Weekly News Express
Industry news: 1) in 2021, the output of Baijiu Enterprises above designated size was about 716000 litres (+0.6%). 2) Guizhou Province plans to attract 32.762 billion yuan of investment to 28 wine related projects, accounting for 11.67% of the total. 3) there are more than 170 Baijiu enterprises in Suqian, 240 thousand tons of raw liquor capacity, 1 million 270 thousand tons of liquor storage capacity, and nearly 70 thousand total cellars. 4) In 2021, the brewing industry accounted for 3.9% and 13.8% of the revenue and profit of light industry respectively, and the profit contribution ranked first.
Company news: 1) Kweichow Moutai Co.Ltd(600519) : “the first phase construction project of Maotai flavor wine Xishui Tongmin during the 14th five year plan” was launched, with a total investment of 4.11 billion yuan; 2) Luzhou Laojiao Co.Ltd(000568) : jointly invest and establish a science and innovation company with Laojiao group and energy group; 3) Jiugui Liquor Co.Ltd(000799) : since May 31, 2022, the strategic prices of 52 degree 500ml inheritance, 39 degree 500ml inheritance and 42 degree 500ml inheritance (1987) have been increased by 10 yuan / bottle respectively. 4) Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) : the market of Fen Liquor has increased to 22, and the export of liquor ranks among the top three in the industry; 5) China Resources beer: the construction of Shenzhen China Resources Snow Beer headquarters base has started, with a total construction area of about 870000 square meters.
Key information feedback this week
This week we have an offline roadshow. At present, the market has several questions about the food and beverage sector:
1) how to see the Baijiu sector when the external environment has not yet been improved? 2) How to look at the food sector against the background of rising raw materials after the year?
In this regard, we give our own thoughts:
1) the current weakness of Baijiu sector is mainly due to the following reasons: first, the price rise of high-end liquor Kweichow Moutai Co.Ltd(600519) is not yet realized and whether the consumption tax can be landed. These two points are the important reasons for the failure of high-end liquor valuation, and the high-end liquor valuation difficulty indirectly affects the value of high-end Baijiu and real estate liquor. Second, the one or two quarter last year, the high base effect of the Baijiu sector superimposed the external environmental impact, and the market expressed obvious concern about the slow down of the two quarter of Baijiu. Third, the bad news of Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Fenjiu and Anhui Yingjia Distillery Co.Ltd(603198) was widely spread in the market this week, which was also an important reason for the correction of the sector; Fourth, there are rumors of consumption tax disturbing the market this week, which is also bad news causing sector adjustment.
Our view: in essence, the peripheral environment has not yet been improved, and we are concerned about the sustainability of Baijiu performance. Underestimating the value of stocks is the first choice for the market. For example, Anhui Golden Seed Winery Co.Ltd(600199) and Xinjiang Yilite Industry Co.Ltd(600197) , which have catalyst factors in the early stage, we also recommend Shede Spirits Co.Ltd(600702) , Jiugui Liquor Co.Ltd(000799) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Anhui Kouzi Distillery Co.Ltd(603589) and so on.
2) in the context of the rise of raw materials after the year, the market is worried about the performance of the food sector this year, mainly due to the following reasons: first, since the fourth quarter of last year, major food enterprises have raised prices. At present, it is in the transmission stage of price increase, and the transmission has not been completely completed; Second, the current level of erosion of raw materials and profits will be affected by the current background. Our view: under the background of weak demand, the market is worried about overvalued stocks and the profits of the food sector, so enterprises with pricing power and undervalued value are favored by the market. We mainly recommend Tsingtao Brewery Company Limited(600600) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Juewei Food Co.Ltd(603517) , Chacha Food Company Limited(002557) , etc.
Investment view
Baijiu sector: this week due to the external environment fluctuations, five Lufen air news and other adjustments brought about by the sector, but the sector fundamentals remain good. Entering the traditional low season of Baijiu in March, we recommend that investors focus on the price and inventory of liquor companies. Undervalued liquor enterprises have become the favored object of the market.
Popular products sector: this week, the feedback from the sales volume of beer sector was better than the market expectation, which led to the rise of the sector. In essence, it was the rise in the market’s valuation of positive catalyst enterprises. We continued to pay attention to the transmission progress of price increase of beer and condiments, and actively paid attention to the structural opportunities of leisure food.
On the whole, our view remains unchanged: at this stage Baijiu sector we recommend three high-end wine giants ( Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) ), three high-end three swordsmen ( Shede Spirits Co.Ltd(600702) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Jiugui Liquor Co.Ltd(000799) ), real estate wine, four gentlemen ( Anhui Kouzi Distillery Co.Ltd(603589) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) and Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) ). We recommend Juewei Food Co.Ltd(603517) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Tsingtao Brewery Company Limited(600600) , Chacha Food Company Limited(002557) , and continue to pay attention to structural opportunities in the food sector. Give the food and beverage industry an “overweight” rating.
Risk tips
Risk of epidemic fluctuation; Macroeconomic fluctuation risk; Recommend the risk that the company’s performance is less than expected; Industry competition risk; Food safety risks; Risk of changes in industrial policies; Consumption tax or production risk; Raw material price fluctuation risk.
