Investment advice
This week’s topic: understanding of recent market focus. Recently, the sector continued to callback, mainly due to the rising risk aversion under the turmoil of the peripheral situation + the pressure on the price of upstream raw materials + the repeated suppression of consumer sentiment by the epidemic. This week, we discussed the trend of Q1 sector fundamentals, cost side and demand side in combination with fundamental analysis.
1) how to view the fundamentals of 22q1 sector? From the disclosed operation from January to February, we believe that the fundamentals of the sector in the first quarter are basically stable. Baijiu cannot be mention in the same breath in terms of liquor control. In terms of dairy products, the demand is relatively less affected by the epidemic, and benefits from the boost of health awareness, and the boom continues.
2) how to view the impact of overseas turmoil on the cost side of mass products? ① Beer: Ukrainian barley is basically not used in beer production, but it can not be ruled out that it will indirectly affect the price of added wheat and French wheat. The biggest uncertainty in the cost comes from packaging materials. The inventory cycle is generally in 1-2 quarters. At present, the prices of glass and carton are relatively stable month on month. Rusal has sanctions expectations, landing or pushing up the price of aluminum. ② Dairy products: the rising price of corn may lead to a slight increase in the upstream breeding cost, but considering the improvement of the supply side and the head enterprises’ strengthening control over the upstream, the increase of raw milk is expected to narrow slightly. ③ Snack food: previously, the price of palm oil continued to rise under tight supply due to the decline in exports from Malaysia, the main producer of palm oil. Recently, there has been a geopolitical conflict between Ukraine and Russia, and their oil and oil exports account for a large proportion in the world, exacerbating the rise in the price of palm oil and other oils. ④ Condiment: the cost side caused by short-term disturbance is repeatedly unsustainable. There is limited room for growth in the high base in 22 years. The gradual release of the price increase effect will effectively hedge the pressure on raw materials.
3) how to prospect the impact of epidemic fluctuations on the demand side? Baijiu: the fluctuation of the epidemic situation mainly affects the demand scenario and demand mood. The former depends on the epidemic prevention policies in all regions, while the banquet demand with a larger influence is limited in the short term. The latter is related to macroeconomic vitality, but under the trend of steady growth, we think there is no need to be pessimistic, and it is expected to continue to improve month on month in the second and third quarters. ② Beer: we believe that the epidemic will not only affect demand, but also affect the subsequent potential price increase and high-end progress. Considering that March April is still the off-season for beer consumption, it is suggested to focus on the prevention and control progress of the follow-up epidemic. Assuming good prevention and control in peak season, it is still expected to deduce the logic of improved demand and good high-end. ③ Leisure snacks: the epidemic may have an impact on the passenger flow of supermarkets, chain retail high potential stores and other channels. It is expected that small snack companies will be relatively dragged down, but still have a certain anti risk ability.
4) sector view: Baijiu: we think that under the external fluctuation situation, the Baijiu sector will be relatively less affected. The construction of supply chain system by liquor enterprises will basically not have much pressure on the cost side, and the consumer side can also respond flexibly through the adjustment of the channel rhythm, and the overall certainty will be relatively dominant. At the same time, with the continuous valuation digestion over the past 22 years, the valuation cost performance of the current sector has been highlighted. We suggest paying attention to the allocation opportunities of the current sector. At present, it is still the first to promote the high-end of certainty and cost performance. At the same time, it is suggested to pay attention to the elastic sub high-end and high demand real estate wine. ② Beer: the period from March to April is still in the off-season. It is suggested to focus on the progress of epidemic prevention and control before the peak season + the price of packaging materials under the conflict between Russia and Ukraine. The transmission of price increase in the early stage is smooth, and it is not ruled out to continue to raise prices in the future. The logic of long-term high-end + improvement of business efficiency remains unchanged, and attention is paid to the layout opportunities in the adjustment of leading enterprises. ③ Food: at present, Yili has sound fundamentals and bright business data. The corresponding valuation in 22 years is about 22 times, with a strong safety margin. Anji, juewe and Miaoke have been adjusted in the early stage. At present, the valuation has cost performance. ④ Condiment: as a necessity of public life, it has strong anti inflation ability and the bargaining power of leading companies. There is no need to worry too much about the impact of inflation on gross profit margin and net profit margin. It is suggested to weaken the short-term performance requirements, continuously track the improvement of demand under the background of the epidemic, and recommend leading targets with deep moat in the industry.
Risk warning: macroeconomic downside risk / continuous and repeated epidemic risk / regional market competition risk.
