According to the Zheshang Securities research report obtained by the Intellectual Finance APP, the mass market achieved a revenue growth rate of 0.17% in 24Q3, a decrease of 5.40 percentage points. Looking at different sectors, the leisure snacks sector and condiment sector showed relatively good performance in the 24Q3 results. From the perspective of offline retail, based on data from Rightaway Win, the sales of offline retail (food, beverages, alcohol, and daily chemicals) in 2024Q3 decreased by 10% year-on-year. Among them, the number of orders decreased by 2.91% year-on-year, the customer unit price decreased by 7.31% year-on-year; but compared to 2024Q2, offline retail sales in 2024Q3 have increased. The growth rate of the dining industry in 24Q3 has significantly slowed down, with a year-on-year increase of 3.1% in September, already lower than the 4.2% year-on-year growth rate of total retail sales of consumer goods.

Zheshang Securities' main points of view are as follows:

The revenue growth rate of mass market slowed down in 2024Q1-Q3, while the profit continued to grow; the profit growth rate in 24Q3 increased compared to the previous year, with good performance in the soft drinks and condiment sectors.

The performance results for 2024Q1-Q3 have been disclosed with the mass market achieving a revenue growth rate of 0.17%, a decrease of 5.40 percentage points; in terms of profit, achieving a growth rate of 10.71%, an increase of 4.23 percentage points compared to the previous year. In 24Q3, the mass market's revenue achieved a year-on-year growth of 1.75%, a year-on-year growth rate of -1.60%; the net profit attributable to the parent company achieved a year-on-year growth of 4.45%, a year-on-year growth rate of -10.71%. Looking at different sectors, the leisure snacks sector and condiment sector showed relatively good performance in the 24Q3 results.

In 2023, looking at the sector's price changes, the soft drinks sector saw an increase; from the beginning of 24Q1 to September 30 of the same year, the condiment sector led the gains, while snacks, dairy products, and soft drinks also saw an increase.

In 2023, mass market experienced a 15.5% decline; from the beginning of 2024 to September 30, the mass market achieved an 11.2% increase, with the condiment sector showing the largest increase and cured products with the largest decline. In 2023, only the soft drinks sector saw an increase, reaching 4.6%, with the cured products sector experiencing the largest decline at -42.6%; from the beginning of 2024 to September 30, the condiment sector saw the largest increase, achieving a 21.1% gain, while the cured products sector experienced the largest decline, achieving a 21.5% decrease.

From the perspective of individual stocks, the top five gainers in 2023 are Wanchen Group, Lianhua Health, Shandong Huifa Foodstuff, Bailong Innovation Park, and Jilin Quanyangquan; the top five losers are Juewei Food Co., Ltd., Shanghai Milkground Food Tech, Ligao Food, Chongqing Brewery, and Foshan Haitian Flavouring and Food; the top five gainers from the beginning of 2024 to September 30 are Dongpeng Beverage, Beijing Yanjing Brewery, Foshan Haitian Flavouring and Food, Guangzhou Zhujiang Brewery, and Pinlive Foods.

General Brand's offline retail performance in Q3 2024 (1): The sales revenue decreased year-on-year but improved compared to the previous month.

According to the data from Ma Shangying, the sales revenue of the four major categories (food, beverages, alcohol, and daily chemicals) for offline retail in Q3 2024 decreased by 10% year-on-year. Among them, the number of orders decreased by 2.91% year-on-year, and the customer unit price decreased by 7.31% year-on-year; but compared to Q2 2024, there was a slight increase in offline retail revenue. With more frequent outdoor activities in the summer of Q3, both sales revenue and the number of orders increased significantly compared to Q2. It is worth noting that the average spending per order in Q3 also increased compared to Q2, which may be related to the Mid-Autumn Festival and the upcoming National Day holiday in Q3.

Based on the orders in selected categories, looking at the indicator data of sales revenue, sales volume, and order quantity, most categories showed a year-on-year decline. Plant-based beverages and sports drinks showed significant year-on-year growth in sales revenue, sales volume, and order quantity. In comparison, ready-to-drink tea has been leading in the first two quarters.

General Brand's offline retail performance in Q3 2024 (2): The dining channel is still in the process of recovery.

In September 2024, dining revenue was 441.7 billion yuan, an increase of 3.1% year-on-year. The growth rate of the dining industry in Q3 2024 has significantly slowed down, with the year-on-year growth rate of 3.1% in September falling below the overall growth rate of 4.2% in total retail sales of consumer goods. In terms of store size, as of September 2024, there have been more net closures of dining stores over the past year.

In terms of structure, in the first half of 2024, the scale of dining stores in first and second-tier cities has experienced a significant negative growth, signaling intensified competition. In contrast, lower-tier markets continued to grow slightly and have vast untapped potential. Consumers are increasingly inclined to consume near their homes, with consumption heat gradually shifting towards community stores. For example, the accelerated expansion of community brands like Nanchengxiang and Ziguangyuan, while multi-brand companies like Haidilao and Xiaolongkan are also entering the community dining market, expanding their presence.

Investment recommendation: Main themes include demand recovery, high economic prosperity, and cost advantages.

In 2024, Volkswagen is facing certain pressure on the income side due to factors such as soft terminal demand and intensified competition, but the cost dividend and cost control effects are evident, and profit repair is significant. Looking ahead to next year, with the recovery of domestic demand, Volkswagen still presents good investment opportunities.

1) From the perspective of the repair order, categories with cost-effective advantages that meet current consumption trends will continue to recover, such as the snack sector. Key symbols to focus on include: Three Squirrels Inc. (300783.SZ), Yanker Shop Food (002847.SZ), Jinzai Food Group (603650.SH), Wanchen Group (300972.SZ), etc. At the same time, if looking at the previous damage extent: dining supply chain, frozen foods, condiments & compound condiments, and beer will also gradually recover. Key symbols to focus on include: Anjoy Foods Group (603345.SH), Foshan Haitian Flavouring and Food (603288.SH), Sichuan Teway Food Group (603317.SH), Tsingtao Brewery (600600.SH,00168).

2) High-quota sub-sectors still have dividends: soft drinks, snacks, health products, etc. When selecting symbols, you can consider: Dongpeng Beverage (605499.SH), Nongfu Spring (09633), Three Squirrels Inc., Yanker Shop Food, Jinzai Food Group, Sirio Pharma (603077.SH).

3) Some sub-industries are expected to enter a new round of cost cycles next year, and profitability will continue to recover, such as dairy products, food processing sectors; major symbols include: Inner Mongolia Yili Industrial Group (600887.SH), Angel Yeast Co.,Ltd. (600298.SH), etc. As a result, the recommended symbols are mainly: Anjoy Foods Group, Three Squirrels Inc., Tsingtao Brewery, Inner Mongolia Yili Industrial Group.

Risk Warning: Food safety risks; soft terminal demand; rising raw material prices, etc.