Resumption 2020: the demand of C-end is large, and the sector welcomes double-click. The epidemic situation in 2020 gave birth to the popularity of quick-frozen food consumption habits. The performance and stock price of major quick-frozen enterprises rose sharply, and the corresponding valuation was also adjusted. However, due to the different channel focus and product structure of different companies, the adjustment rhythm reflected some differences. 1) From the perspective of performance: in the face of the epidemic situation and emergencies, andI has outstanding advantages in management, actively adjusts the channel and product structure with the change of the epidemic situation, and the performance growth rate has always maintained a high level. In 2020, the revenue was + 32% year-on-year, and the net profit attributable to the parent company was + 62% year-on-year; Sanquan’s products are mainly C-end products. In the early stage of the outbreak, the company took the lead in benefiting from the outbreak of C-end demand. In the first three quarters of 2020, the company’s performance increased significantly and Q4 slowed down; 2) In terms of share price, the overall share price of the sector rose strongly by 146% in 2020, achieving an excess return of 119% compared with the Shanghai and Shenzhen 300, and the increase was concentrated after the inflection point of the epidemic. At this time, the consumption inertia of end C continues, the demand of end B recovers, and the quick-frozen enterprises benefit both. With the basic recovery of the impact of the epidemic and the return of C-end demand to normal, Yasui’s share price showed strong resilience. While the overall excess return rate of the quick-frozen sector is negative, andI can still achieve an excess return rate of 5%; 3) From the perspective of Valuation: with the gradual realization of performance, the overall valuation of quick freezing sector (pe-ttm) in 2020 returned to 56.3 times from 69.8 times at the beginning of the year, down 19.3%, and there was differentiation in valuation performance among individual stocks Fu Jian Anjoy Foods Co.Ltd(603345) early channel layout and new products contributed to high performance growth, and the company ushered in a new era Sanquan Food Co.Ltd(002216) early valuation was at a high level, and the valuation continued to callback after the performance was realized.
Outlook 2022: the two rounds of epidemics are the same while reserving differences, waiting for performance catalysis. The impact of the current epidemic on the frozen food sector may be the same as that in early 2020, but there are differences. The marginal changes still need to be closely tracked in the follow-up. 1) Same: the b-end of the quick-frozen food sector was first affected, and the demand at the C-end surged: 2) different: the impact of the epidemic on logistics is higher than that of the previous round, and the transportation efficiency of the industry as a whole slowed down. In addition, affected by the continuous rise of raw materials in 2021 and the conflict between Russia and Ukraine this year, the price of raw materials for quick-frozen products is still at an all-time high. From the perspective of performance: the marginal change of the performance of quick-frozen enterprises in 2022 mainly depends on whether the cost pressure of raw materials can be improved and the degree of improvement. If there is an inflection point in the cost and the enterprise expenses are properly controlled, the performance of the quick freezing sector is expected to maintain steady growth in 2022. From the perspective of Valuation: the valuation of the leading target of high growth has dropped, with a certain margin of safety. Considering the high growth of the quick-frozen sector, we can wait for the improvement of operation and the increase of the valuation of the catalytic sector.
Investment advice. 1) In the short term: Sanquan products are more TOC, and the current valuation level is relatively low, so it is recommended to focus on it; 2) In the long run: with the gradual dissipation of the impact of the epidemic, the core of the industry competition logic has evolved into a low-cost and strong channel under the scale effect. In the follow-up, we need to focus on the recovery of industry b-end demand and the inflection point of raw material cost, and grasp the opportunity of sector layout. First promote Fu Jian Anjoy Foods Co.Ltd(603345) and strong single product advantages with outstanding capacity, channel and product advantages, and deeply cultivate Zhengzhou Qianweiyangchu Food Co.Ltd(001215) ; Prefabricated vegetable products have fully benefited from the deepening of consumer education and the cultivation of consumption habits during the epidemic. It is suggested to focus on Suzhou Weizhixiang Food Co.Ltd(605089) ; The baking industry has high growth, so it is recommended to pay attention to Ligao Foods Co.Ltd(300973) .
Risk tips: raw material price fluctuation risk, food safety risk, increased market competition risk, less than expected channel expansion risk, and increased epidemic risk.
