Kweichow Moutai Co.Ltd(600519) : the performance is in line with expectations, and the China area helps to improve the production capacity of Maotai base liquor. 1) Performance forecast and stable operation: on December 31, the company announced that the production and operation in 2021, and the total operating revenue of the company in 2021 was about 109 billion yuan, with a year-on-year increase of about 11.2%, including Maotai liquor and series liquor, with a year-on-year increase of 9.9% and 26.1%. The compound growth rate of revenue of Maotai liquor in the two years from 19 to 21 was 10.9%, and that of series liquor in the two years from 19 to 21 was 14.9%. The net profit was about 52 billion yuan, a year-on-year increase of about 11.3%, and the overall performance was in line with expectations. According to the company’s annual performance accounting guidelines, we calculated that 21q4 achieved a total operating revenue of about 31.95 billion yuan, a year-on-year increase of about 12.4%, and a net profit of about 14.73 billion yuan, a year-on-year increase of about 14.5%. Compared with the first three quarters, the revenue and profit growth accelerated in the fourth quarter, and the profit growth was slightly faster than the revenue growth, mainly due to the addition of 13-17 years of inventory (boutique, China dragon, coffee gold, old wine Pufei), Wine Expo commemorative wine, 80 years of non-standard and old wine in the fourth quarter. The production capacity of Maotai base liquor increased by 6300 tons year-on-year, which is the completion of production expansion in China during the 13th five year plan. 2) New products help accelerate the performance in 2022: this week, Maotai held a treasure press conference. The treasure is positioned between high-quality products and Maotai for 15 years. It is expected to be a strategic single product with ultra-high price band. According to channel feedback, the ex factory price of treasures is 4299 and the retail price is 4599. It is expected that the actual terminal price is expected to reach more than 5000 yuan. According to the information of wechat liquor 12.26, Maotai 1935 has entered the mass production stage, or will be put on the market in batches during the Spring Festival. As a large single product with a price of 1000 yuan, it will boost the upgrading of product structure, which is expected to drive the series of liquor to become the second growth curve of Maotai.
Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) : hold a dealer conference and enter the 10 billion sprint stage. On December 29 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , “focus on high-quality cohesion and new leap forward” development conference was held in Lianshui, Jiangsu Province. 1) Fruitful achievements in 2021: the 14th five year plan has made a good start, and Q4 is expected to continue to maintain a good development trend in 2021. The development of weak markets and markets outside the province was smooth. In the first three quarters, the market in the province increased by 26.3%, and the province achieved global growth, especially in weak markets such as Jiangsu Lianyungang Port Co.Ltd(601008) , Nantong and Suqian; The market outside the province increased by 36.7%, and the market of “2 + 5” key provincial plates increased by more than 35%. In the future, we will strive to increase the proportion of revenue outside the province to more than 20% at the end of the 14th five year plan; In terms of products, in the first three quarters, the proportion of super class a Guoyuan V-series increased by 120% year-on-year, and the proportion of Guoyuan brands increased to 10.7%; Special a + increased by 31.3%; The cultivation of secondary high-end new products D20 / 30 has achieved remarkable results; 2) Outlook for 2022: the marketing work in the new year will be carried out around “13445”, that is, one main line, following the three modernizations strategy, four campaigns (improving V9 potential energy, enabling open systems and improving control and profit sharing, strengthening Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) brand activation, market breakthrough outside the province) and five guarantees. 3) Establishment of V99 Alliance: it is mainly composed of Guoyuan V-series core dealers. The alliance includes 38 distribution units in the first batch, and the upper limit is expected to be 99, so that members can deeply participate in the marketing scheme and obtain more differentiated support, so as to better unite manufacturers to implement the “ten year ten billion project” of V-series.
Food and beverage strategy for 2022: price recovery is expected to accelerate the release of performance. (1) Consumption will be weak in 2021 and bright in 2022. We start from the thinking of industrial chain. First, under the repeated epidemic situation in 2021, the consumption capacity and willingness decreased. Since the outbreak, the growth of per capita disposable income has slowed down, and the median slowdown is more obvious. At the same time, residents’ willingness to consume is low and their willingness to save is rising. The growth of total retail sales of social consumer goods slowed down, and the growth of catering was under pressure. Second, weak terminal prices and rising costs have squeezed the profits of the industrial chain. 2020h2 has entered the post epidemic era. Due to the decline of consumption capacity and willingness, the terminal price of consumer goods is weak. At the same time, the prices of raw materials and packaging materials have risen, highlighting the cost pressure. The profit of the industrial chain is squeezed, which leads to the accelerated de inventory of channels, and the price and inventory of consumer goods are facing a double drop in 2021. Third, review 2021: the sector’s revenue ranking is low, and its profitability is obviously under pressure. As of December 17, 2021, the yield of the food and beverage sector was – 5.0%, ranking the eighth from the bottom in the Shenwan industry, and the annual yield was lower than – 4.92% of the CSI 300. After the Spring Festival in 2021, due to the weak consumption performance, the P / E ratio of the plate began to fall. Since the end of September, with the price increase of the plate and the landing of boots, the catalytic market has been upward. Fourth, look forward to 2022: the price will rise in a cycle, and the performance is expected to accelerate the release. With the normalization of the epidemic and the development of home consumption scenarios, the marginal impact of the epidemic on food and beverage production and sales will be smaller and smaller. Since the third quarter of this year, food and beverage prices have been rising. In 2022, the price and inventory of food and beverage are expected to enter a double upward cycle, and actively pay attention to the release of profits. In terms of rhythm, we expect that the price increase in 2022q1 will gradually complete the transmission to the terminal. Under the low base of 2022q2, food and beverage profits are expected to increase significantly. In 2022q3-q4, the price increase profit elasticity will continue to release as the cost increase decreases or even falls. (2) Two year epidemic stress test, value regression. The epidemic has limited impact, such as the total volume of Baijiu is limited, the price of beer has accelerated, and the speed of yeast and quick-frozen has increased rapidly. The epidemic situation mostly interferes with the mentality and value chain. With the repair of catering, the industry is expected to return to the right track in an all-round way; The logic of industry growth is expected to continue the logic of 2015-2019. The industry has experienced a price war, and the rest is the king. We should pay enough attention to the dragon one dragon two with more adjustments. At present, the price cycle has been started, the inventory increase cycle is expected to come, and the performance is expected to accelerate the release. If the epidemic situation is controlled properly and the macro performance is good, it is expected to obtain excess returns. Referring to the above research and judgment, our main recommendation focuses on the following directions: first, the strong is a stable income company. Considering that under the background of the normalization of the epidemic, the total growth of the short-term demand side may be suppressed, we should pay more attention to the average price increase and profit release brought by the medium and long-term consumption upgrading, and the leading companies in the industry have strong system competitiveness and stable operation. We mainly recommend Maotai, Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , China Resources beer, Tsingtao Brewery Company Limited(600600) , Foshan Haitian Flavouring And Food Company Ltd(603288) , Chongqing Brewery Co.Ltd(600132) , Chacha Food Company Limited(002557) , Chenguang Biotech Group Co.Ltd(300138) and other sub industry leaders; Second, high growth companies with rapid expansion of the industry. We believe that the growth trend of baked and prefabricated vegetables is expected to accelerate. Considering the weakness of demand side in the repeated outbreak, and the company’s high growth track and competitive strength, the new products (or new businesses) of the company are prone to generate excess returns. We recommend the prefabricated vegetables, frozen industries, sub high end Baijiu, cheese industry, Fu Jian Anjoy Foods Co.Ltd(603345) , and so on. Apple Flavor & Fragrance Group Co.Ltd(603020) , Ligao Foods Co.Ltd(300973) etc; Third, companies with cycle reversal and dilemma reversal. We believe that, on the one hand, the epidemic and other factors affect the company’s production, sales and value chain. With the control of the epidemic and the enhancement of consumer confidence, the company has great flexibility, such as Juewei Food Co.Ltd(603517) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Sichuan Teway Food Group Co.Ltd(603317) , Haidilao, leading oil enterprises and meat products. We suggest paying attention to Yihai international. On the other hand, the development speed of the company has been relatively slow for various reasons, and it is still expected to accelerate after the recent adjustment, such as Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Jonjee Hi-Tech Industrial And Commercial Holding Co.Ltd(600872) . It is recommended to pay attention to Anhui Yingjia Distillery Co.Ltd(603198) , Shede Spirits Co.Ltd(600702) , Zhou Heiya. Chongqing Brewery Co.Ltd(600132) : the price increase was steadily promoted, and the momentum of high-end continued. (1) The price increase was steadily promoted, and the short-term sales fluctuation was viewed rationally. According to the feedback of channel research, the company’s latest procurement cost increased as a whole in December 2021. Considering the potential pressure on profitability next year, the company promoted the price adjustment plan in Xinjiang in September, and the market outside Xinjiang began to promote from November. The company has gradually realized excessive price increase in the off-season according to the local competition in different regions. At present, the process is relatively smooth and the acceptance of terminals and channels is good. Since October, due to the repeated epidemic situation in the whole country, the epidemic situation has occurred one after another in major markets such as Chongqing, Chengdu, Shanghai and Guangdong, resulting in short-term sales pressure. The company actively makes up for the damage of current sales through non current sales channels. In addition, the company releases the sales expenses according to the epidemic situation to realize the efficient use of the expenses. (2) The supply chain continues to be optimized, and the adjustment of the sales team is expected to land smoothly. With the rapid growth of South China market, especially the rapid volume of Wusu, Guangdong Huizhou factory can not fully undertake the task of South China supply chain, resulting in the need to transport products from Chongqing and Hunan. Considering the developed market economy in South China and the broad development space of medium and high-end beer, the company has built a production base with an annual output of 500000 kiloliters of beer in Foshan. The new factory is expected to reach production capacity around June 2024. After reaching production capacity, it will become one of Carlsberg’s most advanced breweries in the world. It is planned to supply Wusu, Lebao, Carlsberg, 1664 and other popular brands in South China. Due to the historical evolution, Carlsberg’s factories in China are relatively small as a whole, and more large-scale factories will be considered in the future. In 2021, the company divided the sales teams in the provincial administrative regions of North China and East China markets, further clarified the responsibility field and improved the internal operation efficiency. After the completion of the restructuring in 2020, the company has carried out similar integration and adjustment of the sales team in Hunan, and the follow-up operation is orderly. It is expected that this adjustment will also be implemented smoothly. (3) The potential of large single products is expected, and the base market continues to upgrade. Wusu brand achieved rapid growth in the first three quarters. The company took advantage of the trend to make Wusu bigger and stronger, continued to enrich Wusu product matrix, and recently launched Wusu new packaging and new white beer (German style). 1664 has a good market awareness in the entertainment channel, and some breakthroughs have been made in the catering end. Under the epidemic situation, the company increased the investment of 1664 in the Ka channel. Summer fun focuses on home consumption, forms complementary channels with 1664, and creates an ultra-high-end product portfolio. It hopes to become a similar ultra-high-end core brand of 1664 through 3-5 years of promotion investment. In addition, in Chongqing, Yunnan, Ningxia and other base markets, the company has steadily promoted the upgrading of mainstream products and realized the upgrading of V8 and X8 series to V9 and x9 series this year.
Juewei Food Co.Ltd(603517) : the price increase has entered the water test stage, and actively explore the sinking market under the epidemic situation. (1) Cost pressure appears, and the company is expected to alleviate it by raising prices. According to the feedback of channel research, the company plans to gradually raise the price by stages and cities, and the terminal and ex factory price are expected to increase at the same time, so as to thicken the channel profit space. Jue Wei’s pricing in the same industry is low, and a space for price increase is reserved. Through the pilot in stages and cities, good results are achieved, and then a comprehensive price increase is carried out. At present, the price of raw materials of duck attached frozen products shows an upward trend. Considering the company’s inventory and futures factors, it is expected that it will be reflected in the statement end in 2022. At this time, the company chooses to try to increase the price, which is expected to alleviate the cost pressure. (2) The epidemic has a great impact on high potential energy stores. The company has increased the layout of communities, street shops and low-level cities. According to the channel survey feedback, compared with the normal level before the epidemic in 2019, the street shops and communities of the company have recovered to about 95%, and the airport, high-speed rail and business district have recovered only 60% – 70%. Considering that the high potential energy stores are greatly impacted by the epidemic and the subsequent epidemic is expected to show a normalization trend, the company adjusted the focus of opening stores and turned to the less affected community street shops and sinking markets. The survival rate of stores in the sinking market is high, and the break even daily sales of single stores are far lower than those in online cities. The company actively promotes the plan of starting a prairie fire. By encouraging employees to open stores in their hometown and promoting market development, it is expected to gradually achieve results in 2022.
Sichuan Teway Food Group Co.Ltd(603317) : sales are expected to improve month on month, and the leading position is expected to be strengthened. (1) Q4 sales are expected to improve month on month, and the company attaches importance to profitability. According to the channel survey feedback, Q4’s sales returned to normal, the growth rate picked up month on month in the third quarter, and the overall dynamic sales were between 2019q4 and 2020q4. This year, due to the low price of pork, the demand for winter flavor products is strong and in short supply. The dynamic sales inside and outside Sichuan are good, and the category sales revenue is expected to reach a new high. At present, the dealer inventory has maintained a benign level after adjustment, and is in a historically low state month on month and year-on-year. At present, the company has not raised the price of conventional products. In 2022, it will comprehensively consider the gross profit margin, net profit margin, cost and competition, and ensuring profitability is one of the standards for the assessment of the company’s products. (2) Dealers maintained steady growth and made concerted efforts in category channels. In 2020, the company will attract a lot of investment and make positive adjustments in 2021: first, revitalize the existing dealers; Second, in 2022, the focus will be on the market sinking and expansion of mature regions; Third, fill in the gaps in key areas. In 2022, it will still maintain a rapid investment trend and is expected to maintain the level in 2021. At the same time, product adjustment will be carried out in 2022. For example, Dahongpao will focus on the promotion of small B end, small B will strengthen the product line and recruit new professional dealers. Non spicy soup products will continue to be promoted and are expected to become the next big single product. (3) Accelerate the reshuffle of the industry and be optimistic about the victory of the leader. After the expansion in 2021h1, a large number of small and medium-sized enterprises began to shrink back to strong regions. For example, Mingyang’s regional layout outside Sichuan and Chongqing decreased significantly in the third quarter, and returned to Sichuan and Chongqing for intensive cultivation. At the same time, small and medium-sized enterprises on the product line also contracted, and the products promoted in the foreign market contracted to only 1-2 strong products. We believe that after this round of competition, the leading advantage is more obvious, and we are optimistic that Tianwei will win in the medium and long term.
Recommended combination in January: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Juewei Food Co.Ltd(603517) , Luzhou Laojiao Co.Ltd(000568) . The combination logic has not been changed, so we continue to maintain the combination recommended last month. In December 2021, the recommended portfolio and its rise and fall were Chongqing Fuling Zhacai Group Co.Ltd(002507) (16.31%), Luzhou Laojiao Co.Ltd(000568) (10.35%), Kweichow Moutai Co.Ltd(600519) (6.18%), Juewei Food Co.Ltd(603517) (5.25%), Wuliangye Yibin Co.Ltd(000858) (2.14%) respectively, and the portfolio yield was 8.05%. Over the same period, the Shanghai Composite Index rose 2.13%, and the portfolio rose 5.92% higher than the Shanghai Composite Index.
Investment strategy: the layout is at the right time. Our main recommendation focuses on the following directions: (1) strong HENGQIANG’s steady income companies: recommend Maotai, Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , China Resources beer, Tsingtao Brewery Company Limited(600600) , Foshan Haitian Flavouring And Food Company Ltd(603288) , Chongqing Brewery Co.Ltd(600132) , Chacha Food Company Limited(002557) , Chenguang Biotech Group Co.Ltd(300138) and other sub industry leaders; (2) high growth companies with fast expansion in the industry: recommend prefabricated vegetables, quick frozen industry, sub high end Baijiu, cheese industry, Fu Jian Anjoy Foods Co.Ltd(603345) , Apple Flavor & Fragrance Group Co.Ltd(603020) , Ligao Foods Co.Ltd(300973) , etc. (3) Companies with cycle reversal and dilemma reversal: epidemic cycle recovery, recommended Juewei Food Co.Ltd(603517) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Sichuan Teway Food Group Co.Ltd(603317) , Haidilao, leading oil enterprises, leading meat products, etc. it is recommended to pay attention to Yihai International; It is expected to accelerate after adjustment. It is recommended to pay attention to Anhui Yingjia Distillery Co.Ltd(603198) , Shede Spirits Co.Ltd(600702) and Zhou Heiya. Detailed recommendation logic
