Zhongyin Securities released a research report stating that there are two important characteristics of food and beverage at this stage: 1) the mass consumption price has strong growth momentum. At this stage, there is an obvious stratification of consumption. High-end and business demands are weak, but the mass price range is still upgrading. 2) Second-tier leading companies are expected to usher in new development opportunities. With the fragmentation of channels and marketing methods, traditional channels have been greatly impacted, the scale barrier of first-tier leading companies has been weakened, and second-tier leading companies are expected to usher in new development opportunities. Focus on second-tier leading companies with unique products, stable consumer base, and clear national or regional expansion paths.

The main points of BOC International are as follows:

Last week, the food and beverage sector rose and fell by -2.3%, ranking 26th among all sectors.

In the food and beverage sub-sectors, condiments and fermented products and health products had the largest increase in both rising and falling, at -1.2% and -1.4%, respectively. Preprocessed foods and beer had the largest decrease in both rising and falling at -3.1% and -3.9%, respectively. As of May 31, the PE-TTM of the liquor sector was 22.8X and the PE-TTM of the food and beverage sector was 22.7X.

Industry data

According to today's liquor prices, Bairong liquor prices, and Tonghuashun data, the price of a whole box of Feitian ranged from 2727-2750 yuan from May 23 to May 31, and the price of a single bottle of Feitian ranged from 2518-2523 yuan. Pu Wu batch price was 940 yuan, and the national cellar 1573 batch price was 875-880 yuan.

As of May 31, the national average pig sales price was 8.81 yuan/jin, up 4.6% from the previous week and 20.9% year-on-year. The national pig-to-grain price ratio was 7.21, up 0.54% from the previous week and 1.87% year-on-year. The prices of duck necks, duck collar bones, and duck feet were 9.9 yuan/kg, 9.2 yuan/kg, and 25.5 yuan/kg, respectively. As of May 24, the domestic fresh milk price was 3.37 yuan/kg, down 0.3% from the previous week and 12.5% year-on-year.

According to data from the National Bureau of Statistics, the output of scaled beer enterprises in April was 2.764 million kiloliters, down 9.1% year-on-year; the cumulative output from January to April was 11.501 million kiloliters, up 2.1% year-on-year. In April, the output of scaled liquor enterprises was 358,000 kiloliters, up 2.6% year-on-year; the cumulative output from January to April was 1.556 million kiloliters, up 5.9% year-on-year.

Key points

Affected by the weak demand side, the food and beverage sector ran slower than the CSI 300 in May.

In the past month, the food and beverage sector rose and fell by -3.6%, ranking 21st in terms of rising and falling among 31 industries, running slower than CSI 300 (-1.2%) 2.4%, of which liquor fell by 3.9%, other types of alcohol and dairy products had the largest increase in both rising and falling, at +0.2% and -0.5%, respectively. Condiments and fermented products and snacks had the largest decrease in both rising and falling, at -7.2% and -7.8%, respectively. Judging from social and retail data in April, the growth rate of catering slowed down, with year-on-year growth of only 4.4%, of which catering above the quota had a zero year-on-year increase, and the data of tobacco and alcohol increased at a slower rate of 8.4%. The price of Maotai liquor is still at a low level, around 2520 yuan per batch last week. The bank believes that the recovery pace of business demand from April to May is slow, and the base is high due to the recovery of banquet demand in the same period of the previous year. The bank predicts that the delivery pace of liquor companies is slow. In May, the market still prefers high dividend stocks, and the leading dairy products relatively resist decline, with a smaller decline in the dairy products sector.

The bank believes that there are two important characteristics of food and beverage at this stage, focusing on investment opportunities in mass price and second-tier leading companies.

1) The mass consumption price has a strong growth momentum. At this stage, there is an obvious stratification of consumption. High-end and business demands are weak, but the mass price range is still upgrading.

2) Second-tier leading companies are expected to usher in new development opportunities. With the fragmentation of channels and marketing methods, traditional channels have been greatly impacted, the scale barrier of first-tier leading companies has been weakened, and second-tier leading companies are expected to usher in new development opportunities. Focus on second-tier leading companies with unique products, stable consumer base, and clear national or regional expansion paths.

In June, combining the above two characteristics of the industry and changes in the company itself, the industry focus is bullish on Shanxi Xinghuacun Fen Wine (600809.SH), Chengde Lulu (000848.SZ), and Anhui Kouzi Distillery (603589.SH), and recommends attention to Zhejiang Guyuelongshan Shaoxing Wine (600059.SH) and Jonjee Hi-Tech Industrial and Commercial Holding (600872.SH).

Recommended combination: Shanxi Xinghuacun Fen Wine, Chengde Lulu, Anhui Kouzi Distillery, Luzhou Laojiao (000568.SZ), Tsingtao Brewery (600600.SH).

Risk warning: Fluctuations in raw material prices, food safety incidents.