Since the outbreak of covid-19 epidemic, epidemic prevention policies, travel restrictions and repeated epidemics have had a serious impact on the consumption scenes of tourism, catering, hotels, food, drinks and other industries. At present, the epidemic situation is expected to continue to improve. The tourism development plan of the 14th five year plan also looks forward to the liberalization of entry and exit when the epidemic situation allows. The Spring Festival + Winter Olympic Games effectively boost market sentiment. We believe that with the logical support of strong policy support + the improvement of the epidemic situation, the starting point of consumption recovery is coming, and the boom is expected to continue to rise. Looking ahead, how can the layout and recovery of post epidemic investment be interpreted? The large consumer group of Qianhai Securities Research Institute of East Asia has launched a series of in-depth reports on “foresight and recovery, layout of post epidemic” series, which are seventh: baijiu.
Core view
The structural market of Baijiu sector under the outbreak of reopening: 1) the first round: high-end Baijiu is mainly based on gift giving, and is less affected by epidemic situation. With the support of performance, the value and price of high-end Baijiu took the lead. The valuation and share price rose from February 2020 to February 2021. 2) The second round: in the middle of 2020, with the weakening of the epidemic disturbance, the national sub high-end liquor enterprises took the lead in recovering, and the recovery of performance promoted the second round of valuation and share price rise. The second round of market rose from the middle of 2020 to the middle of 2021; 3) third round: since 2021, with the weakening of epidemic situation, the banquet and gathering demand is warming up, and the low base effect is superimposed. The performance of the regional high-end Baijiu liquor mainly based on the demand for banquets and gatherings is increasing. The third round of valuation and stock price rise is already brewing.
Looking forward to 2022, the three catalytic factors will promote the third round of market price of regional high-end baijiu. 1) Under the trend of consumption upgrading, sub high-end famous and high-quality liquor enterprises can enjoy the growth space of both volume and price. In the high-end consumer trends, consumers demand for high-end and high-end baijiu. In addition, under Matthew effect, Baijiu market share will be concentrated to the famous liquor enterprises. The premium Baijiu can enjoy the growth of the volume price of the Baijiu price after the price rise of the high-end liquor. 2) macroeconomic stability and good help Baijiu sector. Baijiu is a luxury product, so Baijiu is often used for banquets and gifts. When the macroeconomic situation is better, the growth of business and social needs is superimposed on the growth of residents’ income. The consumption level of Baijiu industry has also increased. China’s economy is expected to increase steadily in 2022, and the economy is expected to continue to improve under the policy of steady growth, and Baijiu demand is expected to be boosted. 3) The disturbance of the epidemic is expected to dissipate, and the demand for banquets may usher in an outbreak. With the vaccination of most residents in China and the approval of covid-19 oral drug of Pfizer, the impact of the epidemic is expected to dissipate gradually. Liquor industry banquets and gathering needs are expected to gradually recover. The demand for wedding banquet accumulated during the epidemic is expected to usher in a burst. Regional Baijiu Baijiu is expected to usher in the third round of valuation and stock price rise.
Investment advice
The disturbance of the epidemic has gradually dissipated. It is suggested to pay attention to regional sub high-end liquor enterprises with high banquet demand. The impact of the epidemic is expected to dissipate in 2022. In the context of economic recovery and overconsumption, the demand for suppressed dinner is expected to rebound strongly, and regional high-end Baijiu will usher in development opportunities. Related targets: 1) Anhui Gujing Distillery Company Limited(000596) : one of the eight famous wines. The products focus on the medium and high-end Vintage puree and Anhui Gujing Distillery Company Limited(000596) series, and are optimistic about the company’s brand strength in the development opportunities of sub high-end liquor enterprises to achieve high performance growth; 2) Anhui Yingjia Distillery Co.Ltd(603198) : with the hole series as the core, the consumption price upgrade trend will hopefully enhance the space price of the high-end baijiu. It is optimistic that the company will achieve the strategic goal of 10 billion yuan after the impact of the epidemic dissipates in the future and maintain high growth of performance; 3) Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) : the company focuses on bridal “culture” to realize differential development. After the company’s nationwide expansion, it will enjoy the profit elasticity of Baijiu market recovery and achieve the goal of billions of revenue.
Risk tips
Risk of recurrent outbreaks; Baijiu consumption tax risk; Macroeconomic downside risks.
