Market review last week:
Last week (11.29-12.03) the food and beverage sector (Shen Wan) rose 2%, the Shanghai Composite Index rose 1.22%, Shenzhen Composite Index rose 0.78%, Shanghai and Shenzhen 300 rose 0.84%, the food and beverage sector won 0.78 points of the Shanghai composite index last week, ranked ninth in the 31 week of the first ten week industry, the sub sector rose and the Baijiu plate increased 2.97%.
Core view: Spring Festival is coming soon, concerned about Baijiu manufacturers’ performance and planning
Baijiu plate: at the end of the year, Baijiu manufacturers will hold a dealer conference, focusing on the performance and the next year’s planning. In December, many manufacturers will hold a dealer conference. At the dealer conference, each company will deliver this year’s performance, next year’s performance plan and objectives. It is suggested that the reform of high-end Baijiu channel be concerned. With the new chairman Ding Xiongjun taking office, the reform of marketing system and price system will become the focus of the future. Moutai’s performance in the future is expected to be further enhanced. Baijiu Baijiu also needs to pay attention to the planning of the development of the sub high end liquor enterprises in the coming year, benefiting from the trend of consumption upgrading and the shift of some high-end liquor prices. The future high-end Baijiu plate is expected to continue to maintain a high economic boom.
Beer sector: the wave of price increase is jointly promoted by the pressure to improve the cost side and the trend of high-end industry. Major liquor enterprises raise prices for the original high-end products, make efforts to layout high-end new products, or, like Budweiser, raise prices in disguise by changing product specifications, not only to improve the upstream cost side pressure, but also to comply with the overall high-end trend of the industry, seize the high-end market and improve the profitability of the company. Under the wave of price increase, the competition between high-end single products is expected to be more intense. It is optimistic about the head beer enterprises with advantages in high-end and differentiation. In the future, it is expected to have stronger pricing power with the advantages of high-end ability and product differentiation, and enjoy the high-end capacity expansion bonus of the beer industry in the wave of price increase.
Condiment sector: pay attention to the conduction velocity under the background of price increase, and condiments are expected to achieve sustainable development. Since the beginning of this year, the price of bulk commodities has increased, and the cost pressure is great. Driven by the cost, Haitian, the leader of soy sauce, took the lead in raising the price, and then the prices of competitive products have been raised one after another. According to the resumption results, after the price increase information is released, the relevant companies have obvious excess returns. After the price increase is announced, driven by the rise in valuation, the stock price will reflect rapidly in a quarter. If the price increase is successful, the report end will reflect the profit thickening after q1-q2. Once the cost falls after the subsequent price increase, the gross profit margin of condiments is expected to enjoy a secondary boost. The resonance between stock price and performance is realized.
Investment advice
Plate allocation: Baijiu > beer > dairy products > snack food > condiment;
Baijiu: the Spring Festival is coming, and Baijiu manufacturers with strong brand strength and strong channel spirit are expected to continue to maintain a high prosperity. We should pay attention to the high-end liquor companies 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: the industry is in the wave of price increase and is optimistic about the continuous improvement of the profitability of head liquor enterprises under the trend of high-end. It is recommended to pay attention to Tsingtao Brewery Company Limited(600600) with high growth expectation in future performance;
Dairy products: at present, the price increase of downstream leading dairy enterprises is expected to improve the profitability of enterprises. It is suggested to focus on Inner Mongolia Yili Industrial Group Co.Ltd(600887) in the three aspects of production capacity, channels and products.
Risk tips:
Baijiu price rise less than expected, terminal demand fell, food safety issues.
