1. Plate consolidation at low level, led by small ticket. On Monday, the food and beverage industry rose by – 3.87%, underperforming the Shanghai Composite Index (- 1.80%) by 2.07 percentage points. In addition to beer rising by 0.29% this week, all sub industries fell to varying degrees, among which meat products and snacks fell relatively small, 0.31% and 0.70% respectively. In terms of individual stocks, Anji Foodstuff Co.Ltd(603696) led the increase (37.97%), followed by Kuaijishan Shaoxing Rice Wine Co.Ltd(601579) (37.41%), Qingdao Foods Co.Ltd(001219) (25.96%), Qingdao Richen Food Co.Ltd(603755) (16.79%) and Sanquan Food Co.Ltd(002216) (15.42%). This week, the marginal improvement of the sector and the level of capital (the level of food and beverage sector continued to maintain a net inflow of $3 billion in the North), ranking the first net entry in all sectors, with Baijiu net flowing to about 2 billion 100 million yuan and the negative impact of the epidemic weakened. Market style switching, under the influence of the epidemic, the resilience of the consumer sector is prominent. We are optimistic about the follow-up performance of the food and beverage sector.
2, Baijiu concerns short-term performance, and continues to look at the opportunity of overall rebound. Since the beginning of the year, Baijiu has been influenced by emotional factors and foreign capital outflow, and the callback range is relatively large, which is not related to the fundamentals. The current share price has already reflected pessimism, and the valuation bubble has been fully digested, and the current valuation level is reasonable. The industry is basically stable and affected by the epidemic. The reference is 2020, when the epidemic affected the consumption of the Spring Festival peak season nationwide, and the impact on the growth rate of the whole year was also limited. The Baijiu industry increased 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”. Previously, the first quarter performance forecast and the business data announcement from January to February released by a number of liquor enterprises also proved the strength of fundamentals. We expect that the Baijiu sector is a rare industry with weak impact and excellent performance. The overall impact is limited, and the overall rebound of the sector is good.
3. The stock price of Volkswagen products has reflected the market pessimism and is optimistic about the three main lines of stock selection. Unlike Baijiu, the demand for popular products is relatively average throughout the year, so some industries are more seriously affected by the epidemic. Since the middle and late March, the cumulative number of covid-19 confirmed cases in China has reached 76600, and at least 22 cities have been “closed”. In March, the social zero consumption decreased by 3.5% year-on-year, of which the catering income decreased by 16.4% year-on-year. With the tightening of epidemic control, consumption scenes such as catering, travel and sports have been seriously damaged, and logistics and transportation have also been affected to some extent. In addition, the epidemic has a certain impact on the income expectation of employees in the service industry, small and medium-sized enterprises and other industries, affecting the willingness to consume. In addition, Volkswagen products companies are under pressure from rising costs. After the conflict between Russia and Ukraine, the prices of oil and raw materials rose sharply. In the case of weak demand as a whole, the cost rise is not easy to pass on. Under the dual pressure of the impact of the epidemic and rising costs, the stock price of Volkswagen products continued to callback. At present, the inflection point of the epidemic has appeared, the rise of the cost side has also reached a high level, and the market pessimism has been fully reflected in the stock price. The valuation of many companies fell back to the low level in recent five years. The current stock selection idea has three main lines:
1) prefabricated dishes: Prefabricated dishes are a rare high consumption track at present. Affected by the epidemic and home isolation, the convenience of prefabricated dishes has won the favor of C-end consumers and accelerated the cultivation of consumers. In the future, with the gradual recovery of b-end consumption scenario, the industry will usher in faster development. Focus on Fu Jian Anjoy Foods Co.Ltd(603345) / Suzhou Weizhixiang Food Co.Ltd(605089) / Zhanjiang Guolian Aquatic Products Co.Ltd(300094) / Zhengzhou Qianweiyangchu Food Co.Ltd(001215) / Springsnow Food Group Co.Ltd(605567) , etc.
2) companies that are less affected by the epidemic this year and have lower cost certainty. Companies focusing on home consumption scenarios benefit from the epidemic, and their performance may be more elastic than expected due to the low base of q2-q3 last year. Moreover, the cost increase of some enterprises is relatively limited, or even decreased significantly. It is suggested to focus on: Chacha Food Company Limited(002557) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Henan Shuanghui Investment & Development Co.Ltd(000895) , Sanquan Food Co.Ltd(002216) .
3) stocks with good long-term growth and current valuation has dropped to a low level. Under the influence of the epidemic, the performance of new consumer companies slowed down, killing both performance and valuation. However, it is only a short-term impact, and the long-term development drivers of the industry remain unchanged. It is suggested to pay attention to Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Juewei Food Co.Ltd(603517) , Fu Jian Anjoy Foods Co.Ltd(603345) , etc.
4, Q1 food and beverage sector agencies reduce the position, Baijiu sector significantly reduced. According to the key position data, the position of food and beverage in 2022q1 accounted for 7.02% (standard configuration 6.07%) of the stock investment market value of the public fund, with a month on month decline of 0.50PCT. In Baijiu, the proportion of liquor holding positions decreased by 0.49pct to 6.01% (4.81%). (1) in terms of industry, Baijiu except liquor, Kweichow Moutai Co.Ltd(600519) , Anhui Yingjia Distillery Co.Ltd(603198) , Shede Spirits Co.Ltd(600702) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , all other wine enterprises are reduced. Non Baijiu ring change was smaller, the largest number of Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Meihua Holdings Group Co.Ltd(600873) and Fu Jian Anjoy Foods Co.Ltd(603345) were added to the warehouse (the number of shares was +5%/+2943%/+122%), and the largest number of those who reduced their positions were Shanghai Bairun Investment Holding Group Co.Ltd(002568) , Chongqing Brewery Co.Ltd(600132) and Angel Yeast Co.Ltd(600298) (the number of shares was respectively -16%/-21%/-54%). (2) From the perspective of branches, the proportion of companies whose positions increased month on month in 2022q1 was less than 30%, of which Kweichow Moutai Co.Ltd(600519) , Inner Mongolia Yili Industrial Group Co.Ltd(600887) , Meihua Holdings Group Co.Ltd(600873) , + 0.10 / + 0.04 / + 0.03pct respectively. The largest decreases were Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Anhui Gujing Distillery Company Limited(000596) , respectively -0.31 / -0.15 / -0.09pct.
5. Update of industry and company views:
(1) Jiahe Foods Industry Co.Ltd(605300) : one stop plant-based beverage suppliers benefit from strong downstream demand at the revenue end and accelerate growth. The Jiahe Foods Industry Co.Ltd(605300) depth report will be released this week Jiahe Foods Industry Co.Ltd(605300) is the leader of China’s vegetable fat powder market. In the past 20 years, it has formed multiple competitive advantages such as excellent products, strong R & D, rapid response to downstream demand and rich customer channel resources. When the downstream demand ushers in the outlet, it can seize the opportunity to realize scale expansion. In recent years, the downstream ready-made tea has developed rapidly, and the demand for fat powder has increased. Based on 1) supply side: it is expected that the middle and low-end tea will still be the mainstream price band of ready-made tea, and there will still be a compound growth rate of 20% + in the next five years. Considering both cost and taste, the middle and low-end milk tea has a strong driving force to use fat powder as raw material. 2) Demand side: milk tea is not a high-frequency consumer goods. Consumers mainly pursue taste and pleasure, and pay relatively little attention to nutrition.
We expect that the end of vegetable fat will continue to grow with the development of milk tea industry. At present, the production capacity of the company is in short supply, and the revenue side is expected to achieve steady and rapid growth with the release of production capacity in the future. The profit side is still under pressure due to the high price of raw materials, but the performance is expected to show high elasticity after the cost decreases.
6, 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), Anhui Yingjia Distillery Co.Ltd(603198) (attention), Jinhui Liquor Co.Ltd(603919) (recommended), and recommended for rallies.
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), Foshan Haitian Flavouring And Food Company Ltd(603288) (recommended), Chongqing Brewery Co.Ltd(600132) (recommended), etc.
Short term recommendation Kweichow Moutai Co.Ltd(600519) , Xinjiang Yilite Industry Co.Ltd(600197) , prefabricated vegetable sector, etc.
7. 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.
