Market review: this week (April 18 – April 22), Shenwan food and beverage industry rose by – 1.33% this week, less than the decline of – 4.28% in Shanghai and Shenzhen 300; Among them, seasoning and fermented products (Shenwan class III, the same below) (2.38%), baked goods (1.60%) and other alcohol (1.26%) ranked first among the three sectors of Shenwan class III food and beverage; Health products (- 5.45%), beer (- 4.87%) and cooked food (- 4.20%) ranked among the top three in the decline of 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 wholesale price of Feitian loose bottles was 26252640 yuan, and the whole box was 28202830 yuan, which was basically the same month on month. The wholesale price of puwu was about 980 yuan, up 10 yuan month on month, and the price system of famous wines remained stable. 1) Previously, on April 14, all cities and prefectures in Jilin Province have achieved the goal of clearing the social aspect of epidemic prevention and control. This week, the new epidemic in Shanghai showed a marginal downward trend (the number of new cases diagnosed + asymptomatic days fell to less than 20000). It is expected that the subsequent epidemic in Shanghai is expected to continue to improve; 2) As of April 22, the temporary closure control measures have been cancelled at the exit of Jiangsu Expressway (except Gehu) and normal traffic has been restored. 3) At present, the channel inventory of leading liquor enterprises represented by Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) and others has maintained a benign level. Although the short-term consumption of liquor Baijiu and banquets and other regional logistics still affect, the order of economic operation is still accelerating. 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 Shede Spirits Co.Ltd(600702) announced the first quarterly report that in the first quarter of 2022, the operating revenue was 1.884 billion yuan, an increase of 83.3% and the net profit attributable to the parent company was 530 million yuan, a year-on-year increase of 75.8%. At the same time, the company issued an announcement on investment, production and capacity expansion. It plans to invest 7.05 billion yuan, with an annual output of about 60000 tons of raw wine, an annual storage capacity of about 342500 tons of raw wine and an annual production capacity of about 50000 tons of koji making. The reserve of shede high-quality base liquor exceeds 120000 tons. Further investment and expansion of production will help the company continuously strengthen the competitive advantage of old liquor in the process of rapid expansion, improve the brewing and storage capacity of the company’s original liquor and enhance the company’s core competitiveness.
Popular products: focus on industry leaders with bargaining power. Inflation is rising, the prices of some raw materials such as palm oil and flour continue to rise, and the costs of relevant companies are under pressure. At the same time, the epidemic has repeatedly affected residents’ consumption, and the driving force of short-term revenue growth of enterprises is slightly under pressure. In the context of relatively weak demand in the short term, give priority to sub industries with stable supply side industry structure and clear long-term development trend, and recommend dairy products, beer, etc; Entering the intensive disclosure period of the first quarterly report, it is recommended to pay attention to the leading industry segments with bargaining power, which has strong performance stability. With high bargaining power, it can transfer the cost pressure and actively layout under reasonable valuation.
Investment recommendations: the industry structure is prosperous, and continue to recommend high-end / regional Baijiu and focus on cost control and anti inflation targets. In the short term, Shanghai’s new epidemic situation has dropped down and high-speed junctions have gradually normalized, and the turning point of the epidemic has gradually emerged. Combined with sector valuation and fundamentals, we recommend the high-end liquor with high certainty and marginal expectations: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) and regional leading liquor enterprises 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., and we also suggest that we should pay close attention to the high growth of Baijiu 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.
