Basic conclusion
New year’s special topic: 2021 has ended, and we usher in a new 2022. The past year has been a volatile year for the food and beverage sector. From the perspective of fundamentals, it has experienced the pressure of macro environment and epidemic fluctuation on demand; From the perspective of valuation, it has experienced the adjustment of historical valuation high at the beginning of the year; From the perspective of market style, it has experienced the differentiation of market and capital. Looking back on the poor expectation of the sector in 21 years, we look forward to the “change and invariance” in 22 years: the change is the initial valuation center and the acceleration of the fundamentals at the bottom; What remains unchanged is the pattern of subdivided industries and the moat of high-quality enterprises, which also makes us have more expectations for 22 years.
We resumed trading for two rounds of sharp declines in the sector in 21 years: 1) the overall valuation of the sector reached a relative high in the first quarter, liquidity tightened and US bond yields continued to rise. The switching layout of trend funds to styles and plates also bred emotional pressure, resulting in a sharp correction of plates. 2) since the beginning of June, the external policy risk has begun to spread from the education sector, Baijiu liquor consumption tax rumors are often repeated, and the resumption of pressure on the catering side also restricts the mood of the public goods sector. We found that each sub sector showed obvious differentiation, some sub sectors still had strong demand resilience under external pressure, and the demand recovery speed of some sub industries was significantly lower than expected. In the fluctuation of fundamentals, the valuation adjustment range and speed of enterprises are more obvious than expected. Superimposed on the change of market style, the share price of food and beverage sector has experienced severe shocks.
The 21 year performance of the food and beverage sub sector has also been divided: the cost of upstream raw materials has increased significantly from the cost side to the plate profitability level, and 1) Baijiu plate, especially the leading companies, has a relatively high profit level, and is less affected by upstream raw material cost upgrades. Baijiu plate price belt gradually moved upward, from the real estate wine, secondary high-end to high-end wine prices at the end of the year, from the dimension of the price to give the medium and long term performance elasticity over expectations. 2) The popular products sector actively responded to the pressure on the cost side and successively implemented price increases to pass on costs. In this regard, the leader exceeded market expectations with stronger bargaining power. For example, the collective price increase in the beer sector at the end of the year is earlier, wider and more extensive than 18 years. Under the pressure of raw milk, the top two dairy products realized the upward trend of profitability through the slowing competition situation, and fulfilled the goal of improving profit margin put forward at the beginning of the year. On the whole, the current sector, especially the leading companies, have shown strong resilience in terms of channel control and external risk regulation, and continuously consolidate market confidence with good fundamentals and performance. At the beginning of 2022, we have more confidence in the investment opportunities of the sector, which is due to the fact that the valuation of the sector has entered a reasonable range and the demand margin has gradually improved, and the structural opportunities are still obvious.
The main line of investment for 22 years: 1) the main line of “certainty + high barriers”: the recommended Baijiu River Plate with deep moat, good business mode and high valuation and high price. During the year, equity incentives of several liquor enterprises were implemented more than expected, injecting new vitality under the new pattern of empowerment. Looking forward to 22 years, we believe that we can still grasp the two main lines of certainty + growth. For high-end liquor, the performance is highly deterministic, the valuation has been digested to a reasonable level, and the certainty of obtaining the deterministic premium is strong, which is still the first; For the secondary high-end with strong growth, the performance is also expected to be flexible, so it is recommended to continue to pay attention.
2) The main line of “performance recovery + price increase and landing”: the mass goods sector with improved fundamentals and prosperity recovery. We believe that, on the one hand, the impact of the epidemic in the past 22 years will weaken marginally, and the demand is expected to improve gradually; On the other hand, the pressure on the cost side will also slow down, and the price increase will be gradually transmitted to the profit side. For the beer sector, it is recommended to pay attention to whether there are valuation opportunities brought by higher-end progress than expected and clear high-end competition pattern. For the dairy sector, we believe that the 22-year profit side is still flexible. The condiments and leisure snacks sector suggests grasping the catalysis of fundamental marginal improvement on performance elasticity.
Risk warning: macroeconomic downside risk / repeated epidemic risk / regional market competition risk
