Key investment points
Shanghai’s anti epidemic victory is in sight, and grasp the bull market of popular products. (1) On May 15, the press conference on epidemic prevention and control in Shanghai pointed out that the resumption of business and the resumption of the city will be promoted in stages from May 16. According to the data of the China Thailand macro team, the number of newly confirmed local cases and asymptomatic cases in Shanghai continued to decline in the latest week of may (14-20). The number of newly confirmed local cases in a single day decreased from 216 to 95, and the number of newly confirmed local asymptomatic cases in a single day decreased from 1933 to 824. In the latest week, the year-on-year decline of Shanghai congestion index was 17% – 21%, narrowing day by day. At the same time, it was significantly narrowed compared with – 29% in April, and the travel margin was repaired. Under the general trend of new local confirmed cases and asymptomatic decline every day, the victory of epidemic prevention and control is in sight. The follow-up policies of stabilizing the economy, ensuring employment and promotion fees are expected to be implemented continuously to promote economic recovery and consumption recovery. (2) After repeated stock price adjustments since the beginning of the year, most leading enterprises of core mass products have reasonable or slightly lower valuations, and food and beverage consumption is still rigid in the medium and long term. Some sectors or leading companies related to the catering industry chain, such as beer, basic condiments, multi tune leading and quick-frozen food, have returned to a reasonably low level in 2022; The catering and brine products with higher relevance in 2022h1 are facing greater operating pressure, resulting in pressure on the annual profit, but the corresponding valuation level in 2023 is slightly lower than the reasonable level. With the subsequent comprehensive recovery of consumption in Shanghai, the demand of the above sectors is expected to usher in a strong rebound. (3) After more than two years of epidemic reshuffle, a large number of small and medium-sized enterprises in food and beverage withdrew, and the market share of subdivided leaders is expected to accelerate after the epidemic is repaired, and the core competitiveness is further strengthened. During the repeated epidemic period, we observed that there was an obvious clearing phenomenon in the subdivided industries such as catering, halogen products and composite condiments. The leader ensured the stability of the main industry through various internal and external measures during the epidemic, and the market share is expected to increase significantly in the recovery stage of the industry. We stand in the final thinking, adhere to the logic of the strong being always strong, and suggest to actively layout the subdivision leader with accelerated share improvement and continuous enhancement of core competitiveness.
Baijiu point of view: the two logics of loose policy and mobile sales improvement, and pay attention to the Dragon Boat Festival payment collection market. 1) Channel side: this week, we entered the collection and preparation period before the Dragon Boat Festival. After the impact of the epidemic from March to April, it began to warm up in May. After two years of experience in the epidemic situation, it can be seen that the manufacturer’s response to the epidemic situation is also more mature and targeted, providing assistance to dealers and outlets in the affected areas in terms of cost and payment collection policies, and strengthening the maintenance of order; For non epidemic areas, we will focus on sales and payment collection, strengthen tasting meetings and customer visits, and reduce the impact of the epidemic on the overall performance. According to channel tracking feedback, at present, the inventory of high-end liquor is low. Although the inventory level of some sub high-end liquor is slightly higher than the same level, it is at a reasonable level, and the dealers have little capital pressure. Most manufacturers have started to launch promotion policies before the Dragon Boat Festival, and regions less affected by the epidemic have taken the lead in replenishment and payment collection. At present, the momentum is good. 2) Demand side: We investigated Shanxi, Jiangsu, Henan, Hubei, Anhui and other markets, and all reported that since May, the consumption scene has gradually recovered, and the dynamic sales have significantly warmed up month on month. For example, most of Jiangsu except Suzhou have resumed hall food, and small-scale gatherings in Anhui have resumed since May Day. The wholesale price of Maotai has been rising for two consecutive weeks after falling continuously since May Day, which also proves that the demand side has warmed up and the confidence of dealers has improved. 3) Our view: under the macro goal of stable growth, policies such as reducing reserve requirement and reducing LPR continued to be introduced. On Friday, LPR over the five-year period recorded the largest decline in history, reflecting that monetary policy further strengthened its support for stable growth, exceeded the expectations of the capital market, and the Baijiu sector increased significantly. We believe that Baijiu has the dual logic of anti inflation and month on month improvement of dynamic sales, as well as the catalyst that the payment collection during the Dragon Boat Festival may exceed expectations. Since the end of last year, there have been many corrections in the Baijiu sector, and the current valuation level is reasonably low. It is suggested to strengthen the allocation. Recommended strong target: Maotai / Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) / Anhui Gujing Distillery Company Limited(000596) / Laojiao / Yanghe; Target of elasticity brought by good demand: Wuliangye Yibin Co.Ltd(000858) / Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , it is recommended to pay attention to Jiugui Liquor Co.Ltd(000799) / willing / welcome.
Weekly tracking of Baijiu: Kweichow Moutai Co.Ltd(600519) : the payment collection in May has been basically completed. Except for the impact in East China, the quotas in April have been basically shipped, and the quotas in may have not been shipped. The full container / bulk bottle flying price rose by 140 / 85 yuan to 3010 / 2755 yuan on a weekly basis, mainly due to the dual impact of tight supply in May and the recovery of demand scene; I Maotai was officially launched, adding 100ml of 53 degree Feitian, 500ml of 43 degree Feitian, 53 degree 500ml of golden Prince and 53 degree 500ml of purple to welcome guests, mainly in the form of online rush purchase and sales; The previous products continue to maintain the reservation subscription lottery Wuliangye Yibin Co.Ltd(000858) : when the goods are controlled and the price is raised, the rated price rises slightly on the basis of 980 yuan, and the inventory is at the level of one month. At present, the elasticity of valuation repair is large, so it is suggested to pay attention to the catalysis of demand scenario / month on month improvement of rating Luzhou Laojiao Co.Ltd(000568) : the progress of payment collection and delivery is good, and the approval price of high and low-grade national cellars is stable. The company has strengthened the channel work in areas with little impact of the epidemic, and is expected to enter the intensive period of payment collection before the Dragon Boat Festival in the near future.
Beer: the darkest hour has passed. Pay attention to the rebound in demand after the epidemic. According to the data of the National Bureau of statistics, the output of beer industry in April 2022 was 2.587 million kiloliters, a year-on-year increase of – 18.3%. The growth rates from January to February and March were 3.6% and – 10.3% respectively. In April, due to the strong and repeated impact of the epidemic, the ready to drink channels were damaged, and the decline of industry output expanded. From January to April 2022, the industrial output was 10.747 million kiloliters, a year-on-year increase of – 6.2%. In April 2022, the revenue of the catering industry increased by – 22.7% year-on-year and decreased by 16.4% month on month (MOM) 3, further expanding; From January to April 2022, the revenue of the catering industry increased by – 5.1% year-on-year. According to the latest channel feedback, the orders of Tsingtao Brewery Company Limited(600600) , Budweiser and others performed well in May, and the growth rate was significantly warmer than that in April. With the gradual victory of the anti epidemic, the most difficult time for the beer industry has passed. In June, the beer industry entered the peak consumption season. After unsealing, it is expected to usher in a strong rebound in short-term demand, and both volume and price will rise in the peak season. In the short term, it is suggested to pay attention to the post epidemic demand repair dividend of the beer sector, continue to be optimistic about high-end in the medium and long term, and promote the release of profit elasticity.
Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) : take the initiative to deal with the epidemic, and the marketing reform has achieved initial results. 1) Although the epidemic spread to some provincial markets from March to April, the impact time was 10-15 days. According to the channel feedback, the dealer inventory was about 1.5 months, which was at a reasonable level. The company has provided targeted support to the important outlets affected by the epidemic, such as the maintenance of high-end customers, acceptance bills, speeding up the progress of expense verification and reporting, reducing the pressure on dealers and promoting capital turnover; Focus on the marketing of small epidemic areas. 2) Since the end of last year, the system and mechanism have been continuously reformed, the organizational structure has sunk, the personnel have been adjusted, the business division has been flattened and equipped with functional departments, so as to realize the decentralization of functions and refined operation.
In terms of channels, dealers continue to optimize, help dealers become bigger, and improve the control and trading ability of key dealers in the regional market. At present, Anhui, Zhejiang and other traditional strong regions have begun to recover, and the overall potential energy of Henan market is also relatively good. 3) New products promote digital operation: xintianzhilan and haizhilan introduce / will introduce digital systems to enhance the company’s control over channels and consumers, improve channel profits and vitality after upgrading, and contribute a solid basic market to the company.
Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) : high growth quality and strong anti epidemic ability. 1) According to the feedback of channel research, the plan of Hubei market this year has been completed well, and it is relatively less affected by the epidemic than other brands. The dealers and terminals feedback that the sales are good year-on-year and the inventory is low, so they go out of the independent market. 2) In terms of product structure, Hubei Qinghua and Bofen continued to be strong, Bofen continued to increase, and the consumer base was solid. This year, the pulling effect on Panama and Xinghua villages at the middle price began to show. The cost of Bofen has basically been completely abolished and gradually tilted to Xinghua village and Panama; 3) Channel management: Bofen and Qinghua act as agents separately to avoid the monopoly of regional dealers, and both are introduced into Panama or Xinghua village to form a comprehensive coverage of high, middle and low-end and benign competition among dealers and promote market promotion. 4) We also conducted in-depth research on the markets of Shanxi, North China and Hunan. The collection and dynamic sales of Fen Liquor were strong in January. Under the strict implementation of the quota system, the inventory in all regions was low. According to channel feedback, the epidemic situation has little impact on Bofen. Bofen continues to maintain strong terminal demand, which also gives Fenjiu unique characteristics of anti epidemic impact in the head liquor enterprises. The growth rate of sales collection in 22q1 is significantly higher than that of revenue, and the subsequent growth is expected to be highly sustainable. The market is worried about the impact of the epidemic on sub high-end investment. We believe that Fenjiu has a solid foundation in the province and the upgrading trend of product structure is clear; Key areas outside the province have basically completed the investment promotion layout, and the growth of natural mobile sales accounts for a relatively high proportion. It is expected that the tasks of the whole year can be completed with high quality.
Jiugui Liquor Co.Ltd(000799) : entering the Dragon Boat Festival cash collection season, the inventory level in most regions is normal. Since April, the inventory has been continuously removed. Except for the areas affected by the epidemic, the inventory of dealers in other regions tends to be normal. The sales terminals purchase goods on demand, and the inventory is benign. The company introduced policies such as buying, giving and displaying to promote terminal dynamic sales and continuously maintain market order. After the introduction of the new price system, dealers are more willing to collect money. According to the channel feedback, the proportion of circulation channels of core large single products such as transmission outside the province and transparent packaging has increased significantly, reflecting that the cultivation of consumers has gradually entered the harvest period, and the inner magenta packaging is suitable for a variety of consumption scenarios, with a rapid growth rate.
Sanquan Food Co.Ltd(002216) : Q2 has accelerated revenue growth and strong performance. According to the channel research feedback, the revenue accelerated in April, and it is expected that the national Q2 can achieve good growth. The delivery end of Sanquan factory is unobstructed, the epidemic situation catalyzes the demand for rice noodles, and the storage and supply are in short supply. The performance side optimization is obvious, and the channel and product reform continues. In particular, the channel reform contributes significantly to the improvement of profitability. 90% of the direct sales to distribution reform has been completed: 1) loss channels are basically cut off or re distributed; 2) The retained direct channels strictly control the cost investment and require profitability. We expect the net interest rate of Q2 to remain at 10% +.
Ligao Foods Co.Ltd(300973) : the demand is improved, and the Growth Logic of freeze baking remains the same. According to channel feedback, frozen baking increased year-on-year and month on month in April. In terms of channels, the Growth Logic of bakery channels remains unchanged, the growth rate remains at a benign level, and historically, the demand has recovered significantly after the closure and control of the epidemic. The improvement of supermarkets is mainly due to the improvement of the epidemic situation in South China and the business recovery of key customers. New products will be launched in May. Therefore, on the whole, the logic of long-term growth of frozen baking track remains unchanged. The overall revenue including baking raw materials is expected to decline slightly in April, but the range is narrower than that in March. We believe that the demand side has been gradually repaired and improved, and the long-term growth remains the same.
Recommended combination in May: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Chongqing Fuling Zhacai Group Co.Ltd(002507) , Juewei Food Co.Ltd(603517) , Anhui Gujing Distillery Company Limited(000596) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) . Maotai and Wuliangye Yibin Co.Ltd(000858) , which have stable dynamic sales under the epidemic situation, and Anhui Gujing Distillery Company Limited(000596) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , which are less affected by the epidemic situation and whose payment and dynamic sales continue to exceed expectations, are recommended. In terms of food, it is recommended to actively pay attention to Juewei Food Co.Ltd(603517) , the layout of restaurant stewed flavor, and Chongqing Fuling Zhacai Group Co.Ltd(002507) , where the profit elasticity can be expected. The rise and fall in the month were Kweichow Moutai Co.Ltd(600519) (1.22%), Wuliangye Yibin Co.Ltd(000858) (3.52%), Chongqing Fuling Zhacai Group Co.Ltd(002507) (- 3.47%), Anhui Gujing Distillery Company Limited(000596) (4.18%), Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (1.71%), Juewei Food Co.Ltd(603517) (3.72%), and the portfolio yield was 1.81%. Over the same period, the Shanghai Composite Index rose 2.02%, 0.21% lower than the Shanghai Composite Index.
Investment strategy: warm spring flowers bloom, active layout. After the adjustment since the beginning of the year, we believe that the worst moment has passed. At present, the valuation of core leading enterprises is relatively reasonable or slightly low, and the demand for food is relatively rigid. We suggest an active layout. Baijiu mainly promotes Maotai, Wuliangye Yibin Co.Ltd(000858) Luzhou Laojiao Co.Ltd(000568) Luzhou Laojiao Co.Ltd(000568) of the strong HENGQIANG, and the sub high-end and regional sub high-end leaders with outstanding performance in the Spring Festival. It is suggested to pay attention to the potential energy of Jiugui Liquor Co.Ltd(000799) Anhui Yingjia Distillery Co.Ltd(603198) willing. Yili, pickled mustard, Qiaqia, Tsingtao Brewery Company Limited(600600) , China Resources beer, heavy beer, etc. are mainly recommended for food. Anjing, Ligao, Haitian, Juewei, Yuanzu, Ganyuan, etc. can also be considered.
Risk tips: risk of global and Chinese epidemic spread, risk of large outflow of foreign capital, sauce and wine inventory, policy
