Review of food and beverage market:
Since the beginning of the year, affected by multiple factors such as the epidemic, geopolitics and liquidity, the market pessimism has increased, and the performance of the food and beverage sector is relatively weak. As of March 18, 2022, the overall valuation level of Hong Kong stock food and beverage industry was about 24.3 times, less than two-thirds of the average value of the past three years. On March 15, the Hang Seng index once fell below the 20000 point mark. Compared with the previous round of stock market disaster (from May 2015 to February 2016, the lowest point of the Hang Seng Index fell to 1831958), the overall average valuation of the food and beverage industry was about 36.5 times. Therefore, from the historical performance, the current valuation of the food and beverage sector has been at the bottom, and the investment value has become prominent. Segment market and data tracking:
Catering: from January to February, the catering revenue increased by + 8.9% year-on-year to 771.8 billion yuan, with a growth rate of + 11.1 PCT compared with that in December last year,
Catering consumption has obviously warmed up; Since March, the epidemic has been sporadic, which has affected the recovery progress in the short term, but the operating pressure of food enterprises may be relieved compared with the past two years. Pig breeding: as of March 22, 2022, the price of three yuan pigs at home and abroad was 11.9 yuan / kg, down - 57.3% year-on-year and - 3.3% month on month. The degree of industry losses continued to deepen; In the case of operating losses and tight cash flow, pig production capacity is expected to accelerate, and pig prices may see an inflection point as early as the middle of the year. Dairy products: as of March 16, 2022, the average price of fresh milk in China was 4.19 yuan / kg, unchanged year-on-year, down - 0.2% from last week; The average auction price of Fonterra milk powder was $5039 / ton, up + 23.2% year-on-year and + 4.1% month on month. It is expected that under the strong consumer demand in China, the raw milk price will remain high and volatile in 2022, and the raw material cost pressure of downstream dairy enterprises will be eased compared with 21 years. Beer: from January to February, the output was + 3.6% year-on-year, basically returning to the same period in 19 years. However, due to the repeated impact of the epidemic in March, the consumption scene was damaged. Under the strict epidemic prevention policy, it is expected that the subsequent consumption scenarios can accelerate the recovery without disturbing the stock and dynamic sales in the peak season.
The cost of short-term food and beverage sector is still under pressure:
At present, the prices of most raw materials in China continue to rise, except for the falling trend of pork prices and the high fluctuation of raw and fresh milk prices; As a "European granary", the outbreak of geographical conflicts between Russia and Ukraine is also expected to have a huge impact on the global Shenzhen Agricultural Products Group Co.Ltd(000061) supply and disturb the Chinese Shenzhen Agricultural Products Group Co.Ltd(000061) market price. In the short term, the cost of food packaging, transportation and production in the food and beverage sector is still under great pressure.
Investment suggestions:
We believe that the current valuation of the food and beverage sector is at the bottom of history and has a certain margin of safety. However, due to the repeated epidemic and the uncertainty of the impact of the Russian Ukrainian war on commodity prices, we suggest: 1. Look for sub industries or preferred stocks with small benefit or impact of the epidemic and strong cost transfer ability. The stability and certainty of performance are relatively high, and Mengniu Dairy (2319. HK) is recommended China Resources beer (291. HK); 2. If the epidemic is well controlled and consumption is boosted, the affected stocks are expected to usher in the repair market. However, with the expected improvement of the recovery of the strategic layout sector, the investment opportunities brought by the double repair of the company's valuation and performance will focus on jiumaojiu (9922. HK), Zhou Heiya (1458. HK) and Helen (9869. HK).
