The food sector, which has been a bull for many years, has “stalled” this year. According to the statistics of 65 stocks in CITIC food, the average increase after excluding new shares was only – 8.8%, underperforming the market.
The performance of Listed Companies in the food sector is not as good as in previous years. In the first three quarters, 27 of the 65 food stocks increased in performance, and the median growth rate of the industry’s net profit attributable to the parent in the third quarter was – 10.2%. At the end of last year, the performance of only 13 stocks declined, and the median growth rate of net profit attributable to the parent of the industry was 22.7%.
What caused the general decline in the performance of Listed Companies in the food sector? Do they have a chance next year?
stocks “wrongly killed”
First, the slowdown in performance growth of Listed Companies in the food sector this year is related to the high performance base caused by the epidemic last year. During the epidemic last year, isolation stimulated the consumption of quick freezing and snacks, and the performance of many food companies reached a new high. For example, Sanquan Food Co.Ltd(002216) last year’s net profit attributable to the parent company increased by 249%, the highest level in recent years; The attributable net profit of Shandong Huifa Foodstuff Co.Ltd(603536) and Haixin Foods Co.Ltd(002702) also increased several times. With the return of consumers’ demand for such quick-frozen convenience foods to the normal level and the superposition of the impact of a high base, the performance of these companies has declined sharply this year.
However, after excluding the volatility caused by the epidemic, the growth of some stocks in the quick-frozen sector is worth looking forward to. In addition, the valuation has undergone a sharp correction, so it has ushered in investment opportunities. For example, Sanquan Food Co.Ltd(002216) the net profit in the first three quarters was 385 million yuan, an increase of 220% over the same period in 2019, mainly due to the company’s expansion of product categories, improvement of product structure and improvement of net interest rate.
In addition, the quick-frozen food leader Fu Jian Anjoy Foods Co.Ltd(603345) has maintained stable growth for many years. The net profit attributable to the parent company in the first three quarters of this year was 496 million yuan, with a year-on-year growth rate of more than 30%, an increase of 108% over the same period in 2019. It is precisely because of the stable performance that the valuation of Fu Jian Anjoy Foods Co.Ltd(603345) P / E ratio has been corrected, but it is still 57 times.
unexpected channel change
In 2020, for the food sector, the sudden rise of community retail is also an unexpected impact, and even many bull stocks overturned their performance, Yanker Shop Food Co.Ltd(002847) is one of them. In 2020, Yanker Shop Food Co.Ltd(002847) the annual increase reached 208%, and the net profit increased by 88.8%. But so far this year, Yanker Shop Food Co.Ltd(002847) net profit has fallen by 57%, and the share price has also fallen by 18%. Yanker Shop Food Co.Ltd(002847) the decline in performance is mainly due to the poor effect of sales expense investment due to the impact of the community group purchase channel on the flow of supermarkets originally focused on the layout.
Last year Haixin Foods Co.Ltd(002702) , with a significant increase in performance, suffered a loss this year, also because community group buying affected the flow of existing channels, and most of the community group buying competition used low-cost products to seize the market, which also posed a challenge to its product price system.
However, community group buying is also undergoing a reshuffle, and many companies have exposed operating difficulties. In response to the channel change, listed companies began to focus more on the tiktok as the representative of the social networking platform. Although many consumer company have been successful in the market, such as jitter and voice, the company has been driving a strong growth in performance. However, the food listed companies have not yet highlighted the case of the huge increase in traffic volume due to the tiktok platform. The reason is that condiments, fast food and other foods are purchased frequently and in a timely manner. These characteristics are suitable for supermarkets. After the recovery of social zero data, the advantages of traditional business supermarket channels will still appear.
rising price tide
In addition to being affected by the performance base, the pressure on the gross profit margin of the food industry caused by the rise in the price of raw materials is also the reason for the impact on the performance of listed companies.
According to statistics, the average gross profit margin of CITIC food in 2020 was 33.1%, which has dropped to 31.5% in the first three quarters of this year. Many listed companies also disclosed the pressure brought by the rising price of raw materials in their financial reports, especially those with small scale and weak brand strength.
In response to cost pressures, a new round of food price increases may have begun.
According to the statistics of interface news, at present, 10 listed food companies have issued price increases, ranging from 2% to 20%. In addition to these companies with clear price increases, many enterprises adopt disguised price increases such as reducing product packaging to pass on the pressure of rising costs. Source: announcement, interface, news research department
It is expected that from next year, the price increase effect will gradually be reflected in the performance of listed companies. This will be one of the highlights of individual food stocks. In addition, there has been a significant correction in the overall valuation of the industry, especially the valuation of individual stocks of quick-frozen food has basically returned to a historical low, just waiting for the demand to pick up.
(interface News)
