Key investment points:
1. Market confidence was gradually restored and the sector rose for two consecutive weeks. On Monday, the food and beverage industry rose 4.40%, outperforming the Shanghai Composite Index (- 1.25%) by 5.65 percentage points. This week, the factors leading to the early fall of the sector continued to improve. At the level of capital (North food fund continued to flow into 900 million yuan, with Baijiu net flowing in about 1 billion 800 million yuan) and the negative impact of the epidemic weakened. Market confidence was restored. The sector rebounded sharply on Tuesday and Thursday after Monday's crash. In terms of breakdown, all sub industries rose to varying degrees this week, led by pre processed food, beer and baked goods, with increases of 18.93%, 9.06% and 8.42% respectively. In terms of individual stocks, stocks benefiting from the epidemic this week led the rise, with Shandong Huifa Foodstuff Co.Ltd(603536) rising first (about 27.27%), followed by Zhengzhou Qianweiyangchu Food Co.Ltd(001215) (+ 23.06%), Suzhou Weizhixiang Food Co.Ltd(605089) (+ 22.57%), Fu Jian Anjoy Foods Co.Ltd(603345) (+ 19.73%), Haixin Foods Co.Ltd(002702) (+ 19.34%) and so on.
2, liquor market rebound is strong, Baijiu strong rebound, continue to optimistic about the overall rebound opportunities. Last week, we stressed that Baijiu has a large range of callbacks since the beginning of this year, mainly due to negative factors such as emotional aspects and outflow of foreign capital, which are not related to fundamentals. The sector has fallen greatly in the early stage, the stock price has reflected pessimism, and is optimistic about the overall repair opportunities of the sector in the short term. The strong rebound of the sector this week confirms our view. At the current time point, we are still optimistic about the overall rebound of the sector, mainly based on: 1) the industry fundamentals are stable and the impact of the epidemic is very limited. Referring to 2020, the epidemic affected the consumption of the Spring Festival in the whole country, and the impact on the growth rate of the whole year was also limited. The Baijiu industry increased by 8.2% and 4.6% respectively in 2019 and 2020, and the growth rate in 2020 was only 3.6pct. This year, the epidemic only affected some regions, and from March to May was in the off-season, accounting for a low proportion of sales in the whole year. Next, we will enter the performance intensive disclosure period. The completion degree of leading collection is high, and the performance of the first quarter will probably achieve a "good start". Last week Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) released the first quarter results forecast, which also proved the strength of fundamentals. 2) after the previous adjustment, the value foam of the Baijiu sector was fully digested, and the valuation level of the sector is now at 49% place in the past three years. 3) market confidence has been remarkably restored. On the one hand, the North has been running into the Baijiu sector for two consecutive weeks. On the other hand, the number of new cases per day in Shanghai will not continue to rise this week, strengthening the market's confidence in ending the epidemic as soon as possible; It is expected that the government will also successively introduce relevant policies to support the resumption of production and work and encourage consumption. At present, the valuation foam and pessimism have been gradually digested. In the future, with the recovery of market confidence, the catalytic rate of good news will catalyze the trend of the sector, and suggest active layout.
3. The pre prepared vegetables were boosted by the epidemic, and the epidemic damaged stocks with large decline in the early stage rebounded. Under the dual pressure of the impact of the epidemic and rising costs, the stock price of popular products continued to callback, and the market pessimism has been fully reflected in the stock price. The valuations of many companies fell back to the lower quartile in recent five years. There has been an inflection point on the emotional side this week, and the sub sector has rebounded significantly since Tuesday.
(1) the C-end demand of prefabricated vegetables has accelerated its penetration under the epidemic situation, and the logic of long-term growth is clear. Under the epidemic situation, residents had to cook at home every day, which made many consumers experience the convenience brought by prefabricated vegetables and accelerated the C-end penetration of prefabricated vegetables industry. In March, semi-finished dishes on platforms such as HEMA, dingdong shopping and Jingdong fresh food were in short supply. We are optimistic about the long-term development trend of the prefabricated vegetable industry. There is room to improve the permeability of both b-end and C-end, and the industry is in the early stage of rapid development. It is suggested to focus on Fu Jian Anjoy Foods Co.Ltd(603345) , Zhengzhou Qianweiyangchu Food Co.Ltd(001215) , Suzhou Weizhixiang Food Co.Ltd(605089) , Zhanjiang Guolian Aquatic Products Co.Ltd(300094) , etc.
(2) the negative impact of the beer epidemic has weakened, market confidence has recovered, and the current high cost of the industry is superimposed. The market is expected that the price increase of the leading enterprises will be close and rebound more. On the whole, the high-end pace of the beer industry is still accelerating, and the performance of leaders such as China Resources, Tsingtao beer and heavy beer is outstanding in 2021. In the future, under the continuous optimization of high-end + cost / efficiency, the logic of long-term improvement of the profitability of the sector will continue to be realized.
(3) the inventory of quick-frozen rice noodles, convenience foods and other categories with strong hoarding properties accelerated to be cleared in March. After the national transportation and logistics returned to normal, it is expected that there is a demand for replenishing inventory. Superimposed on the low base of Q2 last year, Q2 may have performance elasticity, such as Sanquan Food Co.Ltd(002216) , Henan Shuanghui Investment & Development Co.Ltd(000895) , Keming noodles, Angel Yeast Co.Ltd(600298) , Fu Jian Anjoy Foods Co.Ltd(603345) , etc.
(4) the epidemic affects travel, drinking, sports and other consumption scenes. Under the obstruction of e-commerce logistics, the estimated demand for non necessities such as leisure food, halogen products and pre mixed wine is reduced, the short-term performance of some stocks is damaged, the current valuation level is low, and it is expected to achieve high performance flexibility after the epidemic situation slows down. It is recommended to pay attention, such as Juewei Food Co.Ltd(603517) , Shanghai Bairun Investment Holding Group Co.Ltd(002568) etc.
4, industry rating and investment strategy: Overall, the trend of steady and steady improvement of Baijiu industry is maintained. The most pessimistic time point of popular goods sentiment has passed, and the investment value of leading enterprises has become prominent after the decline of valuation. Based on this, we maintain the rating of the food and beverage industry as "recommended".
Baijiu: Kweichow Moutai Co.Ltd(600519) (recommended), Luzhou Laojiao Co.Ltd(000568) (recommended), Jiangsu King'S Luck Brewery Joint-Stock Co.Ltd(603369) (recommended), Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) (attention), Xinjiang Yilite Industry Co.Ltd(600197) (recommended), Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) (recommended), Anhui Gujing Distillery Company Limited(000596) (attention), Anhui Kouzi Distillery Co.Ltd(603589) (recommended), Wuliangye Yibin Co.Ltd(000858) (recommended), Sichuan Swellfun Co.Ltd(600779) (recommended), Anhui Yingjia Distillery Co.Ltd(603198) (attention), and recommended (etc.)
Popular products: Shanghai Bairun Investment Holding Group Co.Ltd(002568) (recommended), Fu Jian Anjoy Foods Co.Ltd(603345) (recommended), Chacha Food Company Limited(002557) (recommended), Angel Yeast Co.Ltd(600298) (recommended), Inner Mongolia Yili Industrial Group Co.Ltd(600887) (recommended), Ligao Foods Co.Ltd(300973) (recommended), Foshan Haitian Flavouring And Food Company Ltd(603288) (concerned), Chongqing Brewery Co.Ltd(600132) (concerned), etc.
Short term recommendation Kweichow Moutai Co.Ltd(600519) , Xinjiang Yilite Industry Co.Ltd(600197) , prefabricated vegetable sector, etc.
5. Risk tips: 1) the recovery of catering channels affected by the epidemic is lower than expected; 2) Macroeconomic fluctuations have hindered the pace of consumption upgrading; 3) Industry policy changes lead to increased competition; 4) The price of raw materials has risen sharply; 5) Focus on the company's performance or less than expected; 6) Food safety incidents, etc.
