On Wednesday, the State Council executive meeting deployed policies and measures to promote consumption, detonating investment enthusiasm in the food and beverage sector. This week, the food and beverage sector increased by 5.8%, ranking second among 31 industries. We believe that the recovery of food and beverage sentiment is not only the direct promotion of consumption by favorable policies, but also the phased victory of the epidemic and the increased confidence of the market in the recovery of consumption. In the short run, we believe that the phased victory of the epidemic has brought hope for the recovery of consumption. In the long run, the competition pattern of the industry has not changed significantly and the long-term growth momentum has not reversed. Enterprises with strengthened competition pattern and advantageous valuation are preferred.
The consumption promotion policy of this national Standing Committee highlights the main line of “promoting the upgrading of consumption structure”, and continues to guide rural consumption. It is required to pay close attention to the implementation of the relief policies for special poverty-stricken industries, stabilize more main players in the consumer service market, and further introduce detailed policies in terms of income security, logistics security and rural areas with high-quality products, which will give a better boost to consumption, This has become a support for the performance of the food and beverage sector in the whole year.
This week Baijiu, prefabricated food, leisure food and other sub sectors increased significantly, the market for high performance, the epidemic may benefit from the sector has been sought after. From the impact of the epidemic in March, the current impact on the annual sales revenue of the food and beverage industry is about 5% – 10%. If the epidemic can be controlled before May, the consumption recovery in the second half of the year is expected to make up for the consumption gap in the first half of the year, and the impact of the epidemic on the annual performance will not be obvious.
We still define the trend of the food and beverage sector this week as a staged rebound. The control of the epidemic is an important observation point to observe whether the fundamentals are reversed. We prefer enterprises with strengthened competition pattern and advantageous valuation, especially those with advantageous cost in 2022q1. We continue to recommend Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Inner Mongolia Yili Industrial Group Co.Ltd(600887) .
Risk warning: the epidemic has led to lower consumer demand than expected; The company’s operation is not as good as market expectations.
Review of Hong Kong Stock Market:
This week, the essential consumption index of Hong Kong stocks rose or fell by 1.9%, of which the key companies rose or fell by 2% for Budweiser Asia Pacific, 1.08% for nongnongshan spring, 2.6% for China Wangwang, 3.94% for Master Kong Holdings, 1.04% for China Feihe, 0.94% for Zhou Heiya, 6.19% for Yihai international and 3.58% for China Resources beer.
