Market review last week:
From April 18 to April 22, 2022, the food and beverage sector (Shenwan) fell by 1.80%, the Shanghai Composite Index fell by 3.87%, the Shenzhen Component Index fell by 5.12%, and the Shanghai and Shenzhen 300 fell by 4.19%. The food and beverage sector outperformed the Shanghai Composite Index by 2.07 percentage points, ranking fourth in the weekly rise and fall of Shenwan’s 31 primary sub industries.
Core view: steady growth helps support the recovery of valuation, and pay attention to the inflection point of the epidemic
Baijiu: steady growth helped the bottom of the valuation rebound, and attention was paid to the marginal improvement brought about by the inflection point of the epidemic. Last week, Maotai’s approval price decreased slightly, and the eighth generation Wuliangye Yibin Co.Ltd(000858) approval price reached 980 yuan. At present, the epidemic situation has rebounded, superimposed on the off-season demand, and the consumption momentum has slowed down. We should pay attention to the catalytic effect of the marginal improvement of the epidemic situation. The market of Baijiu in 2020 was recovered, and high-end Baijiu was the first to recover after the epidemic, with strong toughness. The planned volume of liquor enterprises in the second quarter accounted for a relatively small proportion compared with the annual business plan, and high-end Baijiu had a good start in the first quarter, which has established the annual growth trend. The fundamentals of high-end Baijiu are good, and there is enough space to repair the bottom of the valuation. It is recommended to give priority to the layout of stable growth characteristics. Sub high end performance differentiation, growth sustainability as the long-term main line, and the rating and terminal inventory dynamic sales level are the leading indicators for research and judgment. Focus on the high growth liquor with small impact of the epidemic and large advantageous market and strong single product volume. Willing to release the first quarterly report of 2022, Q1 achieved a revenue / net profit of 1.88/530 billion yuan, a year-on-year increase of 83.3% / 75.7%. The company’s product structure was upgraded and investment attraction was continuously strengthened Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) in the first quarter, the growth of the company is bright, and the short-term epidemic is expected to be less affected.
Beer: beer production has declined in the short term, and opportunities for medium and long-term layout appear. On April 21, the Ministry of industry and information technology disclosed the operation of the brewing industry from January to March 2022: in the first quarter, the beer output of brewing enterprises above Designated Size in China was 8.16 million kiloliters, a year-on-year decrease of 1.5%, of which the beer output in March was 2.849 million kiloliters, a year-on-year decrease of 10.3%. Affected by the epidemic, the decline of beer production in March is relatively serious. According to the experience of the epidemic in 2020, the impact of the epidemic on beer production is expected to be relatively short. Under the expectation of the improvement of the epidemic, it is expected that beer production may recover in May. With the marginal warming of the epidemic in Shanghai, the market sentiment of the beer sector showed a positive trend. The beer sector increased by 6.71% last week. At present, beer manufacturers are actively preparing goods in the peak season from May to August. They expect the inflection point of the epidemic to drive the rebound of demand in the peak season, and the opportunities for medium and long-term layout appear under the improvement of the epidemic margin.
Condiment: take the initiative to deal with short-term disturbances such as costs and channels, turn danger into opportunity, and wait for the inflection point of industry demand. In 2021, the prosperity of the downstream industry of condiments rebounded, but at the same time, the residual wave of the epidemic disturbance was not flat, and the recovery of consumer demand was weak. In addition, factors such as rising raw material prices and channel changes put pressure on the profit side of condiment enterprises Yantai Shuangta Food Co.Ltd(002481) , Anji Foodstuff Co.Ltd(603696) , Jiajia Food Group Co.Ltd(002650) 2021 revenue was about + 7%, + 31%, – 15% year-on-year respectively, and the net profit attributable to the parent company was about – 24%, – 14%, – 145% year-on-year respectively Guangdong Jialong Food Co.Ltd(002495) through the differentiation strategy to expand revenue, the hedging profit side went down, and the revenue increased by about 15% year-on-year in 2021; The net profit attributable to the parent company increased by about 174% year-on-year. In the first quarter of 2022, the rebound of the epidemic in Shanghai and other places led to relatively weak demand. At the same time, the rising trend of raw material prices continued, and many enterprises were under great pressure. When the demand inflection point is approaching, enterprises that take the lead in product differentiation and diversified layout and adapt to channel changes in advance are expected to achieve rapid growth in performance.
Investment advice
Plate configuration: Baijiu dairy products beer snack food condiments;
Baijiu: related targets: Kweichow Moutai Co.Ltd(600519) Wuliangye Yibin Co.Ltd(000858) Luzhou Laojiao Co.Ltd(000568) Anhui Gujing Distillery Company Limited(000596) Jiugui Liquor Co.Ltd(000799) ;
Beer: related target: Tsingtao Brewery Company Limited(600600) , Chongqing Brewery Co.Ltd(600132) , with high growth expectation in future performance;
Dairy products: relevant subject matter: Inner Mongolia Yili Industrial Group Co.Ltd(600887) , which makes concerted efforts in production capacity, channels and products.
Risk warning: risk of tightening industrial policies; Risk of epidemic spread in China; Food safety issues.
