When will the king of the consumer sector return?
You are a consumer stock in the A-share evergreen sector. For more than a year, all subdivided industries have been spared from continuous correction, and the high share prices of many well-known listed companies have been halved. In 2022, from the market point of view, only the aquaculture sector temporarily stands out and is relatively resistant to decline.
When will the market reverse when individual stocks fall out of the "value pit"? In the announcements of consumer companies in recent months, "price increase" has become one of the repeated keywords. Several insiders said that the performance reverse transfer of mass consumer goods began to be reflected in Q2 in 2022. Therefore, they focused on and arranged to enterprises with strong brand power and bargaining position in the industrial chain. These enterprises can transfer cost pressure through price increase, thus bringing performance through the cycle.
"evergreen" sector dormant
As the sector with the lowest "threshold" for investment, the consumer industry is very close to the daily life of investors and basic people. Its investment logic has different scales in the hearts of every retail investor. However, after a year of market shock, a number of high-level investors were trapped in the market.
According to the data, the current stock price of companies under the category of wind big consumption has retreated by an average of 43% compared with the high point of last year, and well-known companies such as Aier Eye Hospital Group Co.Ltd(300015) , Gree Electric Appliances Inc.Of Zhuhai(000651) , Midea Group Co.Ltd(000333) , Wuliangye Yibin Co.Ltd(000858) are close to halving. The declining market continued after the year, which also dragged down the associated theme funds.
At present, there are 184 funds in the Chinese market whose names contain the word "consumption". The average decline of these funds during the year is more than 16%. Only four funds, namely Boshi China Securities Hong Kong stock connect consumption theme ETF, Qianhai Kaiyuan Shanghai Hong Kong Shenzhen University consumption, SDIC UBS information consumption and e-fund China Securities Hong Kong stock connect consumption theme ETF, have positive returns, with increases of 6.66%, 6.56%, 5.51% and 2.78% respectively. Hong Kong stocks are equipped in the heavy positions of three funds, Hong Kong stocks fell much less than A-Shares after the year, so they were free from losses.
In terms of valuation, after more than a year of adjustment, the average valuation of the constituent stocks of the large consumption index is 35.54 times. Wu Yue, director of large consumption research of Harvest Fund, believes that from the perspective of space, after this round of decline, the valuation of a large number of assets, especially the consumer sector, has returned to the low point of 2016, and is about to enter the absolute income space. There are great opportunities for value revaluation in the next two to three years.
"At present, the valuation of the consumer sector is lower than the historical center. If you take it apart, there is still a premium in the valuation of the head consumption white horse company, which may still have the possibility of valuation contraction in the medium and short term. For small and medium-sized market value and compulsory consumption, there are few institutional positions in previous years, and there is no direction of grouping. At present, the valuation is basically at the bottom of history, and the exploration space is limited."
Why are consumer stocks so "injured"? Some insiders believe that with the recent sharp rise in the price of raw materials, the rise of short-term costs is still the main risk of consumer goods enterprises. In addition, with regard to the recent adjustment of the consumption sector, on the one hand, the geopolitical political war will change the risk appetite of global funds. On the other hand, what we are most worried about is the risk of stagflation, that is, inflation will rise sharply, and stagflation will occur under the background that the global economy has not yet made a strong recovery. The stagflation environment may affect the global equity assets, the subject of overvalued values It will cause very obvious pressure on the core track. Whether foreign or domestic, the change of risk appetite in the overall capital has been transmitted to the A-share market, especially the leading white horse stocks represented by consumption, which have a lot of capital positions in Beishang. Therefore, the whole market has shown a sharp unilateral decline recently.
breeding sector is the only highlight
It is noteworthy that among the consumption theme funds mainly investing in a shares, only SDIC UBS's consumption information barely received a red profit after the year. As of the end of last year, five pork stocks including Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , New Hope Liuhe Co.Ltd(000876) and Tecon Biology Co.Ltd(002100) accounted for half of the fund. The net value of the fund barely turned red because the pork sector was one of the few bright spots in the consumption field.
After the year, the decline of animal husbandry ETF during the year was "only" 0.75%, and rebounded by more than 15% in the past 12 trading days. Has the long silent "pig cycle" ushered in a bottom rebound? From the current fundamentals of pig enterprises, Huachuang Securities pointed out that the overall loose supply and demand fundamentals determine that it is still difficult to be optimistic about pig prices for some time in the future, and the upward superposition of feed costs will further squeeze breeding profits. According to the calculation, since the beginning of the year, the use cost of both self ingredients and commercial materials has increased significantly. Considering the lag effect of fat pig marketing cost accounting, it is expected that the breeding end will still bear great pressure of loss for some time in the future. However, its announcement also believes that the cumulative removal rate has exceeded 6% since the peak of production capacity in June 21. Although the overall situation is still in surplus, with the passage of time, The logic of cycle reversal will be gradually strengthened.
The consumption information of SDIC UBS elaborated on the research and judgment of the "pig cycle" in the four seasons report. In terms of specific industries, the pig cycle of agriculture is expected to be the sector beta of the consumer industry in 2022. In history, the turning point at the bottom of the pig cycle is the most comfortable time for investment and the highest expected rate of return. At present, the turning point of sow production capacity in the industry has been seen from June to July 2021, and the price turning point is expected to appear in the first half of 2022.
Wu Yue also believes that in the breeding sector, the short-term Chinese pig price will weaken after the Spring Festival. In the medium term, there will still be the possibility of a double dip in pig prices, but the low point will not fall beyond October 2021, and the trend of capacity removal in the industry continues. The opportunity to allocate pigs in 2022 will probably disappear in the first half of 2022, but it is worth paying attention to whether the pig production rate in 2022 will disappear again.
consumer sector performance reversal is expected
Read the announcements of consumer companies in recent months, "price increase" has become one of the repeated keywords. Baijiu, Beijing Shunxin Agriculture Co.Ltd(000860) , Shede Spirits Co.Ltd(600702) , Anhui Kouzi Distillery Co.Ltd(603589) announced the price increase; Foshan Haitian Flavouring And Food Company Ltd(603288) Zhengzhou Qianweiyangchu Food Co.Ltd(001215) , Sanquan Food Co.Ltd(002216) , Chen Ke Ming Food Manufacturing Co.Ltd(002661) , Snowsky Salt Industry Group Co.Ltd(600929) , etc. also raised the prices of products on sale due to "the continuous rise of raw materials, transportation, energy and other costs".
Wu Mocun, fund manager of SDIC UBS, said in the fund's annual report that the "price rise" of food and beverage in 2022 is expected to be the main line throughout the year. We should find a subdivision direction that can smoothly transfer cost pressure and continuously improve profitability. Wu Yue also predicted that the performance reverse transfer of mass consumer goods will begin to be reflected in Q2 of 2022.
"We mainly focus on and layout to enterprises with strong brand power and bargaining position in the industrial chain. They can transfer cost pressure through price increase, thus bringing performance through the cycle. However, we are cautious about industries and enterprises that are partial to bulk commodities and homogenization this year."
Combined with the current stock price, Wu Yue judged that after this round of correction, the structural differentiation market still exists in the consumer sector, but the differentiation gap is narrowing. If the decline method and range of 10% every week or two are like now, it is basically a comprehensive market. It is not a structural market as judged last year, because the valuation of leading white horse company may also be very attractive next year.
with the decline in the past two years, Wu Yue is becoming more and more optimistic about the consumer goods industry. He judged that there would be a mandatory consumption reversal market with pig breeding + popular products as the core in Q2. "22H2 began to take macroeconomic stabilization and epidemic control. The white horse stocks represented by Baijiu, such as liquor tax exemption, may be reversed. At present, the consumption sector is similar to the 16 year position. Whether it is fundamentals, market sentiment or sector valuation is at the bottom area. Looking ahead to the next three years, there may be a new bull market."
With regard to other segments of the consumer industry, Wu Mocun believes that the current valuation of medicine is not the main contradiction. We need to wait for the natural clearing of concerns about policy uncertainty, and we hope to see long-term allocation opportunities this year; Household appliances need to pay attention to the realization progress of downward cost and demand recovery; The completed industrial chains such as home furnishings and kitchen appliances will continue to track the improvement of leading indicators such as real estate land acquisition and new construction, and then make dynamic evaluation.
