In terms of the fluctuation of the sub-sector, in the third quarter of 2024, SW baijiu, beer, dairy products, pre-processed food, condiments and fermented products, and snack food rose by 17.87%, 14.94%, 14.34%, 25.27%, 27.23%, and 19.23%, respectively.
It was reported by the Wisdom Financial APP that Sinolink Securities released a research report stating that in the third quarter of 2024, the food and beverage sector outperformed the SSE Composite Index by 5.82%, with a continued increase in concentration. By the end of the third quarter, funds favored leading enterprises, significantly increased holdings in baijiu, further concentrated allocations; institutions were more pessimistic about the demand for liquid milk, with more unwinding in Yili Holdings; in terms of beer, the market was pessimistic about the upgrade of the high-end structure in the beer sector, with increased positions in Tsingtao Brew; the snack industry experienced a pullback, resulting in a noticeable decline in the short-term sentiment of growth-oriented sectors, and individual stock valuations decreased significantly; significant increase in holdings in the frozen sector, while the condiment sector showed some differentiation.
Cinda Securities' main points are as follows:
The food and beverage sector outperformed the SSE Composite Index by 5.82% in the third quarter of 2024.
From July 1st to September 30th, 2024, the SW Food & Beverage Index rose by 18.26%, the SSE Composite Index rose by 12.44%, with the sector outperforming the index by 5.82%. Looking at the fluctuation of the sub-sectors, in the third quarter of 2024, SW baijiu, beer, dairy products, pre-processed food, condiments and fermented products, and snack food rose by 17.87%, 14.94%, 14.34%, 25.27%, 27.23%, and 19.23%, respectively. The market value of the food and beverage sector's heavyweights in funds accounted for 0.39% more of the total industry compared to the previous period in the third quarter of 2024. As of September 30, 2024, institutional heavyweights had a market value of 3.14 trillion yuan, an increase of 18.8% compared to the previous period; the allocation weight of the food and beverage sector improved compared to the previous period, with heavyweights totaling 357.5 billion yuan, accounting for 11.4% of the total industry, an increase of 0.39% from the previous period.
The concentration in the third quarter of 2024 continued to increase, with funds favoring leading enterprises.
Specifically, in the third quarter report of funds in 2024, the Top 1-4 heavyweights in the "Moutai, Wuliangye, Yibin, Fen" category accounted for 78.8% of the food and beverage sector, an increase of 2.10% from the previous period; Top 1-10 accounted for 91.6%, a decrease of 0.17% from the previous period; Top 1-20 accounted for 97.3%, an increase of 0.49% from the previous period. Compared to the mid-year report of funds in 2023, the positions of Hebei Hengshui Laobaigan Liquor (from 24th to 12th place) and Mengniu Dairy (from 30th to 20th place) showed significant improvements in the third quarter report.
Significantly increase positions in baijiu, further concentration of allocation.
In 2024Q3, the fund's heavyweight position in baijiu was 323 billion yuan, up +23.8% quarter-on-quarter, accounting for 90.4% of the food and beverage industry, up 0.5 percentage points quarter-on-quarter. In terms of heavyweight holdings, Kweichow Moutai increased by +14.6% quarter-on-quarter, Wuliangye increased by +10.4%, Luzhou Laojiao decreased by -16.1%, Shanxi Xinghuacun Fen Wine Factory decreased by -0.9%. In the mid-to-high-end segment, Shede Spirits decreased by -95.2% quarter-on-quarter, Sichuan Swellfun increased by +156.9%, Jiugui Liquor increased by +7.0%. For Su-style liquor, Jiangsu Yanghe Brewery Joint-Stock increased by +3.0% quarter-on-quarter, Jiangsu King's Luck Brewery Joint-Stock decreased by -25.2%. As for Huizhou-style liquor, Anhui Gujing Distillery decreased by -7.4%, Anhui Yingjia Distillery increased by +31.3%, Anhui Kouzi Distillery increased by +10.6%, Anhui Golden Seed Winery decreased by -100%.
Yili reduced positions significantly, while Mengniu increased positions significantly.
In 2024Q3, the fund's heavyweight market cap for dairy products was 8.5 billion yuan, up +11.3% quarter-on-quarter, accounting for 2.4% of the food and beverage industry, down 0.3 percentage points quarter-on-quarter, ranking second. Inner Mongolia Yili Industrial Group's heavyweight holdings decreased by -14.5% quarter-on-quarter, indicating institutions have a relatively pessimistic view on liquid milk demand. Meanwhile, Mengniu Dairy's heavyweight holdings saw a substantial increase, up +169.6% quarter-on-quarter, with the bank believing it is mainly due to institutional recognition of the undervaluation of Mengniu.
The market is relatively pessimistic about structural upgrades, with an increase in Qingdao Brewery positions.
In 2024Q3, the fund's heavyweight market cap for beer was 7.7 billion yuan, up +6.5% quarter-on-quarter, accounting for 2.1% of the food and beverage industry, down 0.3 percentage points quarter-on-quarter. The allocation weight continues to decline, with the bank attributing it to market pessimism towards high-end products. In terms of positions, Tsingtao Brewery still leads with total positions of 4.9 billion yuan between A and H shares, accounting for 64% of the beer industry. In terms of heavyweight holdings, Tsingtao Brewery increased by +2.7% quarter-on-quarter, Tsingtao Brewery Joint-Stock decreased by -3.6%. Next is China Res Beer with heavyweight positions totaling 1.3 billion yuan, accounting for 17%, with heavyweight holdings decreasing by -15.6% quarter-on-quarter. Chongqing Brewery ranks third, with heavyweight positions of 1 billion yuan, accounting for 17%, and a quarter-on-quarter decrease of -33.7% in heavyweight holdings.
Snack industry retraced, valuations of growth stocks declined significantly.
In 2024Q3, the fund's heavyweight market cap for snack food was 2.2 billion yuan, up +27.8% quarter-on-quarter, accounting for 0.6%, with minor changes quarter-on-quarter. This is mainly due to the market's short-term sentiment decline towards growth-oriented sectors; in terms of heavyweight holdings, Jinzai Food Group decreased by -1.0% quarter-on-quarter; Chacha Food increased by +6.8%; Three Squirrels increased by +344.3%; Yanker Shop Food increased by +15.9%; Wan Cheng Group's heavyweight holdings increased by +146%. Juewei Food Co., ltd. decreased by -53.6% quarter-on-quarter.
The frozen food sector increased its positions significantly, while the condiment sector showed some differentiation.
In 2024 Q3, the fund held a heavy market value of 5.1 billion yuan in the pre-processed food sector, a year-on-year increase of +76.5%, accounting for 1.4%, a month-on-month increase of 0.4%. Anjoy Foods' heavy holdings increased by 42.1% month-on-month, Ligao Foods' heavy holdings increased by 146% month-on-month. In 2024 Q3, the fund held a heavy market value of 4 billion yuan in the condiment and fermentation sector, with a year-on-year increase of +29.1%, accounting for 1.1%, and a month-on-month increase of +0.1%. Jonjee Hi-Tech's heavy holdings decreased by 42.4% month-on-month, Haitian Flavouring's heavy holdings increased by 24.3% month-on-month, and Angel Yeast's heavy holdings decreased by 30.5% month-on-month.
Investment advice:
In the baijiu sector, recommended leading brands with prominent moats and strong performance stability: Kweichow Moutai (600519.SH), Wuliangye (000858.SZ); Shanxi Xinghuacun Fen Wine (600809.SH) with relatively independent momentum and a strong national single-product foundation; Luzhou Laojiao (000568.SZ) deploying a matrix strategy and still possessing national elasticity; Local liquor leaders benefiting from local consumption upgrades and competitive advantages Gujing Gongjiu (000596.SZ)/Yingjia Gongjiu (603198.SH)/Jiangsu King's Luck Brewery (603369.SH).
In the mass market sector, recommended Qingdao Brewery (600600.SH), Chongqing Brewery (600132.SH), Qianhe Condiment and Food (603027.SH) with improved costs; Recommended high dividend-paying symbol Mengniu Dairy (600887.SH), watching the undervalued Yili Industrial Group (02319); Recommend high-growth performers Bai Long Innovation Garden (605016.SH), Dongpeng Beverage (605499.SH); Recommend the top brand in the volume snack industry, Wan Chen Group (300972.SZ) focusing on improving channel efficiency; Recommend the leading spicy snack brand Weilong Delicious (09985), vying for the spicy strip and classic konjac snacks, expected to start a new round of high growth in 2024; Recommend Three Squirrels (300783.SZ) with noticeable effects of supply chain upgrades; Recommend Salted Fish Shop (002847.SZ), Ganyuan Foods (002991.SZ), Haoxiangni Health Food (002582.SZ), and Happy Family (300997.SZ) actively embracing new channels in the volume snack sector; Recommend Jinzai Food (003000.SZ) increasing penetration rates through large packaging and benefiting from category integration dividends.
Focus on solidly managed, excellent cash flow Melon Seed leader Chacha Food (002557.SZ), and actively adjusting Bestore Co.,Ltd. (603719.SH); Focus on Jonjee Hi-Tech (600872.SH) with reform logic.
Risk factors: food safety risks, consumption recovery falling short of expectations, raw material price fluctuations.
