Investment summary:
As the second of our series of deep processing reports, this report mainly considers the road of food end transformation and development of Chinese white feather broiler breeding enterprises from the perspective of benchmarking of overseas companies. In Tyson's 87 year development process, the company established the chicken industry chain integration model in the early stage, began to pay close attention to the industry integration and growth dividend in the 1960s, rapidly expand production capacity and improve the industry chain, and then gradually entered the food end business transformation stage after the 1980s, and the food end transformation of the company entered the comprehensive upgrading stage after 2000. The company's food business development has firmly grasped the change trend of American meat consumption culture, and gradually realized the transformation from traditional chicken production enterprises to food leading enterprises from shallow to deep and from B to C.
Benchmarking the United States: China's white chicken industry is in the superposition period of the increase of market share of leading enterprises and the development of C-end food market. Since the introduction of white feather broiler in the 1980s, China's white chicken industry has maintained rapid development. In comparison with the United States and in combination with the supply and consumption ends of China's white feather broiler industry, the current industry development is in the superposition period of further improvement of enterprise market share (corresponding to the United States in the late 1980s) + in-depth development of food end and C-end market development (corresponding to the United States after 2000). Especially under the impact of covid-19 epidemic, the demand for family cooking simplification is growing rapidly, the C-end market is expected to take the east wind of prefabricated vegetables to achieve high-speed development, and the head enterprises are expected to usher in a great opportunity for leapfrog development at the food end.
Benchmarking Tyson: Chinese enterprises need to build the moat advantages and supply chain advantages of products, channels and brands based on the portraits of key customers at the C-end. The food end of China's head white feather broiler breeding enterprise first started around 2000, mainly to improve the added value of chicken products and adapt to the popularity of Chinese Western fast food consumption scene. In the early stage of food end development, it mainly served big B, which laid a good development foundation. Whether from Tyson's development experience or the changes of Chinese white feather broiler consumption scene, the transformation of Chinese white feather broiler breeding enterprises from food end to C end has become an important trend of industry development. However, in the sinking market, product development, channel expansion and brand building are important issues in front of enterprises. The most important thing for the success of the food end transformation we defined is to enable enterprises to enjoy the value-added brought by the independent pricing of the whole product and the brand premium through the shaping of their own brand power.
Based on the successful experience of Tyson's development, we maintain the overall judgment in the previous report agriculture, forestry, animal husbandry and fishery industry: the rapid development of deep processing industry, and the food transformation of breeding enterprises: at this stage, the focus of enterprise b-end development should be to achieve broad coverage of sinking Market while maintaining the large-scale b-end cooperation relationship, and C-end should be the main breakthrough for the future development of the enterprise, We need to focus on product innovation and brand building. In the process of C-end development, enterprises need to focus on the portrait of target customers, and on this basis, continue to make efforts in product R & D, channel expansion and brand marketing, so as to create a strong food moat advantage. In addition, the supply chain advantage, as the basic guarantee of the downstream distribution strength of meat enterprises, will also greatly contribute to the downstream market development of enterprises.
Investment strategy: we continue to be optimistic about China's leading white feather broiler breeding enterprises in the comprehensive transformation period of the food end. In the future, the focus of the industrial value chain is expected to shift from the breeding end to the downstream slaughtering and processing end, so as to improve the profitability of the enterprise and weaken the impact of the cycle. It is suggested to focus on high-quality leading enterprises with clear food end transformation strategy, leading advantages in product R & D, channel development and brand marketing, and comparative advantages in supply chain. Related enterprises include Fujian Sunner Development Co.Ltd(002299) (002299. SZ), Fengxiang Co., Ltd. (9977. HK), Springsnow Food Group Co.Ltd(605567) (605567. SH), etc.
Risk tip: the development of white feather broiler deep processing industry is less than expected, the development of enterprise food end is less than expected, food safety problems, etc.
