusion and forward-looking data on the overall recovery of consumption, after the stress test this year, food and beverage is at the end of the downturn. If we look at the longer dimension, we still need to be optimistic, and the consumption upgrading is still the same trend, Moreover, after the two-year base disorder of 2020 and 2021, food and beverage can better test some stable industry trends and high-quality companies from top to bottom. At present, the differences in the judgment of food and beverage and the indecision in investment can find “stable” investment opportunities through systematic combing.
Investment suggestion: looking forward to 2022 amid differences, we believe that looking for stability will become the main investment strategy next year. Combined with the current valuation performance of each sub industry, as well as the industry fundamentals and future prospects, we think we can pay attention to three main opportunities: first, the stability opportunities of industry leaders under consumption pressure and cost pressure are prominent, second, the industry trend and company performance are bistable, and third, the bottom of valuation and performance reversal are bistable.
Consumption pressure and cost increase, the first choice of the leading companies with good competition pattern: 1) the valuation of high-end Baijiu has entered a reasonable interval, and next year it may continue to be the K consumption trend. The stability of high-end Baijiu is obvious, and Kweichow Moutai Co.Ltd(600519) and Wuliangye Yibin Co.Ltd(000858) are recommended, and Luzhou Laojiao Co.Ltd(000568) is concerned. 2) Under the logic of price increase, we believe that when the demand is still uncertain, the transmission of price increase is very important. The leader has a comparative advantage in the industry competition, and the price increase dividend is expected to be released. We recommend Inner Mongolia Yili Industrial Group Co.Ltd(600887) and Angel Yeast Co.Ltd(600298) , and pay attention to Foshan Haitian Flavouring And Food Company Ltd(603288) and Mengniu Dairy industry.
The industry trend and the company’s performance are both stable. Beer track is the first choice and catering industry chain is the second choice: 1) the logic of beer industry structure upgrading is continuously strengthened at both the enterprise level and the investment level. In the short term, the industry is catalytic for price increase. In the long term, we are optimistic about the industry beta opportunities brought by the high-end beer. We recommend Tsingtao Brewery Company Limited(600600) and pay attention to Chongqing Brewery Co.Ltd(600132) and China Resources beer. 2) The trend of the catering industry chain is irreversible. In the era of efficiency first, catering industrialization will give birth to many high-quality companies. Although there will be competitive pressure in the short term, the flowers are not beautiful, and the stars are bright, continue to recommend Zhengzhou Qianweiyangchu Food Co.Ltd(001215) and pay attention to Ligao Foods Co.Ltd(300973) , Fu Jian Anjoy Foods Co.Ltd(603345) . 3) Under the healthy trend, the leaders of each segment track are expected to benefit from the rapid growth of the industry beta and the company’s own alpha. It is recommended to Eastroc Beverage (Group) Co.Ltd(605499) , and pay attention to Beijing Scitop Bio-Tech Co.Ltd(300858) , Shanghai Milkground Food Tech Co.Ltd(600882) and By-Health Co.Ltd(300146) .
Double stability of valuation bottom and performance reversal: after the correction in 2021, the subject matter of food and beverage is currently at the bottom of historical valuation, with a high safety margin. At the same time, it can also be confirmed that in the recovery channel of reform, there is a great opportunity for performance reversal, and such targets are expected to run out of strong excess returns in 2022. Recommend the Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) of Baijiu plate, the Qingdao Richen Food Co.Ltd(603755) of the compound condiment plate and the Jiahe Foods Industry Co.Ltd(605300) of the food ingredients plate. It is recommended to pay attention to the Sichuan Teway Food Group Co.Ltd(603317) of the compound condiment plate and the He Bei Cheng De Lolo Company Limited(000848) of the soft drink plate.
The key points are: 1) Baijiu: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) ; 2) non Baijiu: Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Angel Yeast Co.Ltd(600298) , Tsingtao Brewery Company Limited(600600) , Zhengzhou Qianweiyangchu Food Co.Ltd(001215) , Eastroc Beverage (Group) Co.Ltd(605499) , Qingdao Richen Food Co.Ltd(603755) , Jiahe Foods Industry Co.Ltd(605300) .
Risk tips: macroeconomic downside risk, policy risk, food safety risk, company operation risk, less than expected new product launch, substitution and impact of imported products, etc.
