Food and beverage weekly thinking (week 9): cheap is the last word

Affected by the war between Russia and Ukraine and Chinese funds, the Shenwan food and beverage index has been reduced by 12.99% since the beginning of the year, and the valuations of Wuliangye Yibin Co.Ltd(000858) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) and other core targets have fallen to less than 25 times, which is relatively cheap. We believe that the demand for food and beverage is relatively rigid, the debt ratio is low, the long-term growth of the industry leader has good certainty, and now it has good allocation value.

Baijiu week tracking: Kweichow Moutai Co.Ltd(600519) : channel research feedback, the 2022 contract has not yet been signed, and the quota was shipped in February this week. After the festival, the mobile sales turned weak, and the weekly wholesale price of bulk bottles / full boxes of Feitian fell slightly by 30 yuan to about 2755 / 3130, and that of Maotai in the past 15 years fell by 70 yuan to 7580; The third batch of 80 cases of Maotai 1935 have been delivered from the warehouse, and the rated price has fallen by 75 yuan to 1575 yuan Wuliangye Yibin Co.Ltd(000858) : at present, the shipment is to March, and the inventory is about one month. The general five wholesale price in some regions has decreased slightly to 965 yuan, and 970980 yuan in most regions. Last week, we conducted a survey in Gaoqiao stock market, and the reserve price for goods is also 965970. Therefore, it can be judged that there is no large-scale upside down Luzhou Laojiao Co.Ltd(000568) : the dealer is ready to start payment in the third quarter after the delivery to March. At present, the dealer’s approved price is about 930920 yuan, and the inventory is stable for 1 month. At present, there is an expectation that the cost of taking goods will increase in the channel, and it is expected that the price trend will rise steadily in the future.

Gaoqiao Baijiu Market Research: 1) the overall atmosphere: during the Spring Festival, sales did not change much over last year. The high-end is stronger than the middle end, and consumers are more willing to use good steel on the blade. The price band of Tus-Design Group Co.Ltd(300500) yuan in the secondary high-end performs best. From the perspective of brands, Wuliangye Yibin Co.Ltd(000858) , Fenjiu and internal reference are the most prominent. 2) Wuliangye Yibin Co.Ltd(000858) : the base price of goods in Gaoqiao market is 965970, and the overall wholesale price in Changsha is about 970 yuan. The reserve price of Guojiao is 910 yuan. During the Spring Festival, due to the narrowing of the price difference between the two products, Wuliangye Yibin Co.Ltd(000858) cost performance is more prominent. At present, the inventory of dealers and terminals is small, and the dynamic sales still maintain the strong trend in 2021. During the classic Wuliangye Yibin Co.Ltd(000858) Spring Festival, there are natural moving sales, the inventory is further deconstructed, and the channel feedback is that it is difficult to recycle the bottle cap of open bottle drinking. 3) Jiugui Liquor Co.Ltd(000799) : the price of internal reference is at Gaoqiao 800 +, but it has been satisfactory with the rapid increase of sales. The wholesale price of Zitan and hongtan fell a little. The price of Zitan and hongtan reached Jiangsu Yuxing Film Technology Co.Ltd(300305) yuan and 280 yuan respectively, which fell slightly compared with the same period of the Spring Festival last year. The price of Huangtan remains stable. 4) Fenjiu: the price of goods in Gaoqiao market is 360370, which is not far from the approved price in the national market. It reflects that the dynamic sales performance of Fenjiu is balanced and the inventory is very low. It continues to grow rapidly this year.

Beer: it is not light in the off-season under precise control, and there is no need to worry too much about the fluctuation of barley cost. (1) The beer sector rose significantly this week. According to the channel research feedback, it is mainly due to the good short-term sales performance of some leading companies. The sales volume of the beer industry is not light in the off-season. We think it is mainly due to: first, the head enterprises gradually began to fully distribute goods, and the channel inventory increased. On the one hand, the industry generally raised prices in the off-season at the end of last year to prevent the market or terminal share from being affected, so the terminal stock was pressed in advance; On the other hand, most manufacturers and dealers expect that the performance of the industry in the peak season this year will be better than that in the same period last year, mainly because the epidemic prevention and control this year is more scientific; In addition, the weather has warmed up significantly since late February, which is conducive to beer terminal consumption. Second, with the rationalization of epidemic control, the phenomenon of one size fits all prevention and control in the peak season of the Spring Festival this year has decreased significantly, and the consumption scenes and channels are gradually warming up. (2) The good performance of the sales volume of the industry leader from January to February has laid a good start for Q1 sales. At the same time, the high-end process is advancing steadily, and the price increase will also contribute to the increment at the statement end in the first quarter. Although the costs of beer raw materials and packaging materials faced great upward pressure in the first quarter, the growth of sales volume will be conducive to diluting the fixed cost of tons of wine. Throughout the year, high-end + price increase will promote the steady increase of the average price. At the same time, the rise in the cost of per ton of wine in the second half of the year is expected to narrow, and the profits of the whole sector show a trend of low before high. In the environment of precise prevention and control, with the arrival of the peak season, the prosperity of the sector is expected to continue to rise. (3) The situation in Russia and Ukraine is tense, and the market is worried about affecting the price of barley. We don’t think we need to worry too much. First, according to past experience, because beer wheat depends on imports, most beer enterprises will lock in the annual barley price at the beginning of the year, and the price fluctuation in the middle of the year has little impact on the cost of beer enterprises. Second, since China increased tariffs on Australian barley, in order to reduce import dependence, beer enterprises have gradually increased the use of domestic barley in Xinjiang, Inner Mongolia and other places in China. Third, according to customs data, Ukraine accounted for 0% and 26% of China’s barley imports in 2020 and 2021. Canada and France are still the main sources of imported barley. As potential importing countries, Ukraine and Russia have relatively little impact.

Angel Yeast Co.Ltd(600298) : the Russian factory is a small factory. We should rationally look at the impact of the situation in Russia and Ukraine. Angel Yeast Co.Ltd(600298) fell significantly this week, mainly because the market is worried that the sharp depreciation of the ruble will affect the performance of Russian factories affected by the situation in Russia and Ukraine. According to China Securities Network, the Russian factory has a capacity of about 20000 tons, which is a relatively small factory, accounting for only 7% of the company’s total fermentation capacity of 270000 tons of yeast products in 2020. In 2020, the revenue of Russian factories was 350 million yuan, accounting for only 4% of the company’s revenue. At the same time, according to the financial Associated Press, the products of Russian factories are sold both inside and outside the country, and the export products account for a large proportion. Export products are mainly settled in US dollars and are less affected by the depreciation of ruble. The domestic part is settled in rubles, which is expected to be affected by the depreciation of rubles, but the proportion is relatively small, with limited impact on profits. Overall, the company’s product demand is strong, and the transmission of price increase is relatively smooth, which is expected to better cover the rising pressure of cost.

Chenguang Biotech Group Co.Ltd(300138) : the core varieties are stable, and Q4 ends with a bright performance. The company released the 2021 express: it is expected to achieve a revenue of 4.871 billion yuan in 2021, a year-on-year increase of + 24.48%; The net profit attributable to the parent company was 354 million yuan, a year-on-year increase of + 32.21%; Deduct non net profit of 293 million yuan, a year-on-year increase of + 29.98%. (1) The revenue performance of 21q4 exceeded expectations, and the performance growth became more and more stable. Single 21q4 achieved a revenue of 1.666 billion yuan, a year-on-year increase of + 38.24%; The net profit attributable to the parent company was 943797 million yuan, a year-on-year increase of + 51.99%; Deduct non net profit of 651629 million yuan, a year-on-year increase of + 46.71%. The annual net interest rate attributable to the parent company was 7.27%, with a year-on-year increase of + 0.43pct; The net interest rate of Q4 attributable to the parent company was 5.67%, with a year-on-year increase of + 0.51pct. We believe that, on the one hand, the improvement of profitability comes from the increase in the price of chili essence due to the limited supply of raw materials, so the gross profit margin has increased significantly; On the other hand, the impact of the high base brought by lutein last year gradually subsided in the second half of the year, and the performance side had a bright performance exceeding expectations. We believe that in the past two years, under the background of sharp fluctuations in the prices of the two core varieties lutein and capsicum essence, the company has ensured an increasingly stable performance growth with good momentum by virtue of the improvement of its own operation and management ability. The core varieties are stable, and the sales momentum of the second echelon is good. In terms of core varieties, the sales volume of capsicum red, the leading product, was more than 8000 tons, an increase of about 12% at the same time; Affected by India’s supply, the price of Capsicum essence raw materials rose sharply, realizing a sales volume of more than 1100 tons and a new high in revenue; The sales volume of lutein products is nearly 300 million grams.

Among the second tier products, new achievements have been made in the market development of nutritional and medicinal products. The sales momentum of lycopene, rosemary extract, silymarin, curcumin and other products has continued to improve. The sales of spices have increased significantly, especially Stevia products.

Fu Jian Anjoy Foods Co.Ltd(603345) : build a factory in Hubei, increase the layout of prefabricated dishes, and improve the business model of self-produced + supply chain labeling + M & A. The company announced that it expects to invest 1 billion yuan to build a prefabricated dish production project in Hubei. We expect that the production capacity of prefabricated vegetables in this project is expected to be about 1 Ping An Bank Co.Ltd(000001) 50000 tons. It is expected that the formalities will be completed this year. After completion, the project will be constructed in two phases, each with a construction period of 2 years. After the two phases are put into operation, the production is expected to be reached within 3 years. In the next 5-6 years, the compound growth rate of production capacity of main business + prefabricated vegetables will be about 26%. We believe that the company’s investment and construction project reflects the positive layout of the self-produced mode under the business model of “self-produced vegetables + supply chain labeling + M & a”. In the early stage, Mr. frozen products and XINHONGYE started mergers and acquisitions. Mr. frozen products quickly spread channels through the supply chain OEM mode through the OEM mode. The investment in self-produced prefabricated vegetables in this and fixed increase projects will further expand the self-produced mode. Under the self production mode, the product bottleneck of large single products can be solved, and the profitability may be improved. We believe that with the cooperation of the three modes, Anjing prefabricated vegetable business can be promoted more efficiently.

Chacha Food Company Limited(002557) : Q1 is under pressure due to the base number, and nuts still have room to extend. Considering the high base in the same period and the pressure on revenue growth in January, whether there can be growth in the first quarter mainly depends on March. On the cost side, the procurement volume of sunflower seeds before the Spring Festival has reached 60% of the annual consumption, and the main cost of the whole year is expected to remain high. At the same time, considering the relatively independent market of Chinese edible sunflower and foreign oil sunflower, the international situation has little impact on the price of raw materials. In terms of channels, the company continued to promote the intensive cultivation of channels, million terminal projects and the construction of digital platforms. Since November 2020, the company has established a digital marketing platform, recruited channel partners and expanded terminals, hoping to incorporate the orders of the whole terminal network into the system. At present, about 120000 terminals have been included in the channel intensive cultivation system. In addition, the company actively promotes the layout of mother and child stores, flower stores, fruit stores, office buildings, hotels and other products suitable for the company, and hopes to make the company’s products ubiquitous and available all the time in the future. In terms of products, sunflower seeds should build a high-end brand of “Kui Zhen”, expand the category of flavor melon seeds, improve the sinking of vulnerable markets and third and fourth tier cities, promote new products in cities with high coverage, strengthen the dissemination of the nutritional value of sunflower seeds and melon seed culture, and increase interactive marketing with consumers, The goal of nut category is to make the daily nut segment the first in the market stability in the next 2-3 years. We hope to continuously improve the scale and market share of the company’s nut category. In the long run, we still hope to form the competitive advantage of the whole industrial chain through the layout of the industrial chain.

Zhongyin Babi Food Co.Ltd(605338) : the operation continues to improve, and Q1 has a large profit elasticity. In terms of the same store, considering the company’s continuous promotion of store upgrading, takeout coverage and new product expansion, it is expected that the same store will return to a historically high level by the end of 21 and still increase slightly in January of 22. In terms of store opening, considering the good momentum of the company’s store opening in 21 years, and the Q2 consolidation of the brand acquired in Central China, it is more likely to open the new market in Subei, Anhui after the Nanjing plant is put into operation. It is expected that the company will maintain a fast store opening speed in 22 years. In terms of group meal, the company actively develops group meal, catering chain, convenience store chain, catering supply chain, e-commerce and other major customers, and is expected to maintain a strong growth trend in revenue in 22 years. In terms of profit margin, considering the large year-on-year decline in Q1 pork price, Q1 performance is expected to be more flexible.

Recommended combination in March: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Juewei Food Co.Ltd(603517) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Anhui Gujing Distillery Company Limited(000596) . In March 2022, the recommended portfolio and its rise and fall were Juewei Food Co.Ltd(603517) (- 4.31%), Chongqing Fuling Zhacai Group Co.Ltd(002507) (- 1.52%), Kweichow Moutai Co.Ltd(600519) (- 1.03%), Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (- 5.28%), Wuliangye Yibin Co.Ltd(000858) (- 7.41%), Anhui Gujing Distillery Company Limited(000596) (- 2.06%) respectively, and the portfolio yield was – 3.26%. Over the same period, the Shanghai Composite Index fell 0.11%, and the portfolio was 3.15% lower than that of the Shanghai Composite Index.

Investment strategy: considering the adjustment of stocks at the beginning of the year, the current valuation of food and beverage leaders is reasonably low, and the layout is at the right time. During the Spring Festival, many surveys and feedback focused on Baijiu market, and the secondary and high-end areas were less affected by the epidemic. The catering industry began to show a marginal improvement trend, and the catering industry chain greatly affected by the epidemic with policy support is expected to accelerate the recovery. Baijiu mainly pushed the strong, strong and strong Moutai, Wuliangye Yibin Co.Ltd(000858) and Luzhou Laojiao Co.Ltd(000568) . The second high-end companies mainly promoted the Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) and the regional high-end high-end Chinese dragon makers, and suggested that Jiugui Liquor Co.Ltd(000799) , Anhui Yingjia Distillery Co.Ltd(603198) and sacrifice that the potential energy had already been built up. Food is recommended to focus on Tsingtao Brewery Company Limited(600600) , China Resources beer, Chongqing Brewery Co.Ltd(600132) , Yili with stable performance, pickled mustard, Jue Wei, Yuanzu and Ganyuan, which are promoted by the dual logic of epidemic recovery and structural upgrading.

Risk tips: the risk of global and Chinese epidemic spread, the risk of large outflow of foreign capital, sauce and wine inventory and policy.

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