Market review last week:
Last week (March 21-march 25, 2022), the food and beverage sector (Shenwan) fell 3.47%, the Shanghai Composite Index fell 1.19%, the Shenzhen Component Index fell 2.08%, the Shanghai and Shenzhen 300 fell 2.14%. The food and beverage sector lost 2.28 percentage points to the Shanghai Composite Index, ranking 28th in the weekly rise and fall of Shenwan’s 31 primary sub industries.
Core view: weaken short-term disturbance and stick to long-term prosperity track
Baijiu: weaken short-term disturbance and stick to the long and prosperous track. Recently, Baijiu is mainly disturbed by emotional faces, and the industry is not worried in the long run. In March, the epidemic was repeated, deepening the market’s concern about the limited consumption of sub Baijiu and Baijiu liquor. The overall valuation of the industry is in a reasonable allocation interval, and the high Baijiu’s anti cyclical and strong performance growth certainty is the first choice. The Spring Festival dynamic sales show that the strong demand trend of high-end wine remains unchanged, and the dynamic sales of maowu Luzhou are all good, and the inventory level remains low. At present, high-end liquor enterprises have become the main tone to control the volume and price, and strengthen channel control to lay a solid foundation for good performance growth in 2022. Sub high end Baijiu is still the fastest growing sector, and the strongest growth sector is the first to choose strong wine companies. On the product side, the upgrading of product structure of sub high-end liquor enterprises drives the increase of ton price, and the nationalization and large volume of large single products in the sub high-end price band of the card position is the driving factor of performance. On the channel side, the channel reform keeps pace with the times, and the in-depth distribution tends to integrate with the manufacturer’s 1 + 1 model; Channel mode and product differentiation are more tailored to local conditions; Liquor enterprises have bound the interests of dealers to enhance their enthusiasm; Refer to the quota system of famous liquor for flow single product to strengthen the stability of price sector; Group buying and special dealers have also become the layout trend.
Condiment: take advantage of adversity to accumulate energy and wait for the end demand to recover Foshan Haitian Flavouring And Food Company Ltd(603288) released the annual report, in which Q4 grew brightly, realizing a year-on-year increase of + 22.85% / + 7.19% in operating revenue / net profit attributable to parent company. In view of the multiple factors such as the repeated obstruction of the epidemic to the catering consumption scene, the rise of raw materials, the decline of business overload flow and the disturbance of community group purchase, the company raised the price in late October 2021, and expanded the layout for the C-end and new retail channels. In 2021, the online sales increased by + 85% year-on-year and 379 dealers increased year-on-year. At present, the price transmission is still continuing and the inventory is still digested. In the short term, weak demand and rising raw material prices may put pressure on the gross profit margin. In the long term, the leading position of the company is difficult to shake. Scale effect, category growth and supply chain advantages are superimposed. In adversity, price increases and channel transformation accumulate energy for future development, and the growth space is still sufficient.
Beer: without fear of short-term disturbance, the high-end process is imperative. In March, the epidemic situation tightened, leading to the frustration of current drinking channels. In the long run, the high-end trend of the industry is significant, and the structural upgrading drives the ton price to increase. The high pressure of raw materials is smoothed by locking the price and raising the price at any time. With the advent of the peak season, there is enough room for the profit elasticity after the price increase. The performance forecast for 2021 released by China Resources beer last week was in line with expectations. The company achieved revenue / net profit attributable to parent company + 6.2% / + 119.1% year-on-year, the company’s annual sales volume was – 0.4% year-on-year, and the sales volume of second highest and above products increased by 27.8% year-on-year. The trend of structural upgrading was significant. Among them, large single products such as superx and Heineken achieved brilliant growth. The company’s decisive high-end strategy and the development of CVS channels escorted the performance growth after the epidemic stabilized.
Investment advice
Plate allocation: Baijiu beer dairy products snack food condiment;
Baijiu: related targets: high-end liquor enterprises Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) and sub high-end liquor enterprises in the development potential of Fenfen, Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) , Shede Spirits Co.Ltd(600702) , Jiugui Liquor Co.Ltd(000799) , Anhui Yingjia Distillery Co.Ltd(603198) ;
Beer: related targets: Tsingtao Brewery Company Limited(600600) with optimized product structure and Chongqing Brewery Co.Ltd(600132) with large amount of ussu;
Dairy products: relevant subject matter: Inner Mongolia Yili Industrial Group Co.Ltd(600887) , which makes concerted efforts in production capacity, channels and products.
Risk tips:
Baijiu price rise less than expected, terminal demand fell, food safety issues.
