Key investment points:
1, market sentiment led the trend of the sector, and the large outflow of foreign capital led to the Baijiu callback. Food and beverage fell 3.90% this week, underperforming the Shanghai Composite Index (- 1.13%) by 2.77 percentage points. We previously stressed that the food and beverage sector is now entering a performance vacuum, and emotions are easily catalyzed by events; This week, the market risk aversion is warming. The leading food and beverage leader represented by Baijiu liquor is down sharply due to the large outflow of foreign capital. This week, the fine industry only increased 1.98% snacks, Baijiu (-4.84%), health care products (-4.13%), beer (-4.01%) and other sector decline. In terms of equity investment of China Resources Bureau (+ 35 Chongqing Fuling Zhacai Group Co.Ltd(002507) (+ 4.85%) etc.
2, the large outflow of foreign capital has led to the callback of Baijiu liquor, but the industry is basically stable and the upward trend is not changed. Moutai and other regional high-end leaders are also strongly recommended. Due to the turbulence of the international political environment, the market risk aversion increased this week, and foreign capital flowed out sharply. Shanghai and Shenzhen port and food and beverage sectors north of the net capital flows out of about 2 billion 860 million yuan, of which Baijiu sector net outflow of about 3 billion 770 million yuan. Core Baijiu, such as Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) and Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , came out of funds this week, about 33.2, 5.1, 1.2 and 110 million yuan respectively. The total share of foreign capital holdings decreased by 0.15, 0.07, 0.04 and 0.03pct respectively, which is the main reason for the sharp decline of the sector. Liquor sector decline has nothing to do with fundamentals. For example, we emphasized that Baijiu and Su liquor were outstanding in the Baijiu and Spring Festival, and the leading companies’ repayment was completed. In 2022, the overall trend of the industry will continue to rise, and the secondary high-end will continue to grow elastically. At present, the valuation of the sector has dropped to a reasonable level. Taking into account the fundamentals, valuation, performance certainty and market expectations, we continue to be optimistic about Kweichow Moutai Co.Ltd(600519) + regional sub high-end leading liquor enterprises ( Anhui Kouzi Distillery Co.Ltd(603589) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) , etc.).
3. Popular products: the performance of 2021q4 was jointly boosted by the price increase and the advance of the Spring Festival, and the recovery of overall demand still needs to wait. Recently, Eastroc Beverage (Group) Co.Ltd(605499) , Chacha Food Company Limited(002557) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , etc. have released performance letters, and Q4 has a bright performance. However, the performance of Q4 is mainly based on two common factors: 1) the price of Q4 was raised in 2021, the industry leader has strong pricing power and the channel actively prepares goods; 2) The Spring Festival in 2022 will be advanced, and the goods preparation in the peak season of the Spring Festival will be advanced to 2021q4. However, it is expected that many popular products in 2022q1 will face performance pressure: the Spring Festival in 2021 was late last year, and the channels were worried about the recurrence of the epidemic, so the goods were actively prepared. 2021q1 was the quarter with the highest performance base in the whole year. We suggest to comprehensively investigate the actual growth of the company in combination with the performance of 2021q4 and 2022q1. After the Spring Festival, the repeated epidemic brought by Omicron will still affect catering and other consumption, so the overall sector opportunity still needs to wait for the demand to pick up. At present, we can pay attention to structural opportunities: (1) Inner Mongolia Yili Industrial Group Co.Ltd(600887) : the demand for white milk is still strong, the nature of normal temperature milk gifts in the Spring Festival is prominent, the sales increase is high, the price of raw milk is stabilized, and the leading Inner Mongolia Yili Industrial Group Co.Ltd(600887) revenue and profit side are expected to grow well; (2) Shanghai Bairun Investment Holding Group Co.Ltd(002568) : the trend of low alcohol beverage industry continues, the penetration rate is still low, and the future development space of the industry is large. At present, the valuation has dropped to a lower level.
4. Update of industry and company views:
(1) Chongqing Fuling Zhacai Group Co.Ltd(002507) : Q4’s performance has exceeded expectations, and the elasticity is expected to continue. In Q4 of 2021, the company achieved a revenue of 564 million yuan, a year-on-year increase of 19.0%, and the net profit attributable to the parent company was 238 million yuan, a year-on-year increase of 45.7%. Q4’s revenue grew faster and its performance exceeded expectations, which was mainly promoted by many factors: 1) the price increase stimulated the enthusiasm of channel goods preparation and released the price increase effect; 2) The time point of this year’s Spring Festival is ahead of schedule. It is expected that the stock before the festival will be more reflected in Q4; 3) Q4 advertising cost contraction, etc. Looking forward to 2022, considering the high base of Q1 last year, there may be some pressure on Q1 this year, but throughout the year, the price increase effect is expected to continue to release, superimpose the contraction of brand launch costs, and jointly contribute to the elasticity of annual performance. This year, the purchase price of qingcaitou falls back to the normal range of 800900 yuan (about 1300 yuan last year), and its contribution to performance is expected to be gradually reflected. At the same time, this year, the company will upgrade the product packaging, reduce the salt by 30%, and actively promote the sinking of channels and the development of b-end channels. Under the background of the improvement of industry concentration and consumption upgrading, the company is expected to obtain more market share and further open the sales space.
(2) Chacha Food Company Limited(002557) : Q4 performance increased month on month, and the price increase was conducted smoothly. Benefiting from the early spring festival goods preparation in 2022, strong demand for gifts and low Q4 base, the company’s 2021q4 revenue increased by 28.33% year-on-year, with a growth rate higher than expected. Considering the dislocation of Spring Festival, the growth rate of 22q1 may be under pressure in the short term. Combined with 21q4 and 22q1, it is expected to maintain steady growth as a whole. The net profit attributable to the parent company on the profit side was + 21.97% year-on-year, and the deduction of non net profit was + 32.17% year-on-year. The growth rate was faster than that on the income side. The main reason was that the company raised the ex factory price of melon seed series products in October last year, and the price increase was conducted smoothly, demonstrating the company’s strong bargaining power. The melon seed series on the product side continued to develop new flavor products, the probiotics and oatmeal series on the nut side made steady progress, and the company’s channel control and coverage continued to improve under the target of one million terminal on the channel side. This year, the company is expected to take advantage of the opportunity of price increase to continue to promote the upgrading of high-end melon seed brands and packaging, increase brand investment and optimize product structure. The gross profit margin of melon seed series products is expected to rise steadily.
(3) Budweiser Asia Pacific: the profitability has recovered to the level of 2019, and the high-end process has accelerated. This week, Budweiser Asia Pacific released its 2021 annual report, and the company achieved revenue of about US $6.79 billion (the same as + 14.9%); EBITDA was about US $2.14 billion (the same as + 27.3%), and profitability returned to 2019 level. Among them, the revenue and EBITDA of the Chinese market in 2021 were + 18.0 / 28.7% year-on-year respectively, and the sales volume and ton price were + 9.3 / 7.9% year-on-year respectively. The company’s market share in China increased by 0.8% year-on-year, of which 1) Budweiser and Budweiser Jinzun maintained double-digit growth, of which the sales volume of Budweiser Jinzun increased by more than 50%; 2) Harbin beer has successfully upgraded its brand and achieved high single digit growth; 3) Corona, Lanmei and Fujia led the ultra-high end to achieve strong double-digit growth. On the whole, the company’s performance in 2021 is in line with expectations, and the high-end continues to accelerate and continue the performance of structural upgrading.
(4) Guangzhou Zhujiang Brewery Co.Ltd(002461) : rising costs suppress 2021q4 performance, and the company will continue to enjoy high-end dividends.
This week, the company released the performance express for 2021. The company achieved an operating revenue of 4.538 billion yuan (the same as + 6.79%), a net profit attributable to the parent company of 612 million yuan (the same as + 7.42%), and a net profit of about 495 million yuan (the same as – 5.51%) after deducting non-profit; It is estimated that the company’s Q4 operating revenue / net profit attributable to the parent company in 2021 will be + 10.51% / – 73.44% year-on-year respectively. The performance pressure in the fourth quarter is expected to be mainly related to the rise of costs. The company’s high-end products continued to be sold in large quantities. The annual beer sales volume was 1276300 tons (the same as + 6.41%), and the ton price increased slightly year-on-year, with a low increase in ton price. It is expected that it is mainly related to the cost of high-end products. On the whole, the company is deep in the economically developed South China market and has a significant leading position in the province. It is expected to continue to enjoy the high-end dividend of the industry in the future.
5, industry rating and investment strategy: Overall, the trend of steady and steady improvement of Baijiu industry is maintained. The price increase of popular products has brought marginal improvement to the performance of the sector. In the long run, the market share is expected to continue to focus on leading enterprises. After the valuation falls, the investment value of leading enterprises is highlighted. Based on this, we maintain the rating of the food and beverage industry as “recommended”.
Baijiu: Kweichow Moutai Co.Ltd(600519) (recommended), Anhui Kouzi Distillery Co.Ltd(603589) (recommended), Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (recommended), Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) (concern), Anhui Gujing Distillery Company Limited(000596) (concern), Luzhou Laojiao Co.Ltd(000568) (attention), Wuliangye Yibin Co.Ltd(000858) (recommendation), Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) (recommended), Sichuan Swellfun Co.Ltd(600779) (recommended), Anhui Yingjia Distillery Co.Ltd(603198) (attention), Jinhui Liquor Co.Ltd(603919) (attention), and concern (etc.).
The popular goods: Hongda Xingye Co.Ltd(002002) 568 \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ (recommended), etc.
Short term recommendations Kweichow Moutai Co.Ltd(600519) , Anhui Kouzi Distillery Co.Ltd(603589) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) , etc.
6. Risk tips: 1) the recovery of catering channels affected by the epidemic is lower than expected; 2) Macroeconomic fluctuations have hindered the pace of consumption upgrading; 3) Industry policy changes lead to increased competition; 4) The price of raw materials has risen sharply; 5) Focus on the company’s performance or less than expected; 6) Food safety incidents, etc.
