In the early stage, the repeated outbreaks in Shanghai and other places triggered pessimistic expectations of the market on the consumption scene and future consumption capacity. In addition, due to the correction of Maotai rating due to panic, investors were worried about the fundamentals of the industry. We discussed the logic behind the rise and fall of Maotai’s wholesale price in the previous week’s view, and deduced that due to the recent stabilization, Maotai in bulk stood at 2600 yuan and returned to more than 2800 yuan by box this week, which is basically in line with our judgment. We believe that with the effective control of the epidemic and the continuous warming of real estate and other sectors driving economic growth, the market’s expectations for consumption scenarios and consumption capacity will continue to recover. At present, there are many sector adjustments and key targets have more valuation advantages. We suggest looking for deep callback targets along the main line of recovery for layout.
The valuation of key targets has been relatively reasonable. After a significant adjustment in March, by 2022, the valuation of Maotai will be about 35 times, Wuliangye Yibin Co.Ltd(000858) in the early 20s, the peg of the secondary high-end target is basically around 1, the regional leader is already within 20 times, the Foshan Haitian Flavouring And Food Company Ltd(603288) in the mass market is about 45 times, Inner Mongolia Yili Industrial Group Co.Ltd(600887) is about 22 times, Tsingtao Brewery Company Limited(600600) is about 32 times, all below the center in recent years. The valuation of leading enterprises has been highly cost-effective, and some enterprises have made significant in-depth correction.
The epidemic is in the off-season. We expect that the key targets of Baijiu and other key industries will be more stable. The proportion of planned volume in the off-season itself is low, which has little impact on the sales of business plans. At the same time, with the recovery of follow-up scenarios and economic stimulus (the completion of the annual economic target means that the follow-up stimulus plan will be launched continuously), there may be compensation for consumption, and the certainty of the annual performance of key targets is still strong.
Investment strategy: with the improvement of the epidemic situation and the improvement of economic expectations, it is suggested to give priority to the subject matter of recovery and deep correction of valuation. Such targets are subject to more callback in market adjustment due to their own special reasons, such as (1) event driven, such as slow implementation of Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) incentive and unclear adjustment of Wuliangye Yibin Co.Ltd(000858) sales; (2) During the fluctuation, the market is worried about the change of prosperity. For example, the beer scene is greatly damaged, but the prosperity is not affected. The secondary high-end has a strong beta effect, and the market is worried about its expansion logic; (3) The upward cost pressure worries about the long-term competitive advantage. In case of panic, it is more necessary to look forward to the long-term space and focus on the deep correction of valuation with strong performance certainty in the general decline. For specific recommendations, such as Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Wuliangye Yibin Co.Ltd(000858) , Tsingtao Brewery Company Limited(600600) , Foshan Haitian Flavouring And Food Company Ltd(603288) , Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , and other key points of core targets continue to be recommended.
Risk warning: the impact of the epidemic may be repeated; Demand recovery is not strong enough; Food safety issues, etc
