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Guotai Junan Securities Food and Beverage Industry Third Quarterly Report Summary: Divergence continues to intensify, liquor accelerates improvement

Release Time:2022-06-15 Topic:Leading stocks in the food and beverage industry Reading:85 Navigation:Stock Liao information > Food > Guotai Junan Securities Food and Beverage Industry Third Quarterly Report Summary: Divergence continues to intensify, liquor accelerates improvement phone-reading

Source: Financial Industry Website

Source: Guotai Junan Securities

Report Summary:

Investment Suggestion: The high-quality and centralized development trend of the liquor industry is accelerating, and the differentiation is expected to continue. 1) It is recommended to increase the holdings of liquor: Maotai, Wuliangye, Luzhou Laojiao, Shanxi Fenjiu, Jinshiyuan, Gujing Gongjiu, Shunxin Agriculture, Dark Horse: Yingjia Gongjiu, Jiugui liquor. 2) Popular products are recommended to increase their holdings: Juewei Foods, Babi Foods, Tsingtao Brewery, Hengshun Vinegar, Yili, Fuling Mustard, Zhongju High-tech, Haitian Taste, Qiaqia Foods, Anjing Foods, Shuanghui Development, etc.

The overall growth of the 2020Q3 sector was steady, with the most significant month-on-month improvement in liquor. In 2020Q1-3, the revenue and net profit of the food and beverage segment increased by 7% and 11% year-on-year respectively. In 2020Q3, the revenue of the food and beverage segment increased by 10% year-on-year, the growth rate decreased by 5pct year-on-year and 1.5pct month-on-month, and the net profit was 34.9 billion yuan, an increase of 18% year-on-year. highlight. In terms of breakdown, first-tier liquor in Q3 was stable, with revenue up 11% year-on-year, and overall liquor up 12% year-on-year; condiment revenue increased by 9% year-on-year; dairy products and beer revenue increased by 10% and 7% year-on-year; meat products and quick-frozen revenue respectively Year-on-year increase of 18%, 28%. The momentum of improvement of liquor in Q3 was more significant month-on-month, and the growth rate of Volkswagen products decreased month-on-month after experiencing a strong recovery in Q2.

Liquor: Significant improvement compared to the previous month, high-end stability, and sub-high-end leader showing flexibility. 2020Q1-3 liquor revenue +5%, profit +10%, single Q3 revenue +12% year-on-year, profit +13.4%, growth rate +8pct, 7pct. First-tier liquor (Maowu Luyang) Q1-3 revenue +7%, profit +12%, single Q3 revenue 11%, profit 12%, growth rate +6pct, +4pct; second-tier liquor Q1-Q3 revenue -1%, Profit -4%, single Q3 revenue 14%, profit 22%, all turned positive, and profit growth rate was higher than revenue under the influence of structural upgrade, cost control and fee reduction. During the single Q3 period, the expense ratio of the liquor segment was 17.7%, +0.1pct year-on-year, of which the first-tier was 14.5%, -0.8pct year-on-year, and the second- and third-tier liquor was 26.2%, +2.5pct year-on-year, and the second- and third-tier liquor companies increased sales. .

Popular products: 1) Dairy products: Seasonal fluctuations intensify, and the competitive landscape is optimized. Single Q3 revenue/profit was +10%/30% year-on-year, a decrease of 9pct/30pct compared with Q2. Changes in terminal destocking and changes in the rhythm of incoming and outgoing shipments led to quarterly fluctuations, and pattern optimization resulted in a significant drop in expense ratios. 2) Beer: The volume and price of the faucet increased steadily, and the profit was prominent. Single Q3 revenue/profit was +7.4%/7.8% year-on-year, down 4.1pct/34.3pct from Q2, gross profit margin was +2.5pct year-on-year, and net profit margin was flat at 11.1% year-on-year. 3) Condiments: The differentiation is intensified, and the strong are stronger. The single Q3 revenue/profit was +13%/57% year-on-year respectively, and the growth rate was slightly lower than that of the previous month. The supply and demand of the industry returned to normal, and the industry differentiation intensified. The leader is expected to grow steadily in the long term. 4) Meat products: Luwei faucets are differentiated in stages, and the cost pressure is easing. The Q3 revenue and profit of the segment were +18%/25% year-on-year, slowing down from the previous month, but the gross profit margin/net profit margin was +0.6pct/0.7pct month-on-month. 5) Quick freezing: high revenue growth and high profit elasticity. Single Q3 revenue/profit +28%/110% year-on-year, while maintaining high growthProfitability improved significantly.

Risk warning: The macroeconomic downturn, the intensification of industry competition, food safety issues, etc.

The overall steady growth of the 01 segment, with a more significant month-on-month improvement in liquor

The revenue and profit growth rates of the 2020Q3 segment increased significantly month-on-month. In 2020Q1-3, the revenue and net profit of the food and beverage segment were 618.2 billion yuan and 109.3 billion yuan respectively, up 7% and 11% year-on-year, and the growth rate decreased by 12pct and 8pct year-on-year. In the 2020Q3 single quarter, the revenue of the food and beverage sector was 211.2 billion yuan, an increase of 10% year-on-year, the growth rate decreased by 5pct year-on-year and 1.5pct month-on-month, and the net profit was 34.9 billion yuan, an increase of 18% year-on-year. Robust, highlighting certainty. In terms of breakdown, the first-tier liquor in Q3 was stable, with revenue increasing by 11% year-on-year, and liquor as a whole by 12% year-on-year; condiment revenue increased by 9% year-on-year, and the growth rate decreased by 7pct year-on-year and 15pct month-on-month; dairy products and beer revenue growth rate increased month-on-month. The Q2 revenue increased by 10% and 7% year-on-year, respectively; the growth rate of meat products and quick-frozen food revenue was 18% and 28%, respectively, and the month-on-month growth also slowed down. It can be seen that the improvement momentum of liquor in Q3 is more significant month-on-month, and the growth rate of Volkswagen products has declined month-on-month after the strong recovery in Q2.

02 Sub-segment: intensified differentiation, stronger stability of leading

2.1. Liquor: high-end stable, second-end leading with outstanding performance flexibility

The third quarter report of the liquor segment improved significantly from the previous quarter, with profit growth higher than revenue growth. 2020Q1-Q3 liquor revenue +5%, profit +10%, of which Q3 single-quarter revenue +12% year-on-year, profit +13.4%, revenue and profit growth rates improved by 8pct and 7pct respectively. First-tier liquor (Maowuluyang, the same below) Q1-Q3 revenue +7%, profit +12%, revenue and net profit accounted for 73% and 87% of the liquor segment, of which Q3 single-quarter revenue was 11%, profit 12%, The growth rate improved by 6pct and 4pct respectively month-on-month; second-tier liquor Q1-Q3 revenue -1% and profit -4%, of which Q3 revenue was 14% and profit was 22%. The growth rate of revenue and profit turned positive, and the month-on-month improvement was significant. Under the influence of cost control and fee reduction, the profit growth rate was higher than the revenue growth rate.

In terms of gross profit margin, first-tier liquor maintained a high level, and the overall second- and third-tier liquors improved significantly month-on-month. The upgrade of product structure drove the gross profit margin to increase. 2020Q1-Q3 liquor segment gross profit margin was 77.2%, +0.4pct year-on-year, of which first-tier liquor gross profit margin was 83.1%, year-on-year +0.8pct; second- and third-tier liquor gross profit margin was 60.9%, -1.7pct year-on-year, but +1.6pct month-on-month . The gross profit margin of the liquor segment in Q3 was 78.7%, +0.8pct YoY and +3.4 MoM, of which the gross profit margin of first-tier liquor was 84%, +0.3pct YoY and +2.1pct MoM, maintaining a high gross profit level. Luzhou Laojiao Guojiao drove the product structure Upgrading, Q3 gross profit margin was +2.7pct YoY to 86.9%; second- and third-tier liquor gross profit margin was 64.1%, YoY +2.7pct, MoM +6.4pct, a significant MoM improvement, among which Shanxi Fenjiu, Jinshiyuan, Kouzijiao, Yingjia Gongjiu, etc. The improvement in gross profit margin is outstanding. The gross profit margin of Shanxi Fenjiu increased by 9pct to 73% year-on-year in Q3. On the one hand, blue and white and glass Fen contributed positively to the price increase. On the other hand, in 2019Q3, glass Fen and series of wines grew faster, resulting in a significantly lower gross profit margin than the company's normal level. In 2020Q3, with the development of mid-to-high-end products, the product structure has been significantly upgraded; the high-speed and heavy volume of the Shiyuan Guoyuan series drives the improvement of the product structure, and the Q3 gross profit margin is +2.8pct to 76.79%; , the product structure has improved significantly, the Q3 gross profit margin is +6.33pct to 76.74% year-on-year; Yingjia Gongjiu's mid-to-high-end liquor is making efforts to drive the Q3 gross profit margin year-on-year +1.7pct to 62.8% (+1.7pct).

In terms of net profit margin, cumulatively, the profitability of the segment has declined slightly, mainly due to the fluctuation of gross profit margins of second- and third-tier wine companies, but the marginal profitability of the segment has improved in the single and third quarters. During the epidemic period, the first-tier wine companies still have prominent moat advantages, their profitability has steadily improved, and the profitability of second- and third-tier wine companies has been restored, mainly due to theExcellent performance of a few high-end and regional leading wine companies.

1) Cumulatively, the profitability of the sector has declined slightly: the net profit margin of the liquor sector in 2020Q1-Q3 was 36.2%, a year-on-year increase of 1.5pct, of which the first-tier liquor companies’ net profit margin during the period was 43.1%, a year-on-year increase of 1.8% pct, which supports the profitability of the segment, while the net profit margin of second- and third-tier wine companies was 17.2%, down 0.6pct year-on-year, which dragged down the profitability of the segment, mainly because the discount of goods in the first half of the year roughly reduced the gross profit margin.

2) From a quarterly perspective, the margin of profitability of the sector in the third quarter is improving: the improvement of the profitability of first-tier wine companies has significantly boosted the profitability of the Q3 sector. The net profit margin of the liquor sector in 2020Q3 was 34.8%, a year-on-year increase of 0.4pct , the net profit margin of the first-tier liquor segment was 41.2%, an increase of 0.3pct year-on-year, and the growth rate was relatively obvious. Among them, the net profit margin of Laojiao and Yanghe during the period increased by 10.05pct and 1.86pct respectively year-on-year; the net profit margin of the second- and third-tier liquor companies was 17.7%, a year-on-year increase 0.1pct, relatively stable, among which Shanxi Fenjiu and Jinshiyuan’s net profit margins boosted significantly, with net profit margins increasing by 6.25pct and 2.05pct respectively during the period.

In terms of the period expense ratio, cumulatively, the expense ratio during the first three quarters decreased year-on-year. Among them, the first-tier wine companies had better cost control in the first three quarters, which made a major contribution to the reduction of segment rates. In a single quarter, due to the weakening of the impact of the epidemic, second- and third-tier enterprises have increased their investment in the double season and peak season to compete for the market. During the Q3 period, the expense ratio increased year-on-year and drove the overall price of the segment to rise. However, the first-tier wine companies rely on their strong brand power. It still maintains a relatively low cost investment, and the expense ratio during the period decreased year-on-year.

1. Looking at the first three quarters cumulatively, the expense ratio of the liquor segment in 2020Q1-Q3 was 16%, a year-on-year decrease of 1pct, of which the expense ratio of the first-tier liquor was 12.8%, a year-on-year decrease of 1.2pct, and the second- and third-tier liquor period The expense ratio was 24.8%, a year-on-year increase of 0.1pct. On the whole, the first-tier wine companies in the first three quarters had better expense management and control under the impact of the epidemic, which drove the overall expense ratio of the segment to decline.

1) In terms of sales expenses, the sales expense ratio of the liquor segment in 2020Q1-Q3 was 10.3%, a year-on-year decrease of 1.1pct, of which the sales expense ratio of the first-tier liquors during the period was 7.5%, a year-on-year decrease of 1.2pct, a significant decrease. The sales expense ratio of second- and third-tier wine companies during the period was 18.1%, a year-on-year decrease of 0.2pct, which was also down, mainly due to the passive reduction of ground expenses by wine companies under the impact of the epidemic in the first half of the year. 2) In terms of management expenses, the management expense ratio of the liquor segment in 2020Q1-Q3 was 6.3%, a year-on-year increase of 0.2pct, of which the first-tier liquor companies’ management expense ratio was 6.1%, a year-on-year increase of 0.1pct, and the second- and third-tier wine companies’ management expense ratio during the period was 6.1%. It was 6.9%, a year-on-year increase of 0.5pct, mainly due to the confirmation of expenses during the epidemic.

2. From the perspective of the single and third quarters, the expense ratio of the liquor segment in 2020Q3 was 17.7%, a year-on-year increase of 0.1pct. Among them, the first-tier liquor companies’ expense ratio during the period was 14.5%, a year-on-year decrease of 0.8pct. Second- and third-tier liquor companies During the period, the expense ratio was 26.2%, an increase of 2.5pct year-on-year. In general, the single-quarter increase in the rate was mainly driven by the increase in sales of second- and third-tier wine companies, and management expenses were well controlled.

1) In terms of sales expenses, the sales expense ratio of the liquor segment in 2020Q3 was 11.7%, an increase of 0.1% year-on-year, of which the sales expense ratio of first-tier wine companies was 8.9%, a year-on-year decrease of 1pct, and the sales expense ratio of second- and third-tier wine companies It was 19.3%, a year-on-year increase of 3.1pct, mainly due to the intensified competition among second- and third-tier wine companies during the epidemic. Facing the double-holiday window period, each wine company increased spending to seize the market. 2) In terms of management expense ratio, the 2020Q3 liquor sector management expense ratio was 6.9%, a year-on-year increase of 0.1pct, which was relatively stable. The management expense ratio of first-tier wine companies was 6.7%, a year-on-year increase of 0.1pct, and the management expense ratio of second- and third-tier wine companies was 7.4 %, a year-on-year decrease of 0.3pct.

Kweichow Moutai: Directly improved and stable operation. 2In the first three quarters of 2020, the total operating income was 69.575 billion yuan, +9.6% year-on-year (including interest income 2.36 billion), the revenue was 67.215 billion yuan, +10.3%% year-on-year, and the net profit attributable to the parent was 33.827 billion yuan, +11.1 year-on-year %. Q3 single-quarter revenue +8.5% year-on-year, and net profit attributable to the parent +6.9% year-on-year. Q3 single-season Moutai 20.88 billion, +10 year-on-year%, a series of wines of 2.35 billion, a slight decrease of 1% year-on-year. We speculate that in the first half of the year, the work rhythm has moved forward slightly due to the completion of more than half of the task. It is expected that the delivery rhythm will be more stable in the second half of the year. The proportion of direct sales increased to 12.6% at the end of Q3, and it is expected that direct sales will continue to exert its strength in Q4. Q3 gross profit margin was 91.1%, +0.3pct year-on-year, which is expected to be mainly driven by direct sales. Moutai's approval price remained strong after the holiday, and the demand was rigid. At present, the dealer's plan for October is still being implemented. Q3 was slightly lower than expected. The increase in the proportion of direct sales and the stabilization of the delivery rhythm further demonstrated the trend of channel optimization and stable operation. The annual goal is worry-free, and the strong brand power supports long-term high-quality development.

Wuliangye: The leader is stable, and the development meets the qualitative change. Q1-Q3 achieved revenue of 42.493 billion, +14.5% year-on-year, net profit of 14.55 billion, +15.96% year-on-year, of which Q3 single-quarter revenue was 11.73 billion, +17.8% year-on-year, net profit 3.69 billion, +15.03 year-on-year %, Q3 accelerated, the performance exceeded expectations, and the annual target is expected to be successfully completed. The five main brands of the general public maintained the trend of increasing both volume and price, especially after the Q3 peak season, the batch price remained stable, and the increase in volume and price released a positive signal. Q3 single-quarter gross profit margin was 74.5%, +0.7pct year-on-year, continuing the upward trend, with structural upgrade and channel optimization as the main contributions. The effect of channel reform and intensive cultivation continues to be prominent. The current batch price is maintained at around 960 yuan. New products with more than 2000+ enrich the "1+3" product system layout, further consolidate the high-end image, and lay the foundation for the continuous optimization of product structure and the effective promotion of the group buying strategy. high-quality development stage.

Luzhou Laojiao: The performance exceeded expectations again, and Guojiao leads the development. Q1-Q3 revenue was 11.599 billion, +1.06% year-on-year, net profit attributable to the parent was 4.815 billion, +26.88% year-on-year; Q3 single-quarter revenue was +14.45% year-on-year, and net profit attributable to the parent was +52.55% year-on-year, and the profit growth exceeded expectations. Guojiao predicts that Q3 single-quarter sales will increase by 25-30% year-on-year, and it will accelerate again month-on-month. According to grassroots research, Guojiao's annual target has been successfully completed, and the battle market has set an effective model for nationwide expansion. The Q3 single-quarter net profit margin was +10pct to 40% year-on-year, and the profit growth was dazzling. Among them, the gross profit margin was +2.7pct to 86.9% year-on-year. It is expected that the main contribution of Guojiao will drive the upgrade of product structure; the sales expense ratio is -14pct to 17% year-on-year. It is expected that the main reason is that the epidemic will affect the delivery rhythm. As of the end of September, the pre-collection was 1.39 billion. After the price increase of Guojiao, the enthusiasm of the dealers to make money was mobilized. The company currently strictly implements the planned quota system, puts forward the "four nos" principle for quotas, continues the channel management and control ideas in the first half of the year, pays attention to the maintenance of the price system and reduces the pressure on dealers after the price is raised, and the brand pulling effect is expected to continue to be prominent. High-end liquor is still in a period of high prosperity, Laojiao is expected to achieve long-term growth by virtue of brand potential improvement and efficient team execution.

Yanghe shares: Q3 growth rate turned positive, and the dream series is getting better. 2020Q1-Q3 realized revenue and profit of 18.914 billion yuan and 7.186 billion yuan, respectively -10.35% and +0.55% year-on-year, of which 2020Q3 realized revenue and profit of 5.485 billion yuan and 1.785 billion yuan, up 7.57% and 14.07% respectively. . The company achieved positive growth for the first time since 19Q3, mainly because 19Q3 was in a period of in-depth adjustment, and the dream series accelerated volume under the low base of revenue and profit. The company's Q3 performance exceeded expectations, mainly because the increase in the fair value of the company's investment securities in Q3 contributed nearly 300 million profits, and the net profit after deducting non-profits increased by 2.25%, which was in line with expectations. The company's gross profit margin during the period was 73.16%, down 0.78pct from the same period in 2019. It is speculated that the discounted investment of Dream Blue Goods is included in the cost side, which offsets the pull of the product structure improvement on the gross profit margin; the company's sales and management expense ratios were basically flat year-on-year during the period , after taking into account the contribution of fair value improvement, the net interest rate attributable to the parent during the period was 32.54%, a year-on-year increase of 1.86pct. The company's payment collection has improved, and the contract debt at the end of the period is 3.869 billion yuan, which is basically the same as that of 2020Q2; Q3 sales revenue only fell by 5.12% year-on-year, which was significantly narrowed compared with 20Q2. During the period, operating net cash flow increased by 2.69% year-on-year, and the growth rate was boosted month-on-month. obvious. In the short term, the price and inventory of Mengzhilan M6+ are still stable after the double-section volume is increased, indicating that the new products have achieved phased success in the operation of the large-scale business model. The new products are gradually passing the introduction period and will enter the consumer cultivation stage. The conversion rate of the old M6 is expected to continue to increase, and the Dream series is expected to continue to grow. In addition, the resumption of growth of the Dream series will provide more adjustment space for the blue of the sea and the blue of the sky, which will help the company to adjust further.

Shanxi Fenjiu: The performance is beautiful and the revival is striding forward. Profit Q1-Q3 revenue was 10.374 billion yuan, +13.05% year-on-year, and net profit attributable to the parent was 2.46 billion yuan, +43.78% year-on-year. Among them, the Q3 single-quarter revenue was +25.15% year-on-year, and the return to the parent was +69.36% year-on-year. In terms of products, according to grassroots research, with the recovery of liquor consumption scenarios and the recovery of demand, blue and white will usher in a large space for development, and it is expected to grow rapidly under the trend of rising volume and price; Panama will continue to grow at double digits, and Laobaifen will continue to improve month-on-month; The effect of the price increase of Bofen drives the high growth of income. Q3 gross profit margin increased by 9pct to 73% year-on-year. On the one hand, blue and white and glass fen contributed positively to the price increase. On the other hand, in 2019Q3, glass fen and a series of wines grew faster, resulting in a significantly lower gross profit margin than the company's normal level. In 2020Q3, mid-to-high-end products made great efforts The product structure has been significantly upgraded; the net profit margin increased by 5pct to 24.8% year-on-year, and the single-quarter profit has improved significantly. Fenjiu has a clear pan-national expansion strategy, and the optimization of its marketing structure has helped key markets such as the Yangtze River Delta and the Pearl River Delta continue to grow. The leading position of the low-end large single product glass Fen continues to be prominent, focusing on the main product blue and white, strong brand power will lead the trend of future product structure upgrade, the high profit growth is expected to continue, and the revival of the fragrance faucet is at the right time.

Shunxin Agriculture: Low performance expectations, short-term adjustment to accumulate long-term strength. Q1-Q3 revenue was 12.419 billion, +12.27% year-on-year, net profit attributable to parent was 434 million, -34.78% year-on-year; Q3 single-quarter revenue was 2.899 billion, +9.57% year-on-year; net profit attributable to parent was -115 million, 2019Q3 At 16.66 million yuan, the profit was lower than expected. On the revenue side, the parent company’s reported revenue in Q3 (including liquor and meat) was 2.63 billion, a year-on-year increase of +8%, of which it is expected that liquor revenue will remain flat and slightly increased. As of the end of September, the liquor business received 2.9 billion in advance, which was flat month-on-month. On the profit side, the parent company reported a loss of 55.51 million. Considering that both liquor and meat are profitable, the loss is expected to be mainly dragged down by headquarters expenses, and the profit in the consolidated statement is expected to be mainly dragged down by real estate losses and interest expenses. Q3 gross profit margin was -5pct to 23.6% year-on-year, which is expected to be mainly due to the slow recovery of mid-to-high-end product sales and the increase in discounts. In Q3, the sales expense ratio increased a lot in the single quarter, but the cumulative sales expense ratio in the first three quarters was -1.1pct year-on-year to 8.2%. The performance is under pressure in the short term, but the long-term development path of the main liquor business is firm. The strategy of "modeling, structure adjustment, and deep distribution" is clear. Niulanshan's leading position in the bottle is stable. We look forward to the next structural upgrade and market intensive cultivation to achieve new results. Five years is expected to open a new chapter.

Gujing Tribute Wine: Q3 revenue exceeded expectations, and the epidemic will not change the logic of consumption upgrading and nationalization. In the first three quarters, the company achieved an operating income of 8.069 billion yuan and a net profit attributable to the parent of 1.538 billion yuan, down 1.63% and 11.71% year-on-year respectively. Among them, the operating income in the third quarter alone was 2.55 billion yuan, and the net profit attributable to the parent was realized. 513 million yuan, an increase of 15.13% and 3.94% respectively. The company's Q3 revenue growth achieved double-digit growth, exceeding the market's previous expectations, mainly because the Anhui banquet end order replenishment exceeded expectations, and the company increased advertising and promotion expenses before the Mid-Autumn Festival to promote further payment from the channel. Affected by the increase in the proportion of sales expenses, the company's Q3 profit growth rate was significantly lower than the revenue growth rate, but the growth rate of net profit after deducting non-profits achieved double-digit growth. The company's gross profit margin during the period was 75.5%, and taxes and surcharges accounted for 15.78%, which was basically the same as the same period in 2019; due to the company's increase in expenses during the period, the sales expense ratio during the period increased by 3.53pct to 29.37% year-on-year. Due to the company's interest income in the third quarter More, the financial rate during the period was -2.78%, a year-on-year decrease of 1.85pct. Taking into account the above effects, the company's net profit margin attributable to the parent company during the period reached 20.11%, a year-on-year decrease of 2.16pct. In the third quarter, the company's sales revenue fell by 20.30% year-on-year, and the net cash flow from operating activities fell by 80.14% year-on-year, and the cash flow performance was slightly under pressure. According to the performance of the company's single products, Gujing still has a high double-digit growth rate for more than 8 years, while the growth rate of Gujing 5 years and gifts has been under pressure to varying degrees, indicating that the epidemic has not changed the trend of consumption upgrading in Anhui Province, and prices above 200 are booming degree still. In addition, the company still maintains a high-strength strategy outside the province, and it expands rapidly in Jiangsu and other places.

The fate of the world: the country has a high growth rate, and the Q3 profit exceeds expectations. In 2020Q1-Q3, the company achieved operating income of 4.195 billion yuan and net profit attributable to the parent of 1.313 billion yuan, an increase of 1.93% and 1.52% respectively. , increased by 20.99% and 32.70% respectively. In terms of regions, sales growth in all regions in 2020Q3 turned even higherPositive, among them, the core areas of Nanjing and Huai'an increased their revenue by 36.6% and 26.3% respectively during the period, and the growth rate increased by 40+pct and 20+pct respectively compared with 2020Q2; in terms of products, the revenue of special A+ products in 2020Q3 increased by 29.3%. It is estimated that the growth rate of four openings is more than 40%, and the growth rate of two openings is more than 10%. The growth rate has been boosted by double-digit percentage points compared with 2020Q2. It is estimated that the V series will continue to maintain high double-digit growth, continuing the trend of 2020Q2; high income The growth rate matched the increase in net interest rate, and the net profit in Q3 increased by 32.70%, exceeding the previous expectation. In 2020Q3, the gross profit margin was 76.79%, a year-on-year increase of 2.82pct. The company's sales and administrative expense ratios were 24.66% and 4.06%, respectively, and +7.27pct and -1.36pct respectively. A decrease of 3.87% was related to tax deductions. On the whole, the net profit margin during the period increased by 2.03pct year-on-year to 22.95%, and the profitability has improved. At the end of the 2020Q3 period, the contract liability was 634 million yuan, maintaining a relatively high level. In 2020Q3, the company's sales revenue and operating net cash flow increased by 34.34% and 168.58%, respectively. We believe that the good sales performance of Shuangjie proves that the Nanjing and Huai'an markets still have high space, and the Guoyuan series is still in the outbreak period. Affected by the epidemic, fluctuations in inventory and price disks are short-term phenomena, and terminal dynamic sales can better explain the problem.

Kouzijiao: Q3 revenue growth turned positive, and profitability was under pressure. In the first three quarters, the company achieved operating income of 2.687 billion yuan, down 22.47% year-on-year, and realized net profit attributable to the parent company of 864 million yuan, down 33.35% year-on-year, of which the revenue in the third quarter was 1.117 billion yuan, up 6.75% year-on-year, The net profit attributable to the parent was 377 million yuan, a year-on-year decrease of 5.86%. In terms of products, the income of the mouth has increased by 9% for more than five years, of which the income of the mouth has been increased by double digits for more than 10 years, and the income of mid-range wine and low-end wine has fallen by 25% and 19% respectively. With the sales growth rate boosted from the previous month, the decline in Q3 profit growth rate has narrowed significantly compared with 2020Q2. During the period, the gross profit margin increased by 6.33pct year-on-year to 76.74%, mainly due to the leading growth rate of the mouth for more than 10 years, and the product structure has improved significantly; the 2020Q3 sales expense ratio increased by 6.84pct to 12.51% year-on-year, which dragged down the profitability. The internal management expense ratio was 5.11%, a slight increase year-on-year; on the whole, the company's net profit margin in 2020Q3 fell by 4.52pct year-on-year to 33.76%. The company's contract debt at the end of the period was 487 million yuan, a slight increase from the previous quarter in 2020Q2. In 2020Q3, the company's sales revenue and operating net cash flow fell by 19.93% and 40.49% year-on-year, and the decline was significantly narrowed compared with 2020Q2. The effect of channel adjustment has begun to show, but it still takes time. After the epidemic, the growth rate of single products for more than 10 years has been relatively high, indicating that the epidemic has not changed the trend of consumption upgrades in Anhui Province. With its strong brand power, Kouzijiao still has the ability to capture consumption upgrades. .

Yingjia tribute wine: The performance exceeded expectations again, the structure was upgraded, and the dark horse took off. From January to September, the revenue was 2.229 billion, -15.8% year-on-year, and the net profit attributable to the parent was 530 million, -11.41% year-on-year; among which Q3 single-quarter revenue was +12.4% year-on-year, returned to the parent year-on-year +27.8%, Q3 revenue, Double-digit profit growth exceeded market expectations. In Q3, mid-to-high-end liquor was 510 million, a year-on-year increase of +23%, which was positive compared to Q2. It is expected that the Dongzang series will continue to grow. According to grassroots research, the Mid-Autumn Festival and National Day banquets, catering and other channels have improved significantly. In Q3, the province and outside the province were +17.6% and 16.3% year-on-year, respectively. There were 50 new dealers in the province and a net increase of 34, and the channel expansion in the province was smooth. Structural upgrade boosted Q3 gross profit margin and net profit by +1.7pct and +2.8pct year-on-year. The company is in the product structure upgrade cycle of Dongzang's efforts. From 2018, the net profit has reached an inflection point. In 2020, the company has shown a good recovery momentum under the epidemic. The competition in the province focuses on high-price competition, leaving room for development for the company. In the future, with the upgrade of product structure and the preemption of shares in the province, the performance elasticity is expected to be continuously released. At present, it corresponds to only 16XPE in 2021, and the potential for valuation repair is huge.

Shuijingfang: Demand has picked up and the channel has recovered, and the growth rate in Q3 has been boosted month-on-month. In the first three quarters, the company achieved an operating income of 1.946 billion yuan and a net profit of 709 million yuan attributable to the parent, down 26.58% and 21.49% year-on-year respectively; of which, in 2020Q3, the operating income was 1.142 billion yuan, and the net profit attributable to the parent was 399 million yuan , increased by 18.86% and 33.09% respectively. The company's 2020Q3 revenue growth turned positive,The month-on-month boost was significant, mainly due to: 1) The inventory at the end of 2020Q2 was well digested, and the channel's willingness to collect payment was sufficient; 2) The impact of the epidemic gradually weakened, and economic recovery led to the return of demand for sub-high-end prices. In addition to the double-digit growth of the original core stores, the new investment contract amount during the company's channel adjustment period also achieved double-digit growth. The company's 2020Q3 gross profit margin increased by 1.29pct year-on-year, which is presumed to be an upward trend in product structure; the company's sales and management expense ratios increased by 5.32pct and 1.51pct year-on-year respectively during the period, and the reduction in sales rates was mainly due to the impact of the epidemic on offline expenses; the company returned to its parent during the period Net profit margin increased by 3.73pct year-on-year. At the end of 2020Q3, the book contract liabilities increased by about 200 million yuan month-on-month, mainly due to the new advance receipts. As the impact of the epidemic weakens and the economy continues to recover, the sub-high-end is expected to become the first price band to recover after the high-end, and Shuijingfang is expected to resume rapid growth. Jingtai and Zhenniang No. 8 have grown into first-line brands in the core market. We expect the company's channel adjustment to achieve results, and it is expected to enter the acceleration stage, and the profit flexibility can be expected.

Jiuguijiu: The rate is reduced, and the Q3 profit elasticity is released. In the first three quarters, the company achieved operating income of 1.127 billion yuan and net profit attributable to the parent company of 331 million yuan, an increase of 16.45% and 79.76% respectively, of which the operating income in the third quarter was 405 million yuan and 146 million yuan, an increase respectively 56.37%, 419.02%, and realized a non-net profit of 90 million yuan during the period, an increase of 216.52%. The company's third-quarter profit elasticity is mainly due to the low inventory status of Nei Shen wine in the third quarter of 2020, and the full willingness of dealers to stock up, which drives the rapid increase in internal sales. As the impact of the epidemic weakens, the willingness to stock up in the Jiugui series channels has recovered, and the internal reference and Jiugui have accelerated and increased volume. High income growth. During the period, the company's sales and management expense ratios fell by 13.66pct and 4.99pct respectively year-on-year, and the rate control was effective; the company's net profit margin during the period increased by 25.23pct to 36.11% year-on-year, a significant increase. 2) The company's pre-payments at the end of the period were 332 million yuan, which was at a high point since 2018. During the period, the sales revenue increased by 73.54%, and the operating net cash flow increased by 408.16%, which accelerated month-on-month. We believe that the sales progress of the internal reference in the province is in line with expectations, and the internal reference model has proved its feasibility after COFCO entered the market.

2.2. Beer: Faucet volume and price keep growing, and profitability continues to be prominent

In 2020Q3, the revenue and profit of the beer segment maintained a growth trend. 2020Q1-3 beer segment revenue was 42 billion yuan, down 2.1% year-on-year; net profit was 4.39 billion yuan, up 2.9% year-on-year. 2020Q3 single-quarter revenue was 16.4 billion, a year-on-year increase of 7.4%. The growth rate was 7.5pct higher than that of 2019Q3 and 4.1pct lower than that of 2020Q2; Q3 single-quarter net profit was 1.81 billion, a year-on-year increase of 7.8%, and the growth rate was 2.66% lower than that of 2019Q3. pct, a decrease of 34.3pct compared with 2020Q2. The growth rate of beer revenue in Q3 declined month-on-month, mainly because the overall sales of the industry declined due to more rainy weather from July to August. In September, the sales of beer taps have returned to positive growth. It is expected that the benign recovery trend of sales is expected to continue, and the concentration of CR5 Continue to improve.

The trend of product structure upgrading continued, and the profit remained at a high level. In 2020Q1-3, the gross profit margin of the beer segment was 42.4% and the net profit margin was 10.4%, an increase of 1.6pct and 0.5pct year-on-year. In 2020Q3, the gross profit margin of the beer segment was 43.4%, a year-on-year increase of 2.5pct and a month-on-month decrease of 1.3pct. The overall product structure of industry leaders in strong regions has been upgraded from a price band of 6 yuan to 8-10 yuan, which has led to an increase in ton prices. At the same time, non-cash drinking channels have received attention. The single-quarter sales expense ratio of the beer segment in Q3 was 14.3%, a year-on-year decrease of 1.2pct and a month-on-month increase of 0.2pct. The top wine companies chose intensive cultivation areas, and the short-term competition tended to ease, and the sales expense ratio remained at a low level. The industry efficiency improvement and high-end trend continue, and profitability is expected to continue to be prominent.

Tsingtao Brewery: The performance is in line with expectations, and we will start from a new starting point. 2020Q1-3, the company's revenue was 24.422 billion yuan, -1.91% year-on-year, and the net profit attributable to the parent before and after deductions was 29.78 billion yuan, 2.678 billion yuan, +15.17% year-on-year, +16.51%. The Q3 single-quarter revenue was 8.743 billion yuan, +4.76% year-on-year, and the net profit attributable to the parent was 1.123 billion yuan, +17.57% year-on-year. Although the profit growth rate slowed down from Q2, slightly lower than market expectations, the high-quality growth trend continued. In 2020Q1-3, the company's sales volume was -3.5% year-on-year, and the single Q3 sales volume was +2.9% year-on-year. Especially since September, the double-season stocking and the recovery of catering have driven the recovery of terminal demand. The superimposed company has actively adjusted in the Shandong region, and sales have improved significantly. Benefiting from the upgrade of the core market's main product structure to 8-10 yuan and the increase in the canned rate, the company's single Q3 ton price increased by 1.8% year-on-year, and the gross profit margin increased by 2.0pct to 42.4% year-on-year. Single Q3 sales expense ratio was -1.6pct to 14.5% year-on-year, management expense ratio was +0.8pct to 4.5% year-on-year due to the amortization of equity incentive expenses; net profit margin was +1.4pct to 12.8%. After the optimization of the mechanism, the company is more proactive in grasping market opportunities, injecting new vitality into the brand, and the product structure upgrade and category expansion are worth looking forward to. The trend of profit enhancement driven by management optimization and efficiency improvement is more certain.

2.3. Meat products: Staged differentiation of lo-mei faucets, cost pressure eased

The growth rate of revenue and net profit of the meat products segment declined, and the net profit reached a new high. In 2020Q1-3, the revenue of the meat products segment was 110.1 billion yuan, a year-on-year increase of 28%, and the net profit was 7.6 billion yuan, a year-on-year increase of 23%. In 2020Q3, the revenue was 37.2 billion yuan, an increase of 18% year-on-year, the growth rate decreased by 10pct year-on-year and 13pct month-on-month, and the net profit was 2.82 billion yuan, a year-on-year increase of 25%. .

The scale of lo-mei continued to expand, the cost pressure eased, and the leading brands were differentiated in stages. According to estimates, in Q1-3, Juewei Food/Huangshanghuang opened about 1,500/800 stores respectively, and the total number of stores increased by 15%/25% respectively. The two major lo-mei faucets are still in a period of accelerated expansion, and the same-store growth rate from July to September both improved to positive growth month-on-month. On the cost side, the gross profit margin of Juewei Foods in Q3 increased by 2.08pct to 37.60% year-on-year, and the comprehensive gross profit margin of Huangshanghuang decreased by 1.1pct to 36.85%. However, the gross profit margin of its main business meat products segment improved year-on-year in Q3. The common reason is the decrease in raw material costs. . The difference is that the two leading Luwei are in different stages of development. Juewei's existing stores are close to 3X Huangshanghuang, and the scale advantage is gradually highlighted. The transition to management (efficiency) drive is expected to continue to improve profit margins. Huangshanghuang The layout of the supply chain is being improved, and it is expected that the profit scale will expand rapidly on the premise of maintaining a stable profit margin. Shuanghui's development, benefiting from the decline in pig prices, the operating profit of meat products and slaughtering business in Q3 increased by 13%/3% respectively.

Shuanghui Development: The performance is in line with expectations, and the profit of meat products is released. In 1-3Q 2020, the company achieved a revenue of 55.73 billion yuan, a year-on-year increase of 32.8%, and a net profit attributable to the parent of 4.94 billion yuan, a year-on-year increase of 25.2%. The Q3 single-quarter revenue growth rate was 17.1%, and the net profit growth rate was 22.9%, both in line with expectations. We expect full-year net profit growth of 17%. In terms of meat products business, the profit per ton is expected to increase steadily, and the promotion volume of various measures will increase. In Q3, the revenue of meat products business increased by 13.4%, the sales volume of the main department increased by 2.3%, and the unit price increased by 11%. Q3 operating profit increased by 10.0%. According to estimates, the average operating profit per ton in Q3 was around 3,650 yuan, a decline from the previous month (about 3,830 yuan in Q2), mainly because Q3 companies increased channel construction and brand investment. According to channel research, the company's high-margin new product sales growth momentum is strong, and we expect the overall revenue growth of meat products in 2020/2021 to be 16%/8+%. With the decline in pig prices in 2021, we expect that the gross profit margin will be significantly improved, and the profit per ton will increase steadily. It is expected that the overall profit per ton in 2021 is expected to reach about 4,000 yuan. In the slaughtering business, the operating profit margin improved month-on-month and the slaughtering volume gradually recovered. According to estimates, the slaughter volume in Q3 fell by -46.5%. Thanks to part of the import volume, the overall fresh (frozen) product sales fell by -6%. We expect that the annual import volume will be more than 700,000 tons, and the second half of the year will be less than 300,000 tons, and the slaughtering volume will gradually recover. Operating profit grew by 3.0% in Q3, and operating margin improved to 4.1% QoQ (2.4% in Q2). consideringIn the future, the price of pigs will decline, and it is expected that the overall operating profit of the slaughtering business will show a downward trend.

Juewei Food: The performance is in line with expectations, and the scale advantage is gradually highlighted. Performed as expected. In 1-3Q, the operating income was 3.885 billion yuan, a year-on-year -0.01%, and the net profit attributable to the parent was about 520 million yuan, a year-on-year -15.3%. Corresponding to 3Q revenue +5.5% year-on-year, 3Q net profit attributable to parent companies +12.8% year-on-year, in line with expectations. Taking into account the loss of investment income for the year, it is expected that the growth rate of net profit for the year will be -3%. According to the company's communication, the overall same-store growth rate in 3Q was negative, but the month-on-month improvement was significantly improved. In September, the same-store growth rate returned to positive growth. We expect the same-store growth rate in 4Q to be positive. According to estimates, there are about 1,500 net store openings from January to September. We estimate that there will be about 400 net store openings in 3Q alone, and we expect about 1,700 net store openings for the whole year. Looking ahead, we expect the compound growth rate of the number of stores to remain above 10% in the next three years. The cost reduction and efficiency increase will promote the improvement of profit margins, and the investment income is expected to gradually increase. The 1-3Q gross profit margin increased by 0.87pct to 35.57% year-on-year, and the single 3Q gross profit margin increased by 2.08pct to 37.60% year-on-year, thanks to the decrease in raw material costs, the improvement of factory efficiency and the adjustment of product structure. 1-3Q sales expense ratio increased by 0.44pct year-on-year to 9.16%, and single 3Q decreased by 1.52pct to 8.15% year-on-year, mainly due to the reduction of advertising investment and the improvement of management. Looking ahead to the full year, we expect that the gross profit margin is expected to improve by 1.7pct, and the sales expense ratio will remain around 9%. In the long run, the company's scale advantage will gradually become prominent. The 1-3Q investment income was -48.39 million, mainly due to the loss of upstream investment targets. The single 3Q investment loss narrowed to -13.54 million.

Huangshanghuang: The performance is lower than expected, and long-term growth is expected. 3Q revenue was in line with expectations and profit growth was lower than expected. The company's 3Q single-quarter revenue was 569 million, +12.0% year-on-year, which was generally in line with expectations. In terms of products, the revenue of Huangshanghuang meat products was +12.2% year-on-year, and rice products were +8.5% year-on-year. The growth rate slowed down, mainly due to 7- August is affected by solar terms and short-term weather factors. In the 3Q single quarter, the net profit attributable to the parent company was 75.71 million yuan, a year-on-year increase of +6.3%, and the growth rate was lower than expected, mainly due to the loss of the rice product business in the second quarter of the e-commerce platform fee settlement in the second quarter. 3Q rice products drag down the overall profit, and the annual net profit growth rate is expected to be 24%. The gross profit margin in 3Q fell by 1.1pct year-on-year, and the sales expense ratio increased by +1.4pct year-on-year, mainly due to the drag from the rice products segment. The company said that the price of main raw materials has been locked in 4Q, and the management of Zhenzhen Lao Lao has been strengthened. We expect that the overall gross profit margin for the whole year will slightly decline to flat, and the sales expense ratio will remain flat to slightly increased. The company expressed confidence to complete the annual deduction of non-net profit before amortization of 278 million. From September to October, the growth rate of old stores returned to positive growth, and it is expected that about 1,000 net stores will be opened throughout the year. According to the company's communication, the growth rate of old stores returned to positive growth from September to October, and the revenue growth of group buying business in October was gratifying. The company said that 968 new stores were opened in 1-3Q, and it plans to open more than 1,320 new stores throughout the year. We estimate that there will be around 1,000 net store openings (around 350 stores will be closed) throughout the year. Combined with the revenue target of rice products (520 million including tax), the annual revenue growth rate is expected to be 17%.

2.4. Condiments: The impact of the epidemic is relatively limited, and the performance stability is prominent

In 2020Q3, the revenue growth rate of the condiment segment returned to normal, the performance growth continued to improve, and the micro differentiation intensified. 2020Q1-3 revenue was 30.595 billion yuan and net profit was 7.658 billion yuan, respectively +13%/+30% year-on-year. The significant increase in net profit growth was mainly due to the fact that in Q3 Guangdong Ganhua achieved asset disposal income of 916 million yuan, excluding this factor , the net profit growth rate of the condiment segment in 2020Q1-3 was 15%; the gross/net profit margin of the condiment segment in 2020Q1-3 was 41.87%/25.29%, respectively +5.6pct/8.72pct year-on-year; of which 2020Q3 revenue was 10.046 billion yuan, Net profit was 2.821 billion yuan, +13%/+57% year-on-year, respectively, and the growth rate decreased slightly from the previous month. In general, as the impact of the epidemic dissipated, the industry supply and demand structure returned to normal, and industry differentiation was intensified. In terms of breakdown, leading companies such as Haitian Flavor/Zhongju High-tech/Qianhe Flavor/Fuling Mustard/Hengshun Vinegar achieved steady revenue growth through channel expansion, while small and medium-sized enterprises such as Guangdong Ganhua and Lianhua Health have achieved steady growth in revenue. fall intoDifferent growth dilemmas. In the long run, condiments as a whole are expected to continue to benefit from the demand driven by catering consumption and the improvement of product structure and category expansion under the trend of consumption upgrading, and the income is expected to continue the growth trend in the long run.

Haitian Flavor Industry: The performance is in line with expectations, and the pace of soy sauce leader is steady. 2020Q1-3 the company achieved revenue of 17.1 billion yuan, +15% year-on-year; net profit attributable to the parent was 3.3 billion yuan, +18% year-on-year; equivalent to Q2 single-quarter revenue of 5.7 billion yuan, +22% year-on-year, attributable to The parent's net profit was 4.6 billion yuan, a year-on-year increase of 19%. Q3 revenue/performance growth rates were 18%/22% respectively, still maintaining a relatively high growth rate. Specifically, with the help of investment promotion and marketing efforts, Q1-3 central and western market revenue increased by 24%/26% year-on-year, respectively, driving the growth of the overall business. At the same time, the expansion of the gross sales difference drove the company's net profit margin to +0.9pct year-on-year in 2020H1. In the long run, channel/category expansion is driven by two wheels, and the company's long-term performance growth is more certain. 1. In terms of channel expansion, for the B-end to increase the penetration rate by recruiting professional distributors, and for the C-end to further fill the blank market by promoting the sinking of town and village channels; 2. In terms of category expansion, the company proposed the oyster sauce category in the third five-year plan. With higher growth targets, as the company gradually shifts resources to the oyster sauce category, we are optimistic that the oyster sauce business will continue to increase in volume to support performance growth; in addition, the company has layouts in growth-stage segments such as hot pot condiments/vinegar/sesame oil , optimistic about the future new categories gradually flowing into the Haitian channel to continuously increase the performance.

Zhongju High-tech: The performance is in line with expectations, and the company's long-term growth is expected to be driven by the improvement of management efficiency. 2020Q1-3 revenue/net profit attributable to the parent were 3.8/7 billion yuan, +8/22% year-on-year; Q3 revenue/net profit attributable to the parent were 1.3/2 billion yuan, +10/19% year-on-year. In Q3, the proportion of delicious and fresh revenue further increased to 98%, +2pct year-on-year. In terms of products, Q3 soy sauce +13% year-on-year was mainly due to the disappearance of the channel inventory replenishment dividend, and the gradual recovery of catering helped the chicken powder business to reverse the decline (+5% year-on-year); in terms of regions, Q3 East / South / Midwest / North Revenue was +15%/1%/23%/28% YoY, respectively. Q3 gross profit margin was +2.5pct year-on-year, mainly due to the decline in the cost of packaging materials/accessories; Q3 net profit margin was +1.4pct year-on-year, mainly due to the increase in gross profit margin + the decrease in financial expense ratio, and the sales expense ratio was +0.9pct year-on-year, mainly due to the company's aggressive sales strategy. The air/ground fee has been increased. Looking to the future: the marginal improvement of management efficiency drives the top-down reform, and the company can expect to grow. As the first year of the "Three-Year Action Plan", from 2020, the company has strengthened sales force expansion and incentives, expense investment, channel expansion and capacity expansion. With the gradual integration of distributors into the system and the gradual elimination of production capacity bottlenecks, under the background of continuous expansion of expenses, the company's long-term strengths will be gradually lengthened, while its shortcomings will continue to be supplemented. Therefore, we are optimistic about the continuous improvement of the company's competition barriers. In the end, the accelerated harvest of market share will be achieved and the excess profits will be continuously obtained.

Hengshun Vinegar Industry: The reform is gradually progressing, and the dawn is beginning to appear. 2020Q1-3 revenue/deducted non-net profit was 1.4/2 billion yuan, +8/11% year-on-year; Q3 revenue/deducted non-net profit was 5/070 million yuan, year-on-year +9/10%, Both have slowed down month-on-month. Among them, the proportion of revenue from the double main business of vinegar + cooking wine in Q3 further increased to 82%, +1pct year-on-year. Q3 gross profit margin was -2.7pct year-on-year, mainly due to the adjustment of freight costs and included in costs. On a comparable basis, the company's Q3 gross profit margin was +2pct year-on-year; Q3 net profit margin was -7.7pct year-on-year, mainly due to the high base due to asset disposal gains in the same period. Excluding this factor, the company's Q3 Deducting non-net interest rate +0.1pct year-on-year; the sales expense ratio is basically stable on a comparable basis, while the management expense ratio rises mainly due to the increase in consulting management fees + SAP management system input costs, which is beneficial in the long run. Looking to the future: management efficiency continues to improve, and the company can expect long-term growth. After the new chairman took office, the company has continued to implement various reforms from the inside out. Especially since the new marketing director was in place in July, the improvement of the company's internal mechanism has accelerated: (1) The eight major war zones have been implemented, and rights and responsibilities have gradually become clear; In place of assessment + personnel replacement to strengthen and boost the combat effectiveness of the sales team; (3) Digital empowerment gradually helps to improve management efficiency. Looking forward to the future, we are optimistic about the company's continuous introduction of more detailed reform measures. In the medium and long term, we are optimistic that the improvement of the company's operation and management level will lead to the continuous widening of the moat, and ultimately obtain excess returns.

Fuling mustard: short-term fluctuations are hard to shake long-term positive trends. 2020Q1-3 revenue/net profit attributable to the parent were 1.8/6 billion yuan, +12/18% year-on-year; Q3 revenue/net profit attributable to the parent were 6/200 million yuan, +16/3% year-on-year, Both have slowed down month-on-month. According to grass-roots research, channel sinking + Q3 intensified efforts to promote the county-level market revenue in Q3 further accelerated. Q3 gross profit margin was -1pct year-on-year, mainly due to the fact that the company increased the use of semi-finished products such as first salt and second salt under the background of insufficient raw material acquisition; Q3 net profit margin was -4pct year-on-year, mainly due to changes in financial management methods + shrinking gross sales gap; on the one hand, the company decreased Investment in wealth management products has dragged down the net interest rate by 2pct. On the other hand, the company has strengthened its efforts since Q3, resulting in a year-on-year sales expense ratio of +2pct. Q4 performance is expected to accelerate, and performance is expected to continue to grow from a long-term perspective. Due to the continuous effect of channel sinking + the implementation of price increases + the low base in 2019, the company's performance in 2020Q4 is expected to further accelerate. In the long run, the vertical and horizontal expansion of channels will help smooth out the business cycle. Vertical channel sinking: The company began to shift its strategic focus to the offline market in 2019. Considering that the company’s coverage in the offline market is still low, it is expected to continue to make efforts to boost performance in the future; The provincial and prefecture-level markets will increase dealers for refined cultivation. Referring to Haitian's practice in the northern market, we judge that channel intensive cultivation will enhance long-term performance.

Qianhe Flavor Industry: The performance is in line with expectations, and the high-end new Reebok is the business. 2020Q1-3 revenue/net profit attributable to the parent were 1.2/2 billion yuan, +31/64% year-on-year; Q3 revenue/net profit attributable to the parent were 4/070 million yuan, +26/35% year-on-year. In Q3, the proportion of revenue from the dual main business of soy sauce + vinegar further increased to 80%, +2pct year-on-year, of which zero-added soy sauce/vinegar revenue +35%/57% year-on-year. Q3 Eastern +99% YoY, mainly due to the rapid development of Shandong market + Rongjin's accelerated pace of acquiring goods; Benefiting from strategic inclination, Central/Northern +40%/38% YoY; Western -7% YoY, mainly due to changes in statistical caliber; With the recovery of the sugar color business, the revenue in the southern region was +5% year-on-year; Q3 e-commerce channel revenue was +91.8% year-on-year, basically continuing the trend of heavy volume since 2020. Q3 gross profit margin was +2.5pct year-on-year, mainly due to the optimization of product structure, and -1.3pct month-on-month, mainly due to the increase in discounts and cost; Due to the diluting effect), the sales/R&D/financial expense ratio was +0.1/+1.5/+0.9pct year-on-year. The increase in the R&D expense ratio was mainly due to the increase in product research and development, and the increase in the financial expense ratio was due to changes in financial management methods. The strategy is clear, the tactics are aggressive, and the company's growth is expected. Based on the company's differentiated strategy of focusing on high-end soy sauce represented by zero additives, and at the same time continuously focusing on channel/brand building on the tactical side, we are optimistic about the company's long-term growth.

2.5. Dairy products: Seasonal fluctuations intensify, competition continues to optimize

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In 2020Q3, the revenue growth rate of the dairy segment slowed down, and the net profit margin remained stable. 2020Q1-3 dairy sector revenue was 105.2 billion, a year-on-year increase of 6%, net profit was 6.7 billion, a year-on-year increase of 3%, and the single Q3 industry revenue/profit was +10%/30% respectively. Affected by the epidemic, changes in terminal inventory processing and changes in the pace of incoming and outgoing shipments led to large fluctuations in the dairy product sector. The growth rate of Q3 compared with Q2 (19%/60%) slowed down from the previous month, but the overall performance of terminal dynamic sales was good.

The competitive landscape continues to improve, and expense ratios drop significantly. The Q3 gross profit margin of the dairy product segment in 2020Q3 was 32.9%, down 1.8/3.4pct year-on-year and month-on-month, mainly due to the significant increase in the price of raw milk in Q3. According to estimates, the cost of milk receipts by leading dairy companies increased by 4-7% on average. The sales expense ratio was 20.2%, down 2.2pct and 1.6pct year-on-year and month-on-month, and the net profit margin was 7.0%, up 1.1pct year-on-year and down 0.9pct month-on-month. We expect the price of raw milk to rise moderately and gradually narrow in the next three years, and the competition pattern will continue to be optimized.

Yili: The performance was lower than expected, the equity incentive target was locked, and the competition pattern continued to be optimized. 1-3Q achieved operating income of 73.77 billion, +7.4% year-on-year, net profit attributable to the parent was 6.02 billion, +7.0% year-on-year, corresponding to 3Q revenue +11.2%, net profit was +23.7% year-on-year, and the growth rate of performance was lower than expected, mainly because the growth rate of room temperature yogurt was lower than expected. The growth rate in 3Q slowed down QoQ, and seasonal fluctuations did not affect the annual target. The company's 3Q liquid milk/milk powder/cold beverage growth rate was 10%/19%/1% year-on-year respectively. According to the company's communication, it is expected that 3Q Jindian will maintain a growth rate of more than 20%, Anmuxi is growing, the overall growth rate of low temperature and milk beverages is flat, and milk powder (excluding Western Dairy) medium-to-high single-digit growth, the growth rate of various categories has slowed down compared with 2Q. According to channel research, we believe that seasonal fluctuations are mainly caused by the rhythm of dealers' import/export under the influence of the epidemic. As of mid-October, terminal sales were in good condition. Looking ahead, we expect 4Q revenue growth of 14%, and annual revenue growth rate 9%. The optimization of the competitive landscape continues, and profit margins may continue to improve. The company's 3Q gross profit margin decreased by 1.2pct year-on-year to 34.9%. According to the company's communication, the 3Q milk collection cost increased by 6-7%. Based on the assumption of a 3-5% increase in the annual milk price, we expect the annual gross profit margin to drop by 5.5pct. 3Q sales expenses decreased by 1.4pct to 20.4% year-on-year, and the trend of optimization of the competitive landscape is significant. Net profit growth in 4Q is expected to be flat, +6% for the full year. Combined with the company's goal of "top three in the global dairy industry in 2025" and the trend of competitive structure optimization, it is expected that the compound growth rate of net profit in 2021-2022 will be 15%.

Bright Dairy: Results are lower than expected, and advertising spending may increase. 1-3Q achieved operating income of 18.72 billion yuan, +9.3% year-on-year, operating profit of 750 million yuan, down -18.5%, and net profit attributable to the parent of 430 million yuan, -4.2% year-on-year. Corresponding to the 3Q single-quarter revenue +8.8% year-on-year, operating profit fell -35.1%, lower than expected. According to the company's communication, we expect it to be mainly due to the decline in high-margin milk powder products and room temperature acid categories. Due to income tax savings and changes in minority interests, the net profit attributable to the parent company in the single quarter of 3Q recorded a year-on-year +53.1%. 3Q liquid milk / other dairy products / animal husbandry products / other businesses were 5.1%/13.0%/12.3%/28.0% year-on-year, respectively. According to the company's communication, we expect the 3Q revenue side of normal temperature acid, low temperature acid, and infant formula milk powder to decline due to intensified competition and stockpiling of milk powder terminals in 1H. According to channel research, low-temperature fresh milk still maintains a low double-digit growth, of which "Fresh Ranch" (launched in April) is expected to reach a sales scale of 200 million by the end of September. The 3Q comprehensive gross profit margin decreased by 4.8pct to 26.3%, the company said, mainly due to the decline of high-margin milk powder products and room temperature acid categories. In 3Q, the sales expense ratio decreased by 3.3pct/1.1pct quarter-on-quarter to 20.4%, the improvement was less than expected, mainly due to the increase in advertising expenses. According to the announcement, from 3Q to 2021, the company plans to increase its advertising expenses by about 150 million in addition to the business plan at the beginning of the year. Taking into account the reduction in asset impairment, we expect full-year net profit growth of 1%.

2.6. Frozen food: high revenue growth, high profit elasticity, and upward profitability

High revenue growth and substantial profit growth. In the first three quarters of 2020, the revenue of the quick-frozen food segment was 12.28 billion yuan, a year-on-year increase of 22%, and the net profit was 1.13 billion yuan, a year-on-year increase of 158%. Q3 single-quarter revenue was 4.2 billion yuan, a year-on-year increase of 28%, and the growth rate was +3.8pct year-on-year. Among them, Anjing’s revenue was +41% year-on-year to lead the industry; net profit was 330 million yuan, a year-on-year increase of 109.5%. The profits of Quan, Huifa and Haixin basically more than doubled. Sanquan released profit flexibility through product structure optimization and channel adjustment to reduce losses. Haixin’s product structure optimization and cost control increased profits.

Gross profit margin increased, expenses were effectively controlled, and segment profitability improved significantly. In the first three quarters of 2020, the gross profit margin and net profit margin of the quick-frozen food segment were 30.9% and 9.2%, up 2.5pct and 4.8pct respectively year-on-year. Among them, the gross profit margin of the Q3 quick-frozen food segment was 28%, an increase of 1.5pct year-on-year; the sales expense ratio of the Q3 segment was -2pct to 15% year-on-year, the sales expense control was effective, and the management expense ratio decreased by 0.2pct to 4% year-on-year; the final net profit margin was 7.8%, a year-on-year increase. +3pct, significant improvement in profitability.

Yasui Foods: The performance exceeds expectations again, and the profit is on the rise. Q1-Q3 revenue was 4.485 billion, +28.4% year-on-year, net profit attributable to the parent was 379 million, +59.2% year-on-year; Q3 single-quarter revenueYear-on-year +41.1%, net profit attributable to the parent +63.3% year-on-year, if the impact of equity incentive expenses after deduction is expected to be +96% year-on-year in Q3 net profit, the actual net interest rate in a single quarter is expected to be around 9%. In the single quarter of Q3, surimi and meat products were 55% and 53% respectively. The growth rate increased significantly from the previous quarter. It is expected that the contribution of volume and price will remain the same. At the same time, the new products will continue to optimize the product structure. In terms of channels, Q3 dealers increased by 39% year-on-year, and the B-side improvement was significantly driven; supermarkets increased by 44% year-on-year, and it is expected that the effect of subsequent channel deployment will continue to be prominent. The gross profit margin in Q3 was +2.6pct to 26.5% year-on-year, which is expected to be mainly due to the product structure (high gross profit of fresh packaging) and the change of channel structure (the supermarket channel will continue to exert force), and Q3 still has the bonus of price increase in the second half of 2019 . According to grassroots research, Q3 sales continued to maintain a high degree of prosperity, and new products contributed significantly, and the C-end, online and other force effects were prominent, and the Q4 peak season is worth looking forward to. In the future, with the further implementation of the production capacity layout to strengthen the strength of large single products, the B and C ends will expand simultaneously, and the high profit growth under the scale advantage is expected to be maintained.

Babi Foods: Q3 improved QoQ, with accelerated franchise and group meal expansion expected. Q1-Q3 achieved revenue of 656 million yuan, a year-on-year -15.06%, and a net profit attributable to the parent of 103 million yuan, a year-on-year -8.58%. Q3 single-quarter revenue +4% year-on-year, net profit +8% year-on-year, and the Q3 quarter-on-quarter improvement was significant. Q1-Q3 franchise revenue was 550 million yuan / accounting for 84%. The opening of stores in the first half of the year was affected by the epidemic, and Q2 gradually recovered. In the second half of the year, the expansion of store openings is expected to continue to improve; the revenue of group meals is 85 million yuan / accounting for 13%, and the proportion of group meals is relatively At the end of 2019, it will increase by 2pct. Gross profit margin was -0.85pct to 31.87% year-on-year, and it is expected that the proportion of group meals will increase; the overall cost of investment in the first half of the year was reduced, the sales expense ratio and management expense ratio were -0.17 and -0.50pct year-on-year, and the final net profit margin was +1.14pct to 15.7 year-on-year. %. With the continuous optimization of production capacity in East China, there will still be store expansion dividends in East China in the next three years, and the expansion of franchise stores is expected to accelerate. In the past, the group meal business was mainly constrained by production capacity constraints, and there is a lot of room in the future. The growth rate of the group meal business in Q3 has turned positive. Based on the brand and scale advantages of East China Babi, the group meal business is expected to remain high under the trend of capacity optimization and customer expansion. increase.

2.7. Soft drinks: MoM improved and differentiated significantly

Companies with a higher proportion of revenue showed a significant month-on-month improvement, driving the overall improvement in the sector. 2020Q1-3 soft drink segment revenue was 60.3 billion yuan, down 9.0% year-on-year, and net profit was 4.47 billion yuan, down 19% year-on-year. In the segment, Baiyunshan's revenue accounted for a relatively high proportion. In 2020Q1-3, Baiyunshan's revenue fell by 6% year-on-year, and its net profit fell by 16% year-on-year. Revenue of the Q3 segment decreased by 2% year-on-year (down 12% in Q2), and net profit increased by 52% year-on-year (down 44% in Q2). Among them, Baiyunshan’s revenue decreased by 2% year-on-year and net profit increased by 46% year-on-year. VV shares improved significantly. Net profit has doubled significantly, and the performance of other companies has been flat or declining year-on-year. The gross profit margin of the 2020Q3 single-quarter segment decreased by 2.3pct year-on-year to 22.3%, but increased by 3.5pct from Q2, and the net profit margin of the segment was 7.3%, an increase of 2.6pct and 0.6pct year-on-year and month-on-month respectively.

2.8. Food comprehensive: revenue increased steadily, net profit growth dropped from a high level

The food comprehensive segment recorded a steady increase in revenue and a slowdown in net profit growth, but remained stable higher. In 2020Q1-3, the revenue of the food comprehensive segment was 54.99 billion, an increase of 8% year-on-year, and the growth rate decreased by 20pct year-on-year. The net profit was 8.19 billion yuan, an increase of 97% year-on-year, and the growth rate increased by 74pct year-on-year. The revenue and net profit of the 2020Q3 segment increased by 10% and 49% year-on-year respectively, and decreased by 6pct and 191pct respectively from the previous quarter. The explosive growth of C-side demand brought about by the epidemic has gradually faded, but it has a profound impact on the cultivation of consumption habits.

In the baked goods category, peach and plum bread and Angel yeast Q3 net profit maintained a relatively high growth rate. Tao Li Bread's 2020Q1-3 revenue +6.07% year-on-year, net profit attributable to parent +36.37% year-on-year, Q3 single-quarter revenue +4.43% year-on-year, net profit attributable to parent +34.58% year-on-year, revenue growth benefited from core markets and advantageous channels.The Soviet Union began to recover gradually, and at the same time, the scale effect gradually became apparent, competition was still moderate, and profits maintained a relatively high growth rate. Angel yeast C-end, overseas and e-commerce businesses maintained rapid growth, small packaging pushed up gross profit margins, and B-end gradually recovered, 2020Q1-3 revenue +15.58% year-on-year, net profit attributable to the mother +52.12% year-on-year, Q3 single-quarter revenue year-on-year +12.91%, net profit attributable to the parent was +45.82% year-on-year.

Qiaqia Foods: Melon seeds slowed down, nuts improved, and profit was in line with expectations. The company's Q1-3 revenue was 3.651 billion yuan, an increase of 13.41%, and the net profit attributable to the parent was 530 million yuan, an increase of 32.3%. Among them, the revenue of Q3 alone was 1.356 billion yuan, an increase of 10.11%, and the net profit was 235 million yuan. The same increase of 30.26%. Single Q3 revenue fell by 11.02pct from Q2, mainly due to the continuous changes in the impact of the epidemic on consumption scenarios: the weakening of home consumption scenarios in Q3 led to a slowdown in the expansion of demand for melon seeds, an increase in office and party scenarios, and a recovery in nut demand, which boosted the growth rate of nuts. Although the revenue growth rate has dropped, the company's offline promotion has decreased, resulting in a lower sales rate. Q3 profitability has improved. The gross profit margin is 35.78%, which is basically the same as the same period last year. The rate dropped significantly, mainly because the company reduced investment in ground promotion before and after the double festival. Benefiting from the reduction in rates, the net profit rate increased by 2.68pct to 17.30% year-on-year, and profitability improved. As the impact of the epidemic fades, the melon seed market is expected to return to its normal expansion rate. In the future, the melon seed category will still be dominated by product upgrades. The blue-bag melon seed flavor has been recognized by consumers, which is expected to drive the upgrading of the melon seed category structure in the future; the nut market is still a blue ocean, with the epidemic As the impact fades, the direct procurement of raw materials and production automation are gradually implemented, the nut category is expected to continue its rapid increase in volume and enter the channel for profit improvement.

BY-HEALTH: The performance was in line with expectations, with a significant month-on-month improvement. The company's Q3 single-quarter revenue was 1.908 billion yuan, +35.17% year-on-year, of which Maiyou contributed 102 million yuan in consolidated form, and the net profit attributable to the parent before and after deductions was 505 million and 488 million yuan, respectively +55.82% and +70.50% year-on-year , the growth rate of revenue and profit has achieved a significant increase month-on-month. In Q3, domestic and offline business recovered significantly, and online continued to grow rapidly. Domestic 2020Q1-3 main brand revenue was +9.43% year-on-year (H1 year-on-year -1.81%); Jianliduo's revenue was +12.21% year-on-year (H1 year-on-year +1.79%); Life-Space's domestic revenue was 131 million yuan. The overseas LSG revenue was 436 million yuan, +28.42% year-on-year after segment offset, and the growth was stable. In Q1-3, domestic online revenue increased by 49.7% year-on-year, compared with the proportion of H1, which continued to increase by 1.5pct to 22.9%. The growth rate of offline revenue turned positive, +5.32% year-on-year (H1 year-on-year -4.25%). Single Q3 gross profit margin was -0.6pct to 65.3% year-on-year; sales expense ratio was -8.9pct to 24.3% year-on-year, but +3.1pct month-on-month, the impact of the epidemic weakened, and terminal sales and promotion activities gradually resumed; management R&D expense ratio was -2.7pct year-on-year to 6.9%, mainly due to the decreasing amortization of M&A assets; net profit margin increased by +3.5pct to 26.5% year-on-year. The company continues to promote the "4+2+1" product promotion and dealer fission, and the dynamic sales and advertising are gradually resumed to prepare for 2021. The mother-infant and online channels are continuously strengthened. The positive trend of operation is clear, and the elasticity of performance is expected to continue.

2.9. Wine: sluggish demand and continued weakness

The demand for wine has not yet recovered significantly. Under the impact of imported wine, liquor and other substitutes, the domestic wine industry demand continued to be weak and did not improve significantly after the epidemic. In 2020Q1-3, the revenue of the wine segment was 3.01 billion yuan, a year-on-year decrease of 42%; the net profit was 180 million yuan, a year-on-year decrease of 77%. Among them, the revenue of the wine segment in 2020Q3 was 1 billion yuan, a year-on-year decrease of 27%; the net profit of the segment was 50 million yuan, which was positive. Q2 advance receipts were 28 million, a year-on-year decrease of 200 million and a month-on-month increase of 4 million.

2.10. The revenue of the rice wine segment improved month-on-month, and the profit growth rate declined

The rice wine segmentThe decline in block revenue narrowed, and the growth rate of profit fell month-on-month. In 2020Q1-3, the revenue of the rice wine segment was 1.95 billion yuan and the net profit was 150 million yuan, down 25% and 31% year-on-year. In 2020Q3, the revenue of the rice wine segment was 700 million, down 9% year-on-year, the growth rate decreased by 17pct year-on-year, and increased by 14pct month-on-month. In 2020Q1-3, the gross profit margin of the rice wine segment was 39.6%, a year-on-year decrease of 1.4pct; the sales expense ratio was 15.1%, a year-on-year decrease of 2.4pct, the management expense ratio was 12.6%, a year-on-year increase of 2.6pct; the net profit margin was 7.9%, a year-on-year decrease of 0.8pct.

03 Position analysis: The overall allocation ratio has increased, and liquor is more favored by funds

From the perspective of the allocation ratio of heavy-holding stocks in 2020Q3, the allocation ratio of the food and beverage industry The chain improved, and rose to the first. In 2020Q3, the allocation ratio of food and beverage stocks with heavy holdings increased by 1.43pct from Q2 to 9.13%, an increase of 0.89pct compared to 2019Q4, reaching the highest level since 2019Q4, ranking first in many industries, and continuing to receive a high proportion of fund allocation.

In terms of sub-sectors, liquor stocks with heavy holdings and popular brands are also favored by public funds:

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Liquor section: Except for Gujing tribute wine, Shede and Yingjia tribute wine, the proportion of funds with heavy positions has increased. Among them, Luzhou Laojiao, Shunxin Agriculture, and Yanghe Co., Ltd. have heavy holding ratios of 15.82%, 14.87%, and 8.43% in 2020Q3, respectively, up 3.16pct, 2.82pct, and 5.34pct, respectively, compared with Q2, and the increase is more obvious. The proportion of heavy warehouses in Gujing Tribute Liquor has dropped significantly, with a decrease of 1.03pct to 9.45% in Q3. The proportion of ST Shede and Yingjia tribute wine with heavy holdings dropped by 0.23pct and 0.03pct to 0.03% and 0.05% respectively. The proportion of heavy positions in the remaining liquor stocks has been increased in Q3.

Beer segment: Chongqing Beer and Tsingtao Beer increased the proportion of heavy holdings. Tsingtao Brewery's heavy holding ratio in 2020Q3 was 5%, an increase of 0.81pct compared with Q2 and an increase of 3.33pct compared with Q1. The heavy holding ratio of Chongqing Beer in 2020Q3 was 5.47%, an increase of 2.67pct compared with Q2, stopping the continuous downward trend since 2019Q4. The proportion of Zhujiang Beer's heavy holdings continued to decline. Q3 was 0.06%, a decrease of 0.26% compared with Q2, and a decrease of 1.3% compared with 2019Q4.

Meat products segment: The proportion of Huang Shanghuang's heavy warehouses increased, and Juewei continued to decline. The proportion of Huangshanghuang's heavy holdings rose slightly by 0.51pct month-on-month to 3.55% in 2020Q3. The proportion of Shuanghui Development’s heavy positions has dropped significantly. After 2020Q1 rose sharply from 5.65% at the end of the previous year to 12.83%, 2020Q3 dropped 5.66pct to 7.61% compared to Q2. The proportion of Juewei Foods’ heavy holdings continued to decline. In 2020Q3, it decreased by 1.97pct to 12.61% compared with Q2, and it decreased by 12.66pct compared with 2019Q4.

Frozen food segment: The proportion of Yasui Foods' heavy holdings increased. The proportion of Anjing Foods' heavy warehouse has rebounded, and it is 13.21% in 2020Q3, an increase of 2.92pct compared with Q2. The proportion of Sanquan Foods’ heavy holdings in Q3 continued to drop to 6.41%, a decrease of 0.88pct from Q2 and a decrease of 2.83pct from Q1.

Dairy products: Yili, Bright Dairy, and New Dairy increased their heavy positions. Yili’s share of funds with heavy holdings rose sharply by 4.3pct to 13.05% in Q3 after falling back to 8.76% in 2020Q2. In 2020Q3, Bright Dairy and New Dairy received heavy positions of 1.97% and 0.15%, respectively, up 1.03pct and 0.14pct month-on-month. The ratio of Miao Ke Lan's multiple positions decreased by 0.38pct month-on-month to 3.54%, but still increased by 3.52pct compared with 0.02% in 2019Q4.

Condiment segment: Except Qianhe Flavor Industry and Richen Co., Ltd., the proportion of heavy positions has increased. Tianwei Food's heavy warehouse ratio increased by 5.96p month-on-monthct to 9.6% in 2020Q3. Hengshun Vinegar, Zhongju High-tech, Fuling Mustard and Haitian Flavor's Q3 funds accounted for 4.47%, 4%, 3.28% and 1.47%, respectively, up 1.21pct, 0.09pct, 1.51pct and 0.51pct month-on-month. Qianhe Flavor's 2020Q3 heavy holding ratio decreased slightly by 0.09pct to 2.35% from the previous month.

Comprehensive food sector: The proportion of Xianle Health and Yanjin Shop has increased significantly. The proportion of heavy positions in Bairun has increased steadily since 2019Q4, accounting for 17.21% in 2020Q3, an increase of 0.71pct month-on-month. The proportion of heavy positions in Xianle Health in Q3 increased by 4.42pct from the previous quarter to 7.1%. Yanjin Shop's Q3 heavy position ratio increased by 2.61pct to 3.5% from Q2, still lower than Q1's 5.01%. Taoli Bread and Yuanzu shares gained 2.34% and 0.65% of their heavy positions in Q3, up 0.64pct and 0.24pct month-on-month respectively. The proportion of Qiaqia Food's heavy warehouse has been continuously declining since 2020Q1, and the Q3 decreased by 2.76pct to 3.2%. By-health and Huabao's Q3 heavy positions decreased by 1.27pct and 0.13pct to 4.62% and 0.55% respectively.

04 Investment advice: intensify the differentiation, firmly lay out the leader

In 2020Q3, the valuation of liquor is firm, and the valuation of popular products has fallen relatively significantly. In 2020Q3, the overall valuation of the food and beverage sector stabilized after the decline. Among them, the leading liquor companies continued to show certainty, and their valuations were firmer; the differentiation of popular products was intensified, and the valuation fell more significantly, and the leading brands ushered in layout opportunities. From a vertical perspective, the valuation of the sector has stabilized after falling from a high level. Considering that the medium and long-term certainty of the sector is relatively strong, and the long-term investment value is prominent, we recommend that we continue to pay attention to the opportunities for sector layout and firmly deploy industry leaders with more certainty.

The impact of the epidemic has dissipated marginally, and industry differentiation has intensified. In the liquor sector, the volume and price of high-end liquor is well understood, and the certainty and stability are further highlighted. The development of sub-high-end price with sauce wine exceeds market expectations, and industry differentiation is expected to further intensify. The Spring Festival peak season is expected to further continue the development trend of high-end excellence, sub-high-end differentiation, mid-end pressure, and low-end stability. In the long run, the high-quality and centralized development trend of the liquor industry will accelerate. The mass product segment also focuses on differentiation, and leading companies are stronger. In terms of subdivision, the consumption of condiments and other must-haves is expected to continue to maintain resilience, and it is the general trend that the market share will be concentrated in the head; the beer faucets will intensively cultivate strong areas, consolidate advantageous channels to strengthen their advantages and increase market share, and both volume and price are in a healthy growth trend; Dairy products benefit from healthy demand and consumption upgrades, and leading profit margins are expected to continue to improve with the optimization of the competitive landscape. It is recommended to deploy leading companies with stronger performance certainty and optimized management margins and dark horse targets with stronger competitive advantage margins.

05 Core Risks

1. Macroeconomic downturn

The demand for food and beverages is closely related to the macroeconomy. Certain correlation, the slowdown in macroeconomic growth may lead to less than expected demand.

2. Intensified competition in the industry

The concentration of the food and beverage industry has increased, and the intensified competition among enterprises may affect the profitability of the stage.

3. Risk of food safety problems

If the company or other enterprises in the industry have food safety problems, it may have a certain impact on the company's brand. thereby affecting short-term performance.

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Label group:[stock] [food and drink] [liquor] [chain ratio] [continuous improvement] [Net interest rate] [sales expense] [gross profit margin] [q2] [The difference between year-on-year and month-on-year

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