China's epidemic situation is repeated, and the demand for material supply is prominent, which is expected to catalyze the further development of the cold chain; We are optimistic about the overall growth and investment opportunities of the commercial cold chain industry. Specific to different links of the industrial chain, we believe that (1) the demand for cold and fresh food production and storage will promote the technological progress and high-quality equipment in the upstream of the cold chain; (2) The demand for cross ground cold chain transportation will drive the construction of cold storage in the middle reaches and the development of cold chain transportation vehicles; (3) The demand for fresh food distribution, community group purchase and prefabricated vegetables will further stimulate the demand growth of freezers, distribution boxes and other equipment in the "last kilometer" of the cold chain.
Key investment points
China is optimistic about the overall development of the commercial cold chain industry
Recently, the epidemic situation in China has erupted again, and the epidemic prevention situation is grim. We believe that the demand for material supply assurance highlighted in this epidemic will have a direct catalytic effect on the development of China's cold chain industry. Meanwhile, on April 11, the Ministry of transport, the State Railway Administration and other five departments jointly issued the implementation opinions on accelerating the high-quality development of cold chain logistics and transportation, and the cold chain policy support was increased again. We believe that the repeated outbreaks in China and the prominent demand for material supply guarantee are expected to catalyze the further development of the cold chain; We are optimistic about the overall growth and investment opportunities of the commercial cold chain industry.
Upstream: the demand for cold and fresh food production and storage promotes the technological progress and high-quality equipment delivery in the upstream of the cold chain
China's cold chain industry started relatively late, and there is still a significant gap with developed countries: (1) in 2018, the per capita cold storage capacity of Chinese urban residents was only 0.13 cubic meters, lower than the global average of 0.15 cubic meters, and far lower than 0.49 cubic meters in the United States; (2) In 2018, the cold chain circulation rate of fruits, vegetables and meat in China was 25% and 39% respectively, and the decay rate was 15% and 8%, which is far from the average cold chain circulation rate of 80% - 100% and the decay rate of less than 5% in developed countries such as Europe, America and Japan. We believe that the production and storage demand of cold and fresh food highlighted in the epidemic will promote the technological progress and high-quality equipment delivery in the upstream of the cold chain, so as to improve the overall efficiency of the cold chain.
Midstream: the demand for cross ground cold chain transportation drives the construction of cold storage and the development of cold chain transport vehicles
Taking the areas with serious epidemic situation as an example, according to the data of Shanghai Municipal Commission of Commerce, the self-sufficiency rate of grain, pigs and vegetables in Shanghai is only 20%, 10% and 40%. More than 80% of the supply (except green leafy vegetables) depends on the supply of other provinces, especially 8500 tons of vegetables per day. We believe that the cross ground cold chain transportation and storage demand highlighted in the epidemic will also significantly drive the construction of cold storage and the development of cold chain transport vehicles.
Downstream: the demand for fresh distribution, community group purchase and prefabricated vegetables will further stimulate the demand growth of "last mile" equipment such as freezers and distribution boxes
Affected by the epidemic situation, the demand for fresh food and prefabricated food in the community has been further reduced, and the supply of traditional fresh food has been further stimulated by the epidemic situation. According to the industry online data, the sales volume of commercial refrigerators in China in 2021 was 13.52 million units, with a year-on-year increase of 16.5%. We believe that the change of supply structure and the cultivation of demand habits will promote the maturity of online order and offline delivery mode. After the epidemic, the demand for the number and capacity of front warehouse refrigerators and cold chain distribution boxes of e-commerce platforms will continue to grow, and the demand of large supermarkets and prefabricated vegetable enterprises for purchasing large quantities of refrigerators and replacing large capacity refrigerators will also continue to increase, It is expected to further stimulate the growth of the scale of freezers, distribution boxes and other equipment in the "last kilometer" of the cold chain.
Investment advice
(1) upstream: optimistic about the growth potential of Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) , Shanghai Highly (Group) Co.Ltd(600619) , Zhejiang Three Stars New Materials Co.Ltd(603578) core component suppliers;
(2) downstream: it is recommended to pay attention to the refrigerator faucet Hisense Home Appliances Group Co.Ltd(000921) .
Risk tips
The risk of rising raw material prices and the cold chain policy were not as expected.
