Market review last week:
Last week (December 13-december 17), the food and beverage sector (Shenwan) fell 3.35%, the Shanghai Composite Index fell 0.93%, the Shenzhen Component Index fell 1.61%, and the Shanghai and Shenzhen 300 fell 1.99%. The food and beverage sector lost 2.42 percentage points to the Shanghai composite index last week, ranking 27th among the weekly rises and falls of Shenwan’s 31 primary sub industries. Most of the sub sectors fell, and the Baijiu plate fell 3.28%.
The core Baijiu Baijiu high tide, strong and strong liquor sector: the liquor price of the high-end Baijiu is rising steadily, and the high tide is strong. Under the background of the current consumption upgrading, high-end Baijiu is showing a trend of steady price increase. In terms of quantity, the production capacity of high-end Baijiu is limited by technological reasons. In the current peak season, the overall sales volume of high-end Baijiu is relatively stable. In terms of premium, Baijiu liquor has strong brand strength and consumer recognition, and its price is expected to increase continuously under the trend of consumption upgrading. Last week Luzhou Laojiao Co.Ltd(000568) Guojiao Liquor Sales Co., Ltd. issued the notice on adjusting the price system of 52 degree Guojiao classic packaging terminal channel in the south central and southwest regions. The notice said that it was suggested that the planned quota supply price of 52 degree Guojiao 1573 classic packaging (500ml * 6) terminal channel should be increased by 70 yuan / bottle. With the implementation of Luzhou Laojiao Co.Ltd(000568) price increase, Wuliangye Yibin Co.Ltd(000858) and Maotai price increase are expected to be gradually implemented, High end Baijiu boom is highly deterministic.
The market of high-end Baijiu is expanding continuously, and the growth of sub high end brand with strong channel and brand power is expected to further increase. With the Baijiu Baijiu belt moving continuously, the ceiling of the secondary Baijiu liquor has been shifting upward. With the continuous growth of high net worth population and the continuous consumption upgrading, the market space of the second high-end liquor has been constantly opened. Under this background, the sub Baijiu Baijiu enterprises with strong brand strength and channel strength will enjoy the bonus of the industry expansion to a greater extent. The current nodes should focus on the national expansion of the regional high-end liquor leading enterprises.
Condiment sector: what enlightenment does the historical price increase bring us? According to the historical price increase, except for the disturbance of the company’s own business factors, the performance of each company driven by the price increase is good. Firstly, the price increase can hedge the cost pressure. Secondly, once the subsequent cost of the price increase caused by the price increase falls, the company’s performance is expected to usher in a second release. The price increase will sort out the price system in all links of the market, and rich channel profits will drive sound development. Determined by the rigid demand attribute, the price increase has little impact on the seasoning sales.
After the price increase information is released, driven by the rise in valuation, the share price of condiment enterprises will be quickly reflected in a quarter. If the price increase is successful, the report end will reflect the profit thickening after q1-q2.
The resonance between valuation and performance is realized, and the relevant companies have obvious excess returns.
Investment advice
Plate allocation: Baijiu > beer > dairy products > snack food > condiment; Baijiu: we should pay attention to high-end liquor enterprises Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , and Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) and Jiugui Liquor Co.Ltd(000799) with high potential development. Beer: it is recommended to pay attention to Tsingtao Brewery Company Limited(600600) with high growth expectation in future performance; Dairy products: it is suggested to focus on Inner Mongolia Yili Industrial Group Co.Ltd(600887) in the three aspects of production capacity, channel and product.
Risk tips:
Baijiu price rise less than expected, terminal demand fell, food safety issues.
(East Asia Qianhai securities)
