If the industry standard needs to change, this kind of liquor can no longer be called “Baijiu”. Institutions gather to be optimistic about these Baijiu stocks

The new national standard for Baijiu will be implemented from June 1. For some Baijiu enterprises with brand quality and first mover advantage, they are expected to gain greater competitive advantage and market share.

Baijiu new national standard will be implemented from June 1

In May, 2021, the State Administration of Market Supervision issued two national standards, namely, Baijiu industry terminology and beverage liquor terminology and classification, which are regarded as the “new national standard” of Baijiu and will be officially implemented on June 1, 2022.

The new standard specifies the definition of “Baijiu”, that is, “distilled liquor made from grain as the main raw material, Daqu, Xiaoqu, bran koji, enzyme preparation and yeast as saccharifying and fermenting agents, through cooking, saccharification, fermentation, distillation, aging and blending.”

It is reported that in the past, in order to ensure the aroma and taste of Baijiu, enterprises could modify it by adding food additives . At the same time, all flavored Baijiu added with food additives are classified as blended liquor, which is clearly distinguished from Baijiu

In other words, those that meet the definition of “Baijiu” will only have pure grain liquor. This also means that the flavored Baijiu using food additives is excluded from the classification of Baijiu.

Industry insiders believe that the implementation of the new national standard for Baijiu will also raise the threshold of the Baijiu industry, better rectify some chaos in the Baijiu market, and eliminate some low-quality production capacity in the industry. The original market pattern will also be broken. Therefore, some Baijiu enterprises with brand quality and first mover advantage are expected to gain greater competitive advantage and market share

half of Baijiu stocks rose more than 10 times in history

The Baijiu industry has always been favored by institutional investors in A-share market. The characteristics of stable profits, abundant cash flow, brand barriers and scale advantages promote the continuous upward development of the industry.

In the past few years, the revenue and net profit of Baijiu industry have maintained a growth state. The growth rate slowed down in 2020 and returned to a high growth state in 2021. In the first quarter of this year, the industry continued to pick up, and the growth rates of industry revenue and net profit were 19.42% and 26.28% respectively, which significantly exceeded the overall level of A-Shares in the same period

According to data treasure statistics, nearly half of Baijiu stocks have increased by more than 10 times since listing (excluding the first day). In the whole A-share market, Luzhou Laojiao Co.Ltd(000568) , Kweichow Moutai Co.Ltd(600519) are the two stocks with the highest cumulative increase since listing, with the cumulative increase of 668 times and 369 times respectively, Kweichow Moutai Co.Ltd(600519) are the only stocks with a market value exceeding 2 trillion.

Since the beginning of this year, A-Shares have been affected by the epidemic situation and other factors, and the market index has been adjusted one after another. Baijiu is no exception. According to data treasure statistics, since this year, the Baijiu index has fallen by 19.61%, underperforming the Shanghai Stock Exchange Index in the same period, and the market value of the industry’s overall A-share has dropped to 4.1 trillion.

Compared with the highs in the year, the average retracement range of Baijiu shares reached 26.74%, and the retracement range of 3 shares, including Beijing Shunxin Agriculture Co.Ltd(000860) st Huangtai, Sichuan Swellfun Co.Ltd(600779) 23; Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Anhui Gujing Distillery Company Limited(000596) , Kweichow Moutai Co.Ltd(600519) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) and other stocks retreated less than 20%.

After the adjustment in the early stage, the valuation of Baijiu sector moved down, and the latest P / E ratio was 34.59 times. According to the statistics of databao, the rolling P / E ratio of 9 Baijiu stocks is lower than the industry level, including Anhui Kouzi Distillery Co.Ltd(603589) Wuliangye Yibin Co.Ltd(000858) Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) Anhui Yingjia Distillery Co.Ltd(603198) 60398; Sichuan Swellfun Co.Ltd(600779) .

Sealand Securities Co.Ltd(000750) . In the long run, the fundamentals of the Baijiu industry remain stable, the logic of price upgrading has not changed, and the trend of accelerated capacity expansion of the secondary high-end has not changed. At present, the industry is entering the second growth stage and is in a period of elastic growth transition from high-end first-line growth to sub high-end general trend. it is expected that the industry will continue to enjoy structural prosperity in the future, and the sub high-end potential energy is still sufficient

According to the statistics of databao, more than 70% of Baijiu stocks have received positive ratings from more than 5 institutions. The most popular is Kweichow Moutai Co.Ltd(600519) , with 50 research reports paying attention. Followed by Wuliangye Yibin Co.Ltd(000858) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) , Luzhou Laojiao Co.Ltd(000568) .

According to the unanimous prediction of the organization, Beijing Shunxin Agriculture Co.Ltd(000860) , Jiugui Liquor Co.Ltd(000799) , Xinjiang Yilite Industry Co.Ltd(600197) was predicted by the organization to increase the net profit by more than 50% this year.