1. The sector is still in a vacuum period. International conflicts have led to the rise of market risk aversion, led by small cap stocks this week. Food and beverage fell 1.96% this week, 1.85 percentage points lower than the Shanghai Composite Index (- 0.11%). In the fine molecule industry, health products (+ 7.27%), meat products (+ 4.19%), beer (+ 2.48%) and other sectors rose this week; Preprocessed foods (-4.70%), other alcoholic beverages (-3.05%) and Baijiu (-2.89%) have declined in varying degrees. In terms of individual stocks, market sentiment in the vacuum period of the industry is easily catalyzed. International conflicts lead to the rise of crude oil and other costs, and pessimism continues to spread. Small cap stocks rose higher this week; Among them, Juneyao Grand Healthy Drinks Co.Ltd(605388) + 20.12%, followed by Tonghua Grape Wine Co.Ltd(600365) (+ 18.60%), Qinghai Spring Medicinal Resources Technology Co.Ltd(600381) (+ 17.51%), Zhejiang Huatong Meat Products Co.Ltd(002840) (+ 16.21%), Fujian Yanjing Huiquan Brewery Co.Ltd(600573) (+ 13.48%), Xinjiang Yilite Industry Co.Ltd(600197) (+ 11.84%), Gestapo food (+ 10.69), etc.
2, foreign capital outflow + policy concerns led to Baijiu callback, but the industry fundamentals are strong, upward trend does not change. This week Baijiu continued to callback (down 2.89%), the main reason for the continued callback: 1) foreign capital outflow. This week, foreign capital continued to flow out. The Shanghai and Shenzhen port food and beverage sectors exported about 2 billion 310 million yuan of capital to the north, and the Baijiu sector was about 2 billion 410 million yuan. Core leaders such as Wuliangye Yibin Co.Ltd(000858) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Kweichow Moutai Co.Ltd(600519) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) respectively shed about 1.58 billion yuan, 410 million yuan, 340 million yuan and 100 million yuan. 2) Short term policy concerns. Near the two sessions, the market is worried about the sudden bad policies, which will affect the industry trend. 3) Information disturbance in performance vacuum period. The sector is still in a performance vacuum. The market is still worried about the repeated epidemic and economic downturn, and it is difficult to form a joint force on the capital side. But we emphasized earlier that Baijiu sector callback is not related to fundamentals, and the first quarter will achieve a good start. After the performance vacuum period, the sector is expected to usher in opportunities from spring sugar to the first quarterly report. On the whole, the overall trend of the industry will continue to rise in 2022. Considering the factors such as fundamentals, valuation, performance certainty and market expectations, we will 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.). This week we conducted a deep study of the Baijiu Xinjiang Yilite Industry Co.Ltd(600197) in the territory. We judged that the company's recent internal and external business environment had improved significantly. On the one hand, the company's internal reform is advancing steadily; In addition, Xinjiang will turn to economic development in an all-round way in 2022, and the consumption scene will recover significantly. We continue to be optimistic about the company's future and fully enjoy the dividends of economic recovery and cultural and tourism development in Xinjiang.
3. The industry is facing two major problems: weak demand and high cost, and the opportunities of the sector still need to wait for the recovery of demand. After Omicron entered the mainland, the epidemic broke out in many places in China recently, and the number of new confirmed cases per day reached a small peak, which is expected to still affect catering and other consumption. After the Spring Festival, February and March are the off-season for most popular products companies. However, the Spring Festival in 2021 is late, and due to the channel's fear of repeated epidemic, the goods are actively prepared. The performance base of 2021q1 is the highest in the whole year. It is expected that many popular products in 2022q1 will face performance pressure. There is no significant improvement signal on the cost side. Soybean meal, palm oil, barley and corn starch on the raw material side have increased significantly. In terms of packaging materials, pet, rebar and other prices are also at a high level. If the prices of raw materials and packaging materials remain high, the industry is expected to be under pressure as a whole. We believe that we need to wait for the first quarterly report and investigate the real demand of the market in the off-season after the price increase in combination with the performance of Companies in 2022q1 and 2021q4. When the demand is difficult to fully recover in the short term and the industry lacks overall opportunities, we suggest to select stocks from the bottom up, pay attention to the industry leaders who are expected to increase their share under the double test of pricing power, strong anti risk ability and demand cost, such as Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Angel Yeast Co.Ltd(600298) , Chacha Food Company Limited(002557) , Tsingtao Brewery Company Limited(600600) , Fu Jian Anjoy Foods Co.Ltd(603345) , and pay attention to structural opportunities, For example, the dairy and beer sectors with clear product structure optimization and upgrading and high-end trend.
4. The beer leader made a good start, the high-end logic remains unchanged, and the peak season is approaching to catalyze the stock price performance. Beer leaders also face the pressure of rising costs. However, due to the basic completion of the cost lock-in of heavy beer, China Resources and Tsingtao beer, the implementation of large-scale price increase is also expected to hedge the rising costs. It is expected that the pressure on the cost side is controllable. Since 2021, the high-end pace of the industry has been accelerating. From January to February, each leader made a good start, with outstanding performance. Among them, the sales of heavy beer and green beer maintained a high increase, and the price increase of core single products fell smoothly; The volume of China Resources increased steadily, but the high-end process was smooth. With the short-term peak sales season approaching, the sector continued to rise, rising by 2.48% this week, with Huiquan (+ 13.48%), Yan beer (+ 7.82%) and Tsingtao beer (4.73%) leading the rise. In the future, under the continuous optimization of high-end + cost / efficiency, the logic of long-term improvement of the profitability of the sector will continue to be realized.
5. Update of industry and company views:
(1) Xinjiang Yilite Industry Co.Ltd(600197) : the internal and external environment changes positively and enjoy the dividends of Xinjiang's economic development. We investigated Xinjiang Yilite Industry Co.Ltd(600197) this week, and found that the development environment inside and outside the company has changed positively. The territory has turned to economic development in an all-round way, and the demand for end consumption, wedding banquet and so on has erupted intensively; The Corps set up special classes to urge the reform and development of enterprises; The company increases the adjustment of personnel, marketing and incentive: vigorously train young middle-level cadres internally; Incentive measures for sales teams, e-commerce companies, brand operation centers and dealers are gradually implemented. In the second half of the year, the company's dynamic sales were greatly affected by the epidemic. The performance was weak in the fourth quarter of 2021 and January 2022, but it recovered slowly in February and March. With the arrival of the peak tourism season in Xinjiang, the sales are expected to accelerate the recovery, and it is expected that it will return to the level of the same period in 2019 this year. The company owns one billion grade single product "Yili old cellar", which is a well deserved leader of local wine in Xinjiang. However, due to its remote location, the market attention is low; The company is expected to fully enjoy the dividends of Xinjiang's economic development in the future, and its operation will continue to improve and develop.
(2) Chacha Food Company Limited(002557) : the product structure was continuously optimized and the million terminal plan was smoothly promoted. The company previously released the 2021 performance express, and Q4 revenue / deduction of non net profit achieved a growth rate of 28% / 32%. It is estimated that the growth rate of melon seeds and nuts in the whole year is nearly 10% and 40%, which is higher than expected. During the Spring Festival, benefiting from the increased demand for visiting relatives and friends during the Spring Festival, the performance of nut gift boxes is bright, and the sales of mixed canned and roof box gift boxes have doubled year-on-year. The company has a good grasp of the timing of this round of price increase. With the smooth transmission of the peak season of the Spring Festival, the company can basically cover the rise in the cost of melon seeds. At the same time, with the help of this price increase, the company can improve the quality of melon seeds series products. This year, it is expected to launch high-end melon seeds product Kui Zhen, upgrade Kui Zhen raw materials, and nuts are also expected to launch high-end canned nut products to promote the continuous optimization of product structure. On the channel side, the million terminal plan is progressing smoothly. At present, the company has covered 4 Shenzhen Fountain Corporation(000005) 00000 terminals. It is expected to continue to increase this year, and its grasp and penetration of terminals will continue to improve.
Optimistic about the long-term growth of the company's product channels driven by two wheels.
(3) Ganyuan Foods Co.Ltd(002991) : the R & D strength of taste is strong, and new products and OEM business are expected to bring new revenue increment. Since 2021q4, after the adjustment of raw material procurement, the sales of the old three samples have warmed up, Sam's new products have steadily contributed new revenue increment, and the price increase was basically conducted in August. It is expected that the price increase effect will appear in 2021q4, and the performance is expected to improve month on month. The two new products developed by the company, flavor nuts and expanded baking, have begun to attract investment in late February 2022. Among them, flavor nuts are mainly loaded in quantitative quantities, mainly focusing on the channels of Daka and mainstream convenience stores; The new products of expanded baking mainly focus on loose weighing, and cooperate with the old three samples to improve the floor efficiency of the display cabinet, which will help the company to sink the market. The overall nut industry has a market of 100 billion yuan. The delicious and healthy nuts are expected to seize the market share from the single nut with shell and mixed nut segments. At present, there is only one brand in the flavor nut industry, which has been deeply cultivated for many years, with strong product power and large room to play. If the price of raw material palm oil falls, the performance is expected to increase elastically this year.
(4) Fu Jian Anjoy Foods Co.Ltd(603345) : it is proposed to build a self prepared vegetable project, and its profitability may be effectively improved. The company will invest 1 billion yuan to build its own prefabricated vegetable production project in Honghu, Hubei Province. The company will jointly invest with Xiao Huabing, the original actual controller of XINHONGYE, of which Anji holds 90% equity of the project and is expected to be approved for construction within the year. The project will be constructed in two phases, which will be completed and put into operation within two years after being approved, and the full production will be realized within three years after being put into operation. The total production capacity is expected to exceed 100000 tons. Relying on the perfect aquatic product industry chain in Hubei Province, the company will focus on the development of prefabricated aquatic products, new aquatic products such as seasoned crayfish, split fish, pickled fish and grilled fish, deep processing of lotus root and other products, and production capacity of supporting meat and poultry dishes. The company adopts the business model of "self production + supply chain labeling + M & a" in the prefabricated dishes sector. In the early stage, the company used Mr. frozen products brand to understand the demand and operation mode of prefabricated dishes by OEM production. This project is the embodiment of the self-produced mode. Under the self-produced mode, it is expected to further improve the company's market response speed and scale effect, and the profitability is expected to be effectively improved.
6, 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), Xinjiang Yilite Industry Co.Ltd(600197) (recommended), Sichuan Swellfun Co.Ltd(600779) (recommended), Anhui Yingjia Distillery Co.Ltd(603198) (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) , Xinjiang Yilite Industry Co.Ltd(600197) , etc.
7. 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.
