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Food and Beverage 2022 Investment Strategy: Layout Thematic Investments, Focus on Reversal Opportunities

Release Time:2022-06-15 Topic:Leading stocks in the food and beverage industry Reading:110 Navigation:Stock Liao information > Food > Food and Beverage 2022 Investment Strategy: Layout Thematic Investments, Focus on Reversal Opportunities phone-reading

Source: Financial Sector

Although the overall performance of the food and beverage sector in 2021 is lower than expected, the changing trend of the food and beverage industry in 2021 also means new opportunities Maybe being conceived. Recently, the Kaiyuan Securities Food and Beverage Team released the 2022 investment strategy " Layout Thematic Investment, Focus on Reversal Opportunities - Food and Beverage Industry 2022 Investment Strategy", looking forward to 2022, the core views of the Kaiyuan Securities food and beverage team For:

1. In 2022, the background environment is that economic activities are still recovering slowly in the post-epidemic period. After the economic fluctuations in 2021 and the weakening of consumption, from a fundamental perspective, most sub-sectors should be in a process of recovery and improvement in 2022; from a valuation perspective, food and beverages have entered a reasonable range. The valuation is stable in 2022, and the sector still needs to return to the main line of performance growth.

2. Pay attention to the four main lines of food and beverage trading strategies in 2022: One is to focus on the main line of consumption upgrade, and to deploy liquor; the other is to pay attention to the theme of price transmission and deploy price-raising varieties; The third is to pay attention to the investment opportunities brought by rural revitalization under the background of common prosperity. Fourth, in 2021, some industries will be in operational difficulties due to the impact of the base, the epidemic, and the change in channel structure. A reversal is expected in 2022, with a focus on opportunities in the condiment, quick-freezing and snack food industries.

Food and beverages underperform in 2021,

soft drinks perform better

1. January-November 2021 Food and Beverage Section Gains underperformed the market

Food and beverages underperformed the market, with soft drinks outperforming. From January to November 2021, the food and beverage sector fell by 7.5%, underperforming the CSI 300 by about 13.0pct, ranking fourth from the bottom among the first-tier sub-sectors, only better than agriculture, forestry, animal husbandry and fishery, leisure services and non-banking finance . From the perspective of molecular industries, soft drinks (+81.7%) and beer (+5.2%) outperformed the overall food and beverage industry and had positive returns. Condiments (-25.9%), meat products (-28.9%), rice wine (-32.6%) underperformed the broader market and food and beverage sectors.

Jan-Nov 2021 Food and Beverage Market Ranking 25/28

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price changes as of November 2021 12

Jan-Nov 2021 Soft Drinks Top Growth in Food & Beverage Sub-Industry

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price changes as of November 2021 12th

From January to November 2021, the stock price of the food and beverage sector will fall, which is more due to the contraction of valuation. From January to November 2021, the PE of food and beverage dropped by 26.3% compared with the end of 2020, and the net profit in 2021 is expected to increase by 18.9%. The combination of the two has caused the share price of the sector to fall by 7.5% year-to-date. Among them: the valuation of liquor decreased by 27.9% year-on-year, the net profit in 2021 is expected to increase by 20.3%, and the stock price of the liquor sector will drop by 9.2%; the valuation of non-liquor will drop by 22.8%, and the net profit is expected to increase by 16.2% in 2021, and the stock price of the sector will drop by 10.4%. Overall, the share price of the food and beverage sector has declined since the beginning of 2021, and the fall in valuation is the main reason.

The increase in the market value of the food and beverage sector from January to November 2021 is more due to the increase in valuation

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price changes as of 2021 November 12

The valuation of the food and beverage sector is at a high level among 28 industries, but it has dropped from the previous month. The food and beverage valuation (TTM) is about 43.4 times, which is at a high position compared with other sub-sectors, but the chain has fallen from the high point.

November 2021 Food & Beverage valuations at industry highs

Data source: Wind, Open Source Securities Research Institute

Note: P/E ratio as of November 12, 2021

November 2021 Food & Beverage Valuation Has Receded

< p id="0F8QCOF5">Data source: Wind, Open Source Securities Research Institute

Note: Valuation as of November 12, 2021

Food and beverage stock prices slightly underperformed the broader market in October-November 2021. Since entering the fourth quarter, the food and beverage sector fell by 0.6% from October to November 2021, slightly underperforming the CSI 300 by about 1.2pct, ranking in the middle (17th) of the first-tier sub-industry. In terms of molecular industries, beer (+14.6%) performed the best, dairy products (+7.8%), meat products (+7.4%), condiments (+7.1%), food composites (+4.7%) outperformed the food index .Yellow wine (-5.2%), soft drinks (-5.9%), and other alcohol (-14.8%) sub-sector share prices fell and performed poorly. We analyze that the overall performance of food from October to November was better than that of alcohol, which should be related to the recent Price increase catalysis is directly related.

Food and beverage market rank 17/28 in October-November 2021

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price rises and falls Up to November 12, 2021

October-November 2021 Beer Tops Growth in Food & Beverage Subsector

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price rose Decline as of November 12, 2021

2. Rise and fall of individual stocks: high-growth companies and new stocks performed better

The performance of high-growth companies and new stocksit is good. In 2021, the market favors growth companies, so there is a strong correlation between financial report performance and stock price trends. Among the top 10 stocks in the sector from January to November 2021, companies with faster quarterly performance growth outperformed: Shede Wine (115%) ranked third, Yingjia Gongjiu (68%) and Shuijingfang (53%) ) The improvement logic is strong, the third quarter performance growth rate is fast, and the performance is better. In addition, the new stocks performed well, such as Qianwei Yangchu (199%), Dongpeng Beverage (169%), Liziyuan (106%), Weizhixiang (71%), etc., all in the top ten. Most of the stocks ranked in the bottom ten performed worse than expected.

Jan-Nov 2021 High-growth companies and IPOs outperformed

Data source: Wind, Open Source Securities Research Institute

Remarks: stock price changes as of November 12, 2021

3. 2021Q3 Fund's heavy food and beverage allocation ratio continued to fall

2021Q3 food and beverage allocation ratio fell , the sector gains underperformed the broader market. Judging from the fund's heavy holdings, the 2021Q3 food and beverage allocation ratio (the proportion of the stock market value of the fund's stock investment market value) dropped from 9.2% in 2021Q2 to 8.1%, a month-on-month decrease of 1.1pct, and the holdings are in nearly five quarterly low. Since the third quarter, the stock prices of food and beverages have continued to fall. The reason may be related to the lower-than-expected performance of most food companies in the interim reports, as well as the significant market conditions in the cycle, technology and other sectors. The switching of existing funds has led to a continuous decline in the proportion of food and beverages allocated by the overall fund. In terms of market performance alone, the food and beverage sector in 2021Q3 fell by 11.6% as a whole, ranking second to last in the market, underperforming the CSI 300 Index by about 10.3pct. We predict that benefiting from the impact of the mismatch between the timing of the Spring Festival and the optimistic outlook for stocking during the Spring Festival, the performance of listed companies may improve in the fourth quarter, and the food and beverage holdings may improve slightly in the fourth quarter.

2021Q3 Fund’s heavy holding of food and beverages dropped to 8.1% (unit: %)

Data source: Wind, Open Source Securities Research Institute

From sub-industry In terms of decomposition, the proportion of liquor held by the fund has dropped from 7.8% in 2021Q2 to 6.9% in 2021Q3. The number of funds held by Luzhou Laojiao, Jiuguijiu, Gujing Gongjiu, Shede Liquor, Shuijingfang, Shanxi Fenjiu and Yingjia Gongjiu increased. Judging from the changes in the number of shares in the fund's heavy holdings: Liquor companies in Wuliangye, Shunxin Agriculture, and Kouzijiao were reduced by the fund, and the rest of the liquor companies were increased by the fund. We see the characteristics of liquor holdings in the third quarter: the number of fund positions in most liquors has increased, but because the share price of the sector underperformed the broader market, the market value ratio of heavy liquor holdings still fell. In 2021Q3, the overall fund holding ratio of non-liquor food and beverages dropped by 0.16pct to 1.21%. Except for dairy products, the allocation ratios of other industries have declined.

2021Q3 both the proportion of heavy liquor and non-liquor heavy positions dropped

Data source: Wind, Open Source Securities Research Institute

2021Q3 beer, meat products, condiment allocation ratio falls back

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Data source: Wind, Open Source Securities Research Institute

Four of the fund's top ten stocks are food, and consumer companies are still the mainstream. Observation 2In 021Q3, the top ten stocks with heavy holdings in the overall market, food and beverages occupy four seats: Kweichow Moutai, Wuliangye, Luzhou Laojiao, and Shanxi Fenjiu. Among the top ten heavyweight stocks, consumer companies occupy five seats (in addition to food and beverage companies, there are also WuXi PharmaTech in the pharmaceutical industry), which is still the mainstream configuration.

2021Q3, 5 of the top 10 fund holding stocks are consumer companies

Data source: Wind, Open Source Securities Research Institute

Main line of investment: grasp the rhythm of recovery,

Finding deterministic and inflection targets

1. Aggregate judgment: weak economic recovery and flat demand curve recovery

From a macro perspective, the impact of the epidemic has led to The economy will decline in 2020, and the slow recovery in the post-pandemic era will begin in 2021. In 2021Q1, due to the base number, the GDP showed a high growth of 18.7%, but the intermittent epidemic still affects the economy, and low-speed operation may have become an industry consensus. The GDP and social zero data in the third quarter bottomed out again (4.9%), and it is expected that the fourth quarter should improve. On the whole, the macroeconomic environment has not shown strong growth, and the social zero data is also running in a weak range.

2021Q3 domestic GDP growth rate of 4.9%, down to the low point of the year

Data source: Wind, Open Source Securities Research Institute

Social zero growth rate will drop from the second quarter of 2021

Data source: Wind, Open Source Securities Research Institute

< p id="0F8QCOGH">Industry performance from a micro level: the revenue growth rate of food manufacturing companies from January to September 2021 was 9.7%, and the growth rate fell, which should be affected by the dual impact of the base and the epidemic; total profit fell by 0.6% year-on-year %, should be due to the dual pressure of cost increase and channel structure change resulting in increased expenses. Looking at industry data, from January to September 2021, the output growth rate of most industries will increase rapidly under the low base effect. Among them, dairy products and fresh refrigerated meat had a greater impact during the epidemic, and the growth rate rebounded more obviously; the growth rate of wine production continued to decline.

In 2020, the revenue and profit growth of food manufacturing companies will gradually recover after bottoming out

Data source: Wind, Open Source Securities Research Institute

Dairy Products Jan-Oct 2021 , the growth rate of alcohol has rebounded significantly after bottoming out

Data source : Wind, Open Source Securities Research Institute

2. Review of rhythm in 2021: the whole year shows a downward trend, and it is expected to stabilize in the fourth quarter

Liquor: Liquor sales were booming during the Spring Festival, with rapid replenishment after the holiday, stable in the third quarter, and the annual growth rate showed a high and a low. From the perspective of demand, the first quarter is the traditional peak consumption season for liquor. During the Spring Festival, the epidemic situation was well controlled, and consumer demand increased significantly, especially the expansion of the thousand-yuan price band. From the channel level, the channel inventory is at a low level, and there is inventory replenishment in the Spring Festival channel preparation for the peak season. Compared with 2020, the manufacturers' replenishment and payment collection after the holiday is more positive, and the second quarter will also achieve rapid growth. in the third quarterDue to the high base and local epidemic disturbances, the double-section dynamic sales were stable, and the growth rate in the third quarter declined slightly. Liquor showed a slowdown overall throughout the year, and it is estimated that the growth rate in the fourth quarter should stabilize.

Mass products: the first quarter recovered rapidly, the second quarter faced the pressure of high base and channel structure transformation, and the third quarter was affected by the epidemic and the consumption power was weak, and the growth rate was still low. The epidemic has led to the lack of consumption scenarios, and the base in 2020Q1 is low. In 2021Q1, the epidemic has been effectively controlled, and rapid growth has occurred in the context of a low base. In 2021Q2, the high base effect superimposed the change of channel structure, and the growth rate of mass products dropped. In the third quarter, the consumption power was weak, and the impact of the epidemic in some areas caused the growth rate to remain low.

3. Main line of investment: consumption upgrade, price increase theme, rural revitalization, reversal of predicament

to Looking ahead to 2022, the background environment is that economic activity is still recovering slowly in the post-pandemic period. After the economic fluctuations in 2021 and the weakening of consumption, from a fundamental perspective, most sub-sectors should be in a process of recovery and improvement in 2022; from a valuation perspective, food and beverages have entered a reasonable range. The valuation is stable in 2022, and the sector still needs to return to the main line of performance growth. We choose four main lines of food and beverage trading strategy in 2022: first, to focus on the main line of consumption upgrade, and to deploy liquor; second, to focus on the theme of price transmission, and to deploy price-raising varieties; third, to focus on investment opportunities brought by rural revitalization under the background of common prosperity. Fourth, some industries will have a greater impact in 2021, and a reversal may occur in 2022. Specifically:

Strategy 1: Stick to the main line of upgrading and actively deploy liquor. The demand for liquor is more resilient, and liquor has social attributes, so the upgrading trend is difficult to reverse. Under the main line of consumption upgrade, the thousand-yuan wine price band and the sub-high-end price band will still be expanded. We recommend actively deploying high-end liquors that are growing steadily, as well as sub-high-end liquors that continue to grow rapidly. We recommend liquor companies such as Kweichow Moutai, Wuliangye, Shanxi Fenjiu, and Shuijingfang. At the same time, pay attention to real estate wine leaders, such as Yanghe Co., Ltd., Gujing tribute wine, etc.

Strategy 2: Grasp the theme of price transmission and arrange price-raising varieties. In the context of the widening scissors gap between PPI and CPI, it is possible for cost pressure to be transmitted downstream. At present, we have observed that there have been price increases in some mandatory consumption areas. For example, Angel Yeast has raised prices for some products at the end of September, and Haitian Flavor has also announced a price increase in late October. Enterprises may also follow the price increase. The triggering factors for price increases include rising costs and thinning channel profits. The positive impact is that it can hedge cost pressures and at the same time increase channel profit margins and enthusiasm. At present, in addition to the increase in the cost of raw materials, energy restrictions have also brought about a reduction in production capacity and an increase in costs. The price-raising varieties may spread from mandatory consumption to optional consumption. It is recommended to arrange price-raising varieties, such as condiments, beer, and quick-freezing industries.

Strategy 3: Focus on investment opportunities brought by rural revitalization under the background of common prosperity. Rural revitalization under the background of common prosperity is an important theme. If the policy is appropriate, the per capita income level of third- and fourth-tier cities and county-level markets will increase, which will greatly improve consumption in lower-tier cities. The upgrading of the gift market is expected to accelerate, and products with township gift attributes may benefit.

Strategy 4: Focus on investment opportunities brought about by fundamental reversals. In 2021, some industries will be in operational difficulties due to the impact of the base, the epidemic, and the change in channel structure. A reversal is expected in 2022, with a focus on opportunities in the condiment, quick-freezing and snack food industries.

Industry: Liquor continues to upgrade, and popular products gradually recover

1. Liquor: The epidemic will not change the long-term trend, and the logic of product upgrade and concentration improvement will continue to be deduced

2015 Since the recovery of the liquor industry in 2010, product price increases and upgrades, corporate management reforms, increased industry concentration, and the differentiation of participants' strengths are the four main trends in this round of liquor industry. Leading company reform in 2020The reform has been further deepened. At the same time, the epidemic has strengthened the original industrial trends such as product upgrading and enterprise differentiation, and new industrial phenomena such as sauce wine fever and high-line light bottle wine have also appeared. Looking forward to the long-term, the liquor industry is still in a long cycle of a new round of growth characterized by structural prosperity. The competition pattern of squeeze growth will exist for a long time.

This round of liquor growth is essentially driven by consumption upgrades, and the industry is structurally prosperous. During the period from 2009 to 2012, the liquor industry expanded in an inclusive manner, and liquors in all price bands performed well. However, since 2015, high-end liquor has led the industry's structural growth, and high-end and sub-high-end prices have increased Obviously faster than the low-end price band, product upgrades have become the main driving force for the growth of the liquor industry since 2015. Therefore, focusing on product upgrades and controlling the channel order has become the key work of liquor companies in recent years.

During the period of 2009-2012, the price of liquor increased rapidly in each price band

Data source: Wind, Open Source Securities Research Institute

High-end and high-end price bands since 2015 Revenue outperformed overall

Data sources: Wind, Open Source Securities Research So

under the background of consumption upgrade, brand high-end has become the core goal of wine companies. During the period from 2013 to 2015, the consumer group of liquor changed from being led by government affairs consumption to mass consumption and business consumption, and consumers paid more attention to brand and quality. Since 2015, famous liquor companies have ushered in rapid growth. The share of small and medium-sized enterprises mainly engaged in middle and low-end liquors has shrunk. The liquor industry has an obvious trend of concentrating on famous liquor companies. Since 2018, with the continuous and rapid evolution of consumption upgrades, famous liquor companies There is also a clear differentiation between them. The potential energy of companies that have done better in product layout and channel coordination in advance continues to be released, while the development of wine companies that have not grasped the opportunity to upgrade in time has encountered bottlenecks.

The market share of listed liquor companies continues to increase

Data source: National Bureau of Statistics, Open Source Securities Research Institute

The number of liquor companies above designated size has declined significantly since 2018

Data source: National Bureau of Statistics, Open Source Securities Research Institute

The categories of Qingxiang and Maotai are growing rapidly, and the sub-high-end price band pattern has changed. Since 2018, the sub-high-end price band has resumed rapid growth from the bottom, with a compound growth rate of 27% in revenue from 2015 to 2019. Since 2019, as the trend of "Moutai fever" continues, sauce-flavored wine has grown, and the price has increased. The market is basically concentrated in the sub-high-end price range of 300-800 yuan. The fragrance category represented by Shanxi Fenjiu continues to grow, and the sub-high-end competition is more intense. The pressure on the strong fragrance brand is gradually emerging. The core of competition is to do a good job in brand building and promotion. Brand value, cultivate consumer stickiness.

The proportion of Maotai-flavor liquor increased rapidly

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Data source: Qianzhan Industry Research Institute, Open Source Securities Research Institute

The management reform of excellent brands has given them the ability to surpass the industry. growth. After the industry adjustment in 2012, on the one hand, almost all outstanding brands have made reforms in management and marketing, carried out intensive channel cultivation, strengthened consumer communication, enhancedControl over distributors and control over terminals to adapt to the transformation of consumption structure. On the other hand, leading enterprises have improved their ability to grasp the market environment, refused to advance aggressively, maintained channel order, and steadily promoted price increases and product upgrades. The active internal and external reform of famous wine makes the product market operation and brand building more scientific and long-term, thus obtaining a faster development speed and longer-term development space.

Veteran wines carry out management reforms during industry recovery with significant results

Sources: official websites of companies, company announcements, Open Source Securities Research Institute

Looking forward to 2022, our judgment on the liquor industry As follows:

High-end wine has both certainty and growth potential, and each price band has the highest prosperity. The continuous upgrading of residents' consumption is the basis for the expansion of high-end liquor. Since 2013, the income of Chinese residents has grown rapidly, and the average wealth level has continued to increase. On the one hand, the middle class continues to expand, and on the other hand, the wealth level of the wealthy class continues to rise. With the improvement of wealth and the increase of consumer confidence, consumers are pursuing more high-priced, high-quality commodities that can reflect their personal wealth status. From 2015 to 2020, the compound growth rate of the high-end liquor market is 24.8%. With the increase in the number of high-net-worth individuals and assets, the high-end liquor market will continue to expand.

The scale of high-end liquor continues to grow

< p id="0F8QCOHV">Data source: Wind, Open Source Securities Research Institute

The number of high net worth individuals continues to grow (unit: 10,000 people)

Data source: China Merchants Bank Private Wealth Report, Open Source Securities Research Institute

In terms of split, there is room for improvement in both volume and price of high-end liquor. The sales volume of high-end liquor in 2020 is about 80,000 tons, with a compound growth rate of 17.7% from 2015 to 2020. Benefiting from consumption upgrades and branding, it is expected that the sales of high-end liquor will maintain an average annual growth rate of around 6%-10% in the future. speed. At the end of 2019, the average monthly salary of urban residents has doubled compared to 2011, and the terminal prices of Feitian Maotai, Wuliangye, and Guojiao 1573 have just reached the highest level in 2011. Therefore, considering the increase in the consumption level of residents and the scarcity of high-end liquor production capacity, At present, the price of high-end liquor still has room for improvement.

Historical growth in high-end wine sales

Data source: Wind, Open Source Securities Research Institute

Prices of high-end wine are still within acceptable range

Data source: Wind, Open Source Securities Research Institute

The structural upgrading and national expansion of the sub-high-end price bands will continue, and the growth rate will remain the highest among all price bands. As Wuliangye and Guojiao gradually stabilized after the price increase in 2019, it provides an external environment for wine companies to push the sub-high-end price band up. The price band above 400 yuan will increase significantly from 2020, such as Jiannanchun, Honghua Since the beginning of 2020, Lang, Hongtan Jiuguijiu, etc. have continuously raised the benchmark prices, and the world has opened up and upgraded. The price band of 600-800 yuan has just been formed, and the sub-high-end representative brands are actively occupying positions and competing for the future: Yanghe launches Dream 6+, Jinshiyuan focuses on resources and develops V series, Shuijingfang carries out organizational structure and channel reform, and develops collection series, etc. On the other hand, after the recovery of demand in 2021, the national expansion of sub-high-end brands will continue.Jingfang plans to increase investment in collections in the third quarter of 2021. Under the influence of the two major driving forces of structural upgrading and national expansion, it is expected that the sub-high-end price band will maintain a relatively high growth rate.

After Wuliangye stabilized in the price band of 1,000 yuan, the sub-high-end price ceiling

Data sources: National Bureau of Statistics, Open Source Securities Research Institute

Under the background of structural prosperity, the price of popular wine Product upgrades and increased concentration are long-term trends. On the one hand, in the context of the increasingly prominent social product attributes of baijiu, consumers' pursuit of brands has increased, and distributors and terminals are more inclined to represent strong brands with faster sales in the region. The profit per bottle is high, but the circulation speed is slow. products are discarded. On the other hand, the epidemic has also accelerated the increase in the market share of regional leaders in the base market. Regional leading wine companies have strong scale and strength, perfect personnel organization, greater market control and support, and strengthened assistance and cooperation with distributors. Communication, and the weaker brands can only give up part of the market and stick to the dominant market.

In 2020, the leading Gujing tribute market share in Anhui increased significantly

Data source: Wind, Open Source Securities Research Institute

Yanghe and Jinshiyuan will increase their market share in Jiangsu market in 2020

Data source: Wind, Open Source Securities Research Institute

At present, most of the mainstream consumer prices for mass banquets in most parts of the country are at or below 200 yuan. In recent years, regional strong wine companies have also actively promoted product upgrades in the base market. With a solid channel foundation and consumption In recent years, good results have been achieved in the layout of the price band of 300-500 yuan. In the future, structural upgrading will be one of the main driving forces for the growth of popular wine faucets.

The mainstream price of liquor for banquets in most parts of the country is in the range of 100-200 yuan

Sources: Liquor Industry, Sugar and Wine Quarterly, Open Source Securities Research Institute

Summary: Liquor Structure Upgrade The industry logic of increasing concentration is still deduced. The current share price of leading companies has fallen to a reasonable range corresponding to the valuation in 2022. We continue to be optimistic about the performance of the liquor sector in the fourth quarter of 2021. Key recommendations: Kweichow Moutai, Wuliangye, Shanxi Fenjiu, Yanghe Co., Ltd. , Shuijingfang.

2. The demand for beer has declined slightly, and the price increase in the off-season is actively concerned.

2021Q3 beer revenue growth rate maintained smooth. The revenue growth rate of listed beer companies in 2021Q3 is similar to that of the industry. Except for Chongqing Beer, which benefited from Wusu and 1664’s high growth, the revenue of Tsingtao Beer, Zhujiang Beer, and Yanjing Beer remained flat and slightly decreased. In terms of sales volume, the sales volume of Tsingtao Beer, Pearl River Beer, and Yanjing Beer converged and declined simultaneously with the industry, but the improvement in product structure offset some of the impact of the decline in sales.

2021Q3 beer production down 6.5% YoY

Data source: Wind, Open Source Securities Research Institute

Beer production from January to September 2021 increased by 4.1% year-on-year

Data source: Wind, Open Source SecuritiesThe research institute

actively pays attention to the high-end process and the catalyst for price increases in the off-season. The consumption upgrade of the beer industry is not yet sufficient, and the high-end market has been greatly expanded and structurally upgraded. Subject to the beer market pattern and industry attributes, the beer industry is highly regional, and the high-end beer pattern has not yet been finalized. Actively pay attention to the leading wine companies to promote the high-end process and the performance of core products. At the same time, affected by the rising cost of upstream glass bottles, aluminum cans, barley, etc., the industry cost pressure is expected to promote the price increase of wine companies, and actively pay attention to the catalysis of price increase in the 2021Q4 off-season. From the perspective of the whole year, it is expected that the annual sales volume will be stable and slightly decreased, and the industry's prosperity will continue driven by high-end and structural upgrading, and profits are expected to maintain rapid growth.

Barley imports grow rapidly as barley prices recover

Data source: Wind, Open Source Securities Research Institute

The average import price of barley in 2021 will increase by about 50% at most

Data source: Wind, Open Source Securities Research Institute

3. Dairy products: industry demand is good, competition tends to be rational

The dairy product industry demand is good, and revenue and net profit are stable increase. The demand for dairy products in 2021Q3 is relatively strong, and the sales of normal temperature milk products are relatively good. From the perspective of listed companies, the revenue of A-share listed dairy companies in 2021Q3 increased by 8.9% year-on-year. The price of raw milk is still in an upward cycle, but dairy companies have eased cost pressures through structural upgrades, and the 2021Q3 net profit of A-share listed dairy companies has increased by 17.3% year-on-year.

2021Q3 A-share listed dairy company revenue increased by 8.9% year-on-year, and net profit increased by 17.3% year-on-year

Data source: Wind, Open Source Securities Research Institute

Dairy industry volume and price rise , there is still much room for development in the future. According to Euromonitor data, the dairy industry is currently seeing both volume and price rise. It is expected that in 2021, the sales volume of the dairy industry will increase by 4.3% year-on-year, and the average sales price will increase by 1.8%. In the future, the industry still has a lot of room for development, and the quantity and price will continue to increase: (1) Quantity: The impact of the epidemic is gradually under control, but consumers' awareness of the ability of dairy products to enhance immunity has increased, and milk consumption habits have been maintained. The number of people who drink milk and the frequency of drinking milk can be increased. At present, the per capita consumption of dairy products in low-tier cities is still low, and there is still room for improvement in the future. (2) Price: The product structure is upgraded, the subdivisions such as cheese are cultivated, the consumption scenarios are extended, and the per capita consumption amount of dairy products can also be continuously increased.

In the sub-industry, room temperature milk accounts for a relatively high proportion, and it is still the main category. The growth rate of low temperature fresh milk is fast and has great potential. The volume of low-temperature fresh milk is small and the growth rate is relatively fast. In 2020, milk delivery to households and school channels will be affected by the epidemic, which will slow down the industry growth rate to 8.5%. In 2021, the impact of the epidemic will be controllable, and the industry growth rate is expected to recover to 11.4%, faster than the 5.2% growth rate of room temperature milk. The development of low-temperature milk is limited by the mismatch of upstream milk source resources and the regional distribution of major consumer groups, the imperfect development of the national cold chain, and the preference for hot food in Chinese dietary habits. At present, the proportion of low-temperature fresh milk in my country has steadily increased year by year from 22.5% in 2016 to the current 27.5%. In the long run, low-temperature milk still has great development potential, which is in line with the trend of consumption upgrading. Room temperature milk has a long shelf life, a wide range of transportation, low transportation and storage costs, and conforms to the traditional eating habits of Chinese people. It is still the main category, accounting for about 72.5%.

Fresh milk industry to resume pre-pandemic growth rate in 2021

Data source:Euromonitor, Kaiyuan Securities Research Institute

Japan's fresh milk consumption is expected to stabilize at 98% in 2021

Data sources: Euromonitor, Open Source Securities Research Institute

Expected fresh milk consumption in China in 2021 27.5%

Data sources: Euromonitor, Open Source Securities Research Therefore,

the leading position of dairy products is stable, and the speed of market concentration is increasing. According to Euromonitor data, the CR2 of the dairy industry is expected to be 35% in 2021, and the CR2 of the liquid milk industry to reach 47.8%. The industry duopoly is stable. The leading edge of the dairy industry is stable, with strong channel power, product power and brand power, and its share continues to increase. In the long run, leading Yili and Mengniu Dairy can enhance their core competitiveness by continuously building brands, laying out the entire upstream and downstream industry chain, deepening channels, and optimizing product structure, and the industry concentration can be continuously improved.

Dairy market CR2 expected to increase to 35% in 2021

Data source: Euromonitor, Open Source Securities Research Institute

The recovery speed of dairy cattle inventory is slow, and the price of raw milk is still high . Under the tightening of environmental protection policies, non-standard retail farmers have withdrawn, and the number of dairy cows has been declining since 2016. However, the speed of replenishment of dairy cows is still relatively slow, and will stop falling and rebound in 2020, with a slight increase of 1.5% year-on-year. However, the milk production period of dairy cows is about 2 years. Although the level of pasture management continues to improve, and the per-unit yield of dairy cows has increased from 6.4 tons in 2016 to 8.3 tons in 2020, the recovery speed of the raw milk supply side is still relatively slow, while the demand side of dairy products is strong. As the demand for dairy products continues to increase, it is expected that the overall supply and demand of raw milk will be tight, and the price of raw milk will remain high in 2022.

2020 saw a slight recovery in dairy herds

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Data source: Zhiyan Consulting, Open Source Securities Research Institute

The 2021Q3 whole milk powder conversion price is lower than the domestic fresh milk price

Data source: Wind, Open Source Securities Research Institute

< p id="0F8QCOK4"> During the last round of raw milk growth, the net profit margin of the dairy industry rose. The last round of raw milk rising cycle was mainly in 2013. The raw milk supply side contracted due to the impact of cattle infectious diseases and natural disasters, and raw milk prices rose by as much as 24%. During this period, Bright Dairy took the lead in raising prices for overall products, and Yili and Mengniu Dairy also eased upward pressure on costs by adjusting the prices of star products. In 2014, the gross profit margins of Yili and Mengniu Dairy increased by 3.8 and 3.8pct year-on-year to 32.5% and 30.8% respectively. During the rising period of raw milk, the industry competition slowed down, and the net profit margins of Yili and Mengniu Dairy continued to rise.

The price of raw milk rose rapidly under the milk shortage in 2013

Data source: Wind, Open Source Securities Research Institute

Looking forward to 2022, the price of raw milk is still at a high level, and the competition in the industry is trending. to rationality. With the release of supply-side capacity, pastureThe management level is gradually improved, and the supply and demand of raw milk will gradually become more and more balanced. It is expected that the price of raw milk will remain high in 2022. With the closer continuity between upstream pastures and downstream enterprises in the dairy industry, and the increase in the scale of upstream animal husbandry, the price of raw milk will stabilize in the long run. During the mild uptrend of raw milk, it is expected that the willingness of various dairy companies to buy gifts and promotions will be low, the market investment will slow down, and the competition in the dairy industry will still be more rational.

The revenue and net profit of national dairy companies have grown steadily, while the revenue and net profit of local dairy companies have grown rapidly. According to the size of dairy companies and the size of their operating regions, the revenue of national dairy companies (Yili shares) in 2021Q3 increased by 8.5% year-on-year. The improvement in business structure and the weakening of buy-and-gift promotions led to an increase in gross profit margins and a slowdown in industry competition. Sales expense ratio The decline resulted in a year-on-year increase of 14.6% in net profit and a 0.6pct increase in net profit margin to 9.3% year-on-year. Regional dairy companies (Bright Dairy, New Dairy, Sanyuan Shares) 2021Q3 revenue increased by 12.7% year-on-year, net profit increased by 28.32% year-on-year, and net profit margin was 3%. Regional dairy companies (Yantang Dairy, Kedi Dairy, Tianrun Dairy) 2021Q3 revenue increased by 3% year-on-year, net profit increased by 46.1% year-on-year, net profit margin was 14.8%, and revenue and net profit grew rapidly.

2021Q3 national dairy company revenue increased by 8.5% year-on-year

Data source: Wind, Open Source Securities Research Institute

2021Q3 National Dairy Enterprises Net Profit Increased by 14.6% YoY

Data source: Wind, Open Source Securities Research Institute

Recommended Yili, the leader with a solid moat and a steadily increasing market share.

4. Meat products: slaughtering is gradually recovering, and meat products are more elastic

Live pig inventory Quantity and slaughter volume continued to recover. In July 2021, the slaughtering volume of live pig slaughtering enterprises was 21.95 million, an increase of 87.4% year-on-year. The number of live pigs recovered rapidly. In September 2021, the number of live pigs was 440 million, an increase of 18.2% year-on-year; the number of reproductive sows was 44.59 million, an increase of 16.7% year-on-year. Looking forward to 2022, the slaughtering volume will continue to recover, and the profit of pure slaughtering business can be further improved. Looking ahead, as the government strengthens control over the slaughtering industry, and small and medium-sized slaughterhouses are withdrawn under the environmental protection policy, the concentration of the slaughtering industry can be further enhanced.

Breeding is gradually recovering, and pig prices are expected to remain in a downward cycle in 2022H1. On November 5, 2021, the price of live pigs was 16.1 yuan/kg, -51.0% year-on-year and +1.1% month-on-month; pork prices were 22.7 yuan/kg, -48.4% year-on-year and +5.1% month-on-month, and pig prices are currently at a low level . With the support of national policies and the strong enthusiasm of farmers for pig breeding, pig breeding has gradually recovered, and the number of live pigs and reproductive sows continued to rise. It is expected that the 2022H1 pig price is still in a downward cycle, and the 2022H2 pig cycle may be reversed.

Since 2021Q1, pork prices and hog prices have been in a downward cycle

Data source: Wind, Open Source Securities Research Institute

The cost of raw materials is declining, and the profit of meat products business is more elastic. In 2021Q3, the volume and price of the meat products business of Shuanghui Development, the leader, fell, and the decline in sales was mainly due to the large sales base due to the demand for replenishment in 2020Q3; the decline in ton price was mainly due to the increase in market input and a better product structure in 2020Q3, and high-profit products were produced first when the supply exceeded demand. In 2021Q3, the decline in raw material costs will increase the profit per ton, driving the operating profit of the meat products business to increase by 3.0% year-on-year. Looking forward to 2021Q4, the sales of meat products can grow steadily, and the profit per ton is still high despite the cost advantage. Looking ahead to 2022, meat sales are expected toIt can still grow steadily, and the profit per ton can rise steadily as the scale increases and the cost falls.

The development of the leading Shuanghui has formed an industrial closed loop, the sales of meat products can grow steadily, and the profit per ton will increase steadily in the long term. Shuanghui Development's meat product sales can still grow steadily: (1) driven by new products; (2) layout of new tracks, such as catering, new casual snacks, etc.; (3) marketing innovation; (4) professional sales; ( 5) Strengthen terminal sales management; (6) Increase market input; (7) Information management drives sales growth. With the decline of the company's channels, the rejuvenation of the brand, and the adjustment of product structure, it is expected that the sales of meat products will grow steadily; the decline in cost will push up the profit per ton. The company adopts the self-propagating and self-supporting method to lay out the breeding industry, and after building a closed industrial loop of breeding, slaughtering, meat product processing and sales, it can further smooth the cost fluctuation, enhance the industrial synergy effect, and improve the profitability of the slaughtering and meat products business.

5. Condiments: performance in the third quarter improved, price transmission to hedge cost pressures

2021Q3 condiments launched The company's revenue increased slightly, and profits still declined, but the growth rate improved in the second quarter. In 2021Q3, the listed condiment companies (excluding Lotus Health and Xinghu Technology) achieved an overall operating income of 8.80 billion yuan, a year-on-year decrease of 1.6%; the overall net profit attributable to the parent was 1.50 billion yuan, a year-on-year decrease of 16.3%. The main reasons for the decline in revenue and profits: First, due to the repeated economic impact of the epidemic in some regions, the market demand for condiments is weak; second, the negative impact of community group buying is still reflected, on the one hand, the product structure is downgraded, and on the other hand, the thrust of traditional channels has declined; The third is that some enterprises increased investment at the end of June to push up inventories, and concentrated on digesting previous inventories in the early third quarter. The decline in the third quarter narrowed month-on-month, mainly due to the disappearance of the high base effect and the diminishing marginal impact of community group purchases.

2021Q3 seasoning revenue and net profit decreased by 1.6% and 16.3% respectively

Data source: Wind, Open Source Securities Research Institute

2021Q3 Sauce and Vinegar Company’s revenue and net profit decreased by 2.2% respectively vs 12.5%

Data source: Wind, Open Source Securities Research Institute

2021Q3, the net profit margins of key condiment companies all dropped year-on-year. As far as the five key condiment companies (Haitian Flavor, Zhongju High-tech, Hengshun Vinegar, Qianhe Flavor, and Tianwei Food) are concerned, the net profit in 2021Q3 will all drop. The increase in corporate profit pressure is mainly due to the weak revenue growth caused by channel disturbances, and the rising cost pressure.

The 2021Q3 net profit margins of key condiment companies have declined year-on-year

Data source: Wind, Open Source Securities Research Institute

The influence of channels is gradually weakening, and the industry generally increases prices. It is expected that condiments The trend for 2022 is upward. We have observed signs of improvement in the condiment industry: First, the negative impact of community group buying is gradually weakening. On the one hand, various companies are actively cooperating with community group buying while strictly regulating the channel order; on the other hand, community group buying It is also transitioning from the original extensive development stage to the orderly and standardized stage. Second, channel inventory has fallen, some companies have dropped to normal levels, and terminal sales have improved significantly. At the same time, a number of condiment companies have announced price increases, which have improved channel profit margins while hedging cost pressures. Taking into account the base factor in the same period and the increase in performance brought about by price increases, it is expected that the growth of the industry should improve significantly in 2022, with a clear recovery trend.

6. Braised products: revenue slowed down, gross profit margin decreased slightly

stores Gradually recovered, gross profit margin declined. In 2021Q3, the revenue of listed companies in the halogen products industry increased by 9.2% year-on-year, and the net profit increased by 54.3% year-on-year. The revenue growth rate has slowed down, mainly due to the gradual weakening of the low base effect of the epidemic in 2020. The flow of people has decreased, the frequency of long-distance travel of consumers has dropped significantly, and high-potential stores such as airports and high-speed railways of various brands still need to recover. Community street stores have gradually returned to pre-epidemic levels. The raw material prices of halogen products companies have maintained a fluctuating upward trend since 2020. With the consumption of low-level raw material reserves, the gross profit margin of companies in the industry has declined.

2021Q3 halogen products listed company's overall revenue increased by 9.2% year-on-year

Data source: Wind, Kaiyuan Securities Research Institute

The raw material prices of halogen products companies have fluctuated upwards from low levels since the epidemic

Data source: Wind, Open Source Securities Research Institute

< p id="0F8QCOLE"> Looking ahead, great companies are expected to continue to grow. In 2021, due to the weak mass consumption and the repeated impact of the epidemic in various places, the offline chain business format has been significantly impacted, and the overall growth rate of the halogen products industry is not high. Looking forward to 2022, as the epidemic situation is alleviated, it is expected that the industry is expected to accelerate recovery. The braised product industry has a high-quality track, and the overall expansion and growth is in the stage of healthy competition. Both Juewei Foods and Huangshanghuang have launched equity incentive plans to lay a solid foundation for future steady growth. Some halogen products companies continued to expand their stores, and the industry concentration increased steadily.

Key stocks: preferred leaders,

Focus on thematic investment and improvement opportunities

Key Company Earnings Forecasts and Valuations

Data source: Wind, Open Source Securities Research Institute (closing date is November 22, 2021)

Risk warning: macroeconomic fluctuation risk, consumption recovery lower than expected risk, raw material price fluctuation risk.

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