Benefiting from post-pandemic demand recovery, China's beer industry produced 35.555 million kiloliters (yoy +0.3%) in 2023, but there is still a gap compared to 2019.
Judging from the price point of view, the upgrading trend in China's beer industry is a slowdown or not a downgrade, and the gross sales gap of enterprises continues to rise. In 2023, the number of domestic catering companies suspended nearly 1.3 million, more than double that of 2022.
The ready-to-drink scene is recovering slowly as the main position for upgrading the beer structure, compounding the pressure on overall consumption power. The high-end trend has slowed down, but the mid-tier products of wine companies have maintained good growth.
Major domestic wine companies all achieved low to medium single-digit increases in tonnage prices in 2023. Demand for upgrades continues, and there is still room for profit margins to increase.
The valuation has reached the lowest range in history. In December 2023, the beer allocation ratio of the fund was 0.37%, falling to the level of June 2020. The market value of beer was the lowest in history in the past 13 years compared to the overall market value of A-shares in December 23. The valuation of individual beer stocks was low, and the allocation value was prominent.
Dongwu Securities released a research report saying that beer sales were good in 2024Q1. This year, various wine companies will make structural improvements and profit protection their strategic priorities this year to further cultivate their strong markets. There is room for price increases and fee reductions for some products, and structural upgrades continue.
At the same time, companies tend to control spending in competitors' strong markets to improve cost efficiency. Profitability is expected to continue to improve. With the pro-cyclical scenario recovering, the 2024 peak season is worth looking forward to.
Currently, the stock prices of high-quality stocks with performance support in the sector are at the lower limit of historical valuation, and there is plenty of room for improvement.
Beer-related businesses:
Budweiser Asia Pacific (01876), China Resources Beer (00291), Tsingtao Brewery (00168), Beijing Holdings (00392)