In the third quarter, the performance of liquor companies generally slowed down, and channels are preparing for next year. The long-term logic of mainstream products remains unchanged, and it is recommended to focus on performance surpassing expectations.
According to the Securities Times app, Debon Securities released research reports stating that in the third quarter, the revenue and profit growth of liquor companies slowed down. Looking at different price segments, the revenue growth rates of high-end liquor, mid-to-high-end liquor, and property liquor in Q3 2024 were +9.4%/-18.6%/+3.2% respectively. The growth rates of mid-to-high-end and property liquor decreased significantly compared to the second quarter, and high-end liquor also experienced a slowdown. The performance of beer companies in the third quarter varied. Overall performance was under pressure due to weak demand recovery, weather, and other factors, but it is expected that the average price per ton of major beer companies will maintain a stable and rising trend for the whole year. In addition, as end demand continues to weaken, the performance of dining supply chain companies in the third quarter is generally under pressure. Currently, the valuation levels of most companies are at historically low levels with sufficient safety margins.
Debon Securities' main points are as follows:
Baijiu: The performance of liquor companies slowed down in the third quarter, preparing for next year with channel adjustments.
This week, the third-quarter financial reports of listed liquor companies have been disclosed. In the third quarter, revenue and profit growth of liquor companies both slowed down. Looking at different price segments, the revenue growth rates of high-end liquor, mid-to-high-end liquor, and property liquor in Q3 2024 were +9.4%/-18.6%/+3.2% respectively. The growth rates of mid-to-high-end and property liquor decreased significantly compared to the second quarter, and high-end liquor also experienced a slowdown. The net profit growth rates of high-end liquor, mid-to-high-end liquor, and property liquor in Q3 2024 were +9.3%/-28.8%/+1.9% respectively. Due to industry pressure among other reasons, the profit growth rates at different price segments are slower than the revenue growth, with some mid-to-high-end brands experiencing significant profit margin reduction due to obvious scale contraction.
Debon Securities believes that the current situation is still within the bottom range of fundamentals. Previous policies were intensively introduced, and policy transmission still requires time. They are bullish on future price increases. In the baijiu sector, it is recommended to focus on industry leaders such as Kweichow Moutai, Wuliangye Yibin, Luzhou Laojiao, Shanxi Xinghuacun Fen Wine Factory, and Anhui Gujing Distillery.
Mainstream products: The long-term logic of various sub-sectors remains unchanged, and it is recommended to focus on symbols with performance above expectations.
Beer: The performance of the third quarter report is relatively differentiated. In 2024Q3, sales volumes of Tsingtao Brewery, Chongqing Brewery, and Beijing Yanjing Brewery decreased by -5.1%/-5.6%/+0.2% year-on-year, and prices per ton decreased by -0.2%/-2.4%/+0.03% year-on-year. The overall performance is under pressure due to weak demand recovery and weather impact, but it is expected that the main beer companies will maintain a stable and rising trend in prices per ton for the whole year. Debon Securities believes that with the introduction of stimulus consumer policies, terminal demand is expected to improve, and the recovery of dining and other current drinking scenes is expected to drive the upgrade of the beer structure, recommending a focus on relatively stable high-quality leading companies and reform momentum upward targets.
Dining Supply Chain: The overall performance of the third quarter report is under pressure, expecting subsequent recovery in terminal demand. Due to continued weakening terminal demand, the overall performance of dining supply chain companies in the third quarter report is under pressure. Currently, the valuation levels of most companies are at historically low levels with sufficient safety margins. Subsequently, with the promotion of policies to boost terminal consumption, company performance is expected to stabilize and rebound, recommending a focus on leading companies with stronger performance resilience and flexible targets with expected demand recovery.
Leisure Snacks: The company's performance has further differentiated, looking forward to the performance of high momentum targets as the peak sales season approaches. The performance of leisure snack companies in Q3 has further differentiated, with top high momentum companies still showing growth resilience. The upcoming Chinese New Year peak season is expected to bring the possibility of performance exceeding expectations. Currently, the income profit margin levels of leading companies are expected to remain stable, recommending a focus on top companies with excellent capabilities and strong growth resilience.
Dairy Products: In the first half of the year, Yili and Mengniu both slowed down their shipment pace, maintaining reasonable levels of channel and terminal inventory. It is expected that starting from Q3, the freshness of terminal products will improve, and sales momentum is expected to gradually recover. It is advised to pay attention to the Q4 Spring Festival stocking situation. Combining the current low valuation levels, it is recommended to focus on leading companies with strong upstream and downstream supply chain, channels, and product control capabilities, as well as sectors where annual profits are expected to exceed expectations under the cost dividend.
Investment advice:
Baijiu Sector: Focus on Kweichow Moutai (600519.SH), Wuliangye Yibin (000858.SZ), Luzhou Laojiao (000568.SZ), Shanxi Xinghuacun Fen Wine Factory (600809.SH), Anhui Gujing Distillery (000596.SZ), etc. Beer Sector: Recommend Tsingtao Brewery (600600.SH), Chongqing Brewery (600132.SH), Beijing Yanjing Brewery (000729.SZ), and suggest paying attention to China Res Beer (00291). Soft Drinks Sector: Recommend focusing on Dongpeng Beverage (605499.SH), Nongfu Spring (09633).
Condiment Sector: Recommend focusing on Jonjee Hi-Tech Industrial and Commercial Holding (600872.SH), Foshan Haitian Flavouring and Food (603288.SH). Dairy Product Sector: Recommend paying attention to Inner Mongolia Yili Industrial Group (600887.SH), Mengniu Dairy (02319).
Dining Supply Chain Sector: Recommend focusing on relatively stable leading companies and elastic targets with improved downstream demand performance, such as Anjoy Foods Group (603345.SH), Jinzai Food Group (300973.SZ), Qianwei Yang Kitchen (001215.SZ), Baoli Food (603086.SH), etc. Food Additives Sector: Recommend focusing on Bailong Chuangyuan (605016.SH), Chenguang Biotech Group (300138.SZ).
Leisure snack sector: It is recommended to pay attention to dividend continuation symbols such as Yanker Shop Food (002847.SZ), Jinzai Food Group (003000.SZ), and Ganyuan Foods (002991.SZ), as well as potential turnaround symbols such as Three Squirrels Inc. (300783.SZ), ChaCha Food (002557.SZ), and so on.
Risk warning: Risks of macroeconomic downturn; food safety issues; intensified market competition; price increases lower than expected.
