Although overall demand in the food and beverage industry is still lackluster, the value space of leading companies has been revealed after the valuation has fully declined, and a mid-line layout is proposed.
The Zhitong Finance App learned that Huachuang Securities released a research report saying that although overall demand in the food and beverage industry is still lackluster, after valuations have fully declined, the value space of leading companies has already been revealed, and a mid-line layout is recommended. Looking at the short-term pace, starting in May, concentrated categories of festival consumption such as liquor entered the off-season. The core depends on meeting business needs, while beer, beverages, etc. enter the peak summer season, and there are many catalysts. Currently, leading wine companies have good inventories and actual operations are still healthy. The fundamentals of volume and price are relatively stable, and the annual performance is highly deterministic. Currently, the valuation level of the liquor sector is not high. It is recommended to focus on targets with better fundamentals. In the mass goods sector, it is recommended to select structural flexibility to seize the opportunity of excessive decline.
The views of Huacheng Securities are as follows:
Liquor sector: Leading wine companies emphasize share and solidify the foundation in the off-season.
The overall feedback from the May Day channel was good, benefiting from wine companies actively regulating the pace of delivery, a solid market foundation for major products in each price band, the gradual elimination of industry inventories, and increasing share demands from leading companies in all price bands. Looking ahead to the second half of the year, the business strategies of leading wine companies are gradually becoming clear, and channel confidence is stabilizing and improving. The variables are the strength and sustainability of macroeconomic policy efforts to boost demand. Specific company and regional feedback is as follows:
Wuliangye feedback: Business ideas are clear, and the 1,000 yuan price band advantage is enhanced. The core single product, Eighth Generation Five Control, raised the price, and products such as 1618, low-grade, and newly launched 45 degrees grabbed the share, and the channel side continued to gain strength in specialty stores.
Feedback from the Shanxi Fenjiu Shareholders' Meeting: Combining offense and defense, seeking further goals. Quality/culture/market/management are making more efforts, mainly promoting the core 10 billion single product Blue and White 20. The pace of investment in Blue and White 30 resources is accelerating. Lao Baifen/Panamanian products are expected to be upgraded. The channel side focuses on growth outside the province, and the cost side uses digital and accurate marketing.
Feedback from the Huazhong Liquor channel: Terminal sales remained stable, and tactical products such as Wuliangye 1618 had excellent results. Sales have been steady since March. By scenario, business banquets and wedding banquets have remained flat, and there has been a slight increase in baby banquets. Looking at specific branches, Maotai's non-standard product is expected to grow by 20%, and its boutique bottling performance is excellent. Wuliangye is focusing on raising prices. New products at 45 degrees and 68 degrees contributed to the increase, and 1618 strengthened the banquet layout and red envelope distribution. Lao Cellar has expanded bottling and well digging channels. The 60 edition of the special song has excellent wine quality feedback. The first song is imported into red envelopes that scan the code, which is expected to achieve high growth. Alcoholics have improved their sales within the province and drunkards have made efforts to build a base market in Hunan. Outside the province, 22 core markets have been consolidated, no new investment is being promoted, and the fundamentals continue to be repaired.
Popular products: The state of the enterprise has improved, and the year is cautiously optimistic.
After the end of the Spring Festival season, many companies reported that external demand had declined somewhat month-on-month, but since May, it showed an improvement trend, which was basically in line with the companies' own expectations. As a result, related business activities continued according to the original plan, maintaining cautious and optimistic expectations throughout the year. Beer and beverages such as Huarun, Dongpeng, and Happy Home are actively preparing for the peak season. The promotion of related products, display and distribution of related products progressed in an orderly manner, while condiment companies that were under a lot of pressure last year, such as Haitian and Zhongju, continued to straighten out their internal business conditions. The current business situation is improving. Frozen Yasui and Ligao have maintained steady operations, and profits are expected to improve in the context of cost reduction and efficiency.
Feedback from related companies: 1) China Resources Beer: The upgrade continues to advance, driving the release of performance. 2) Dongpeng Drink: Actively preparing for the peak season, full of growth momentum. 3) Qiaqia Food: Channel expansion is active and orderly, and overseas routes are more clear. 4) Happy Home: Actively promoting business and channel development around the “Coconut +” matrix. 5) I miss you so much: Channel single products resonate, and revenue acceleration is more effective. 6) Xianle Health: BF optimizes supply chain management and has sufficient confidence in motivational goals throughout the year. 7) Yasui Foods: Continued steady operation and optimized capital expenditure. 8) Ligao Foods: Optimize individual products in bakery to reduce costs and increase efficiency. 9) Haitian flavor industry: improving business status and setting the tone for high-quality growth. 10) Zhonghu Hi-Tech: Reforms continue to advance, saving potential for growth. 11) Richen Co., Ltd.: New products contribute more and have sufficient operating potential. The companies exchanged detailed core feedback, please see the text.
Investment suggestions: Short-term preferences determined, mid-line layout space.
Although overall industry demand is still lackluster, after valuations have fully declined, the value space of leading companies has been revealed, and a mid-line layout is proposed. Looking at the short-term pace, starting in May, concentrated categories of festival consumption such as liquor entered the off-season. The core depends on meeting business needs, while beer, beverages, etc. enter the peak summer season, and there are many catalysts. Currently, select specific sections:
Liquor: Focus on leading brands at various prices, with Maowu, the leader, preferred at the bottom. Currently, leading wine companies have good inventories, and actual operations are still healthy. The fundamentals of volume and price are stable, and the annual performance is highly certain. Currently, the sector's valuation level is not high, so it is recommended to focus on targets with better fundamentals. Preferred industry leader Kweichow Moutai (600519.SH) (with sufficient operating license, stable performance as Taishan, accelerated sprint 14 5) and 1,000 yuan price with leading Wuliangye (000858.SZ) (marginal improvement in operation, improved price, and high dividend policy); recommend the second-high-end leader Shanxi Fenjiu (600809.SH) (business inertia ensures rapid growth, national brand tension is sufficient); continue to recommend Luzhou Laojiao (000568.SZ) (strong team ability, report continuity is still determined), and current regional leader). 603369.SH
Popular products sector: Select structural flexibility to seize the opportunity of a sharp decline. As overall demand recovery is weak and economic differentiation between sectors intensifies, three main lines of recommendation are recommended: one is the medium term logically determined and flexible sector, including China Torch Hi-Tech (600872.SH) (equity incentives have been implemented, target guidance is positive, and the plight is expected to reverse), Dongpeng Drinks (605499.SH) (strong potential energy, sufficient spare capacity, high growth sustainability is safe); second, the beer and restaurant supply chain with clear medium- to long-term logic due to strong demand suppression in the early stages, including China Resources (00291), and Tsingtao Brewery (600600.SH) Wait; third, the dividend rate is already Attractive leaders, such as Yili Co., Ltd. (600887.SH).
Risk warning: Terminal demand recovery falls short of expectations, industry competition intensifies, price increases fall short of expectations, etc.