Market review: this week (from April 11 to April 15), Shenwan food and beverage industry rose or decreased by 5.85%, which was greater than that of Shanghai and Shenzhen 300 by – 0.99%; Among them, pre processed food (Shenwan class III, the same below) (17.30%), cooked food (12.17%) and baked goods (6.65%) led the increase in Shenwan class III food and beverage; The health products (- 1.55%) sector led the decline in Shenwan level III food and beverage sectors.
Baijiu: the epidemic prevention and control policy is implemented in a timely manner, and the long-term value of the sector is firmly established. This week, the price of Feitian loose bottles was 26202640 yuan, which was basically the same month on month. The wholesale price of the whole box was 28 Shenzhen Mingdiao Decoration Co.Ltd(002830) yuan, a month on month decrease of about 30 yuan, the wholesale price of puwu was about 970 yuan, a month on month increase of 5 yuan, and the price system of famous wines remained stable. A short time East China epidemic (recently confirmed in Shanghai, and the number of asymptomatic people still exceeds 20 thousand) still affects Baijiu drinking, banquets and other consumer scenarios (Shanghai, Suzhou, Wuxi, Nantong, Changzhou and other Sunan ring Shanghai cities) suspended food. In April 14th, the news conference of epidemic prevention and control in Jilin Province announced that all cities and counties in Jilin province had achieved the goal of zero control of epidemic prevention and control, and will be fully liberalized and social liberalization. Speed up the pace of work in restoring the order of economic operation. On April 16, the Shanghai Economic and Information Technology Commission issued guidelines for industrial enterprises to resume work and production, and comprehensively promote epidemic prevention and control and economic and social development. With the implementation of the epidemic control policy, the epidemic situation is expected to gradually decrease and the positive catalytic expectation for Baijiu sector will be formed. This week, Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) announced the performance forecast for the first quarter. In the first quarter of 2022, it is expected to achieve a total operating revenue of about 10.5 billion, an increase of about 43% year-on-year; The net profit attributable to the shareholders of the listed company is expected to be about 3.7 billion yuan, with a year-on-year increase of about 70%. In the first quarter, it is expected that the proportion of the company’s blue and white series revenue will increase significantly, and the structural upgrading will drive the company’s net profit to increase to about 35%, an increase of about 5pct at the same time. We continue to be optimistic about the growth and certainty of Fenjiu.
Popular products: pay attention to the marginal changes of cost and demand side, and optimize the leaders of subdivided industries. Inflation is rising. Direct materials for mass goods (production raw materials and packaging materials, etc.) account for about 75% – 90% of the cost. The cost side of each sub industry is under pressure to varying degrees. Since the second half of 2021, many enterprises have raised prices. Considering the delay caused by channel inventory digestion and Spring Festival Promotion, the price increase effect is expected to alleviate the cost pressure in the future; On the demand side, the epidemic affects many consumption scenarios such as business supermarket passenger flow and offline catering. If the epidemic is effectively controlled and the consumption scenario is repaired, the demand side of mass goods will pick up. Industry leading enterprises have stronger ability to raise prices and control costs. They are also expected to maintain profitability through more efficient expenses. Their overall anti risk ability is strong. They deserve priority allocation under reasonable valuation.
Investment recommendations: industry structure and prosperity, continue to recommend high-end / regional Baijiu and focus on cost control inflation targets, in the short term, “three zone” prevention and control policy optimization and resumption of production, the recovery scenario of consumer scenario will be better, combined with sector valuation and fundamentals, we recommend the high end and high margin Baijiu liquor: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) and regional leading liquor companies such as Anhui Gujing Distillery Company Limited(000596) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Anhui Yingjia Distillery Co.Ltd(603198) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , etc., also suggest that they should pay close attention to the high growth of high-end Baijiu, Shede Spirits Co.Ltd(600702) , Jiugui Liquor Co.Ltd(000799) and Sichuan Swellfun Co.Ltd(600779) . The public is paying attention to the popular focus, focusing attention on leading indicators with industry pricing power and relatively controllable costs, and recommending Inner Mongolia Yili Industrial Group Co.Ltd(600887) etc.
Risk tips: the adjustment of restrictive industrial policies exceeded expectations, the scattered occurrence and control of the epidemic affected the recovery of consumption scenarios, the risk of higher than expected rise in raw material costs, food safety risks, etc.
