Core view: The off peak season has clearly become the norm. More attention has been paid to the low level of the industry. From May 20 to May 24, the food and beverage index fell by 2.7%, ranking the seventh in the first tier sub industry, about 0.7 pct lower than Shanghai and Shenzhen by 300. Dairy products (+1.8%), other foods (+0.0%) and meat products (- 0.7%) are relatively leading in the sub industry. In terms of individual stocks, Mogao, Chunxue Food and Changyu led the way; Huangshi Group, Juewei Food and Quanyangquan were among the top decliners. This week, the market adjusted its volume from rising to falling. The dividend sector became the main direction of the market, and the food and beverage sector also experienced a correction. The second quarter is a traditional slack season for consumption, and consumption data indicators such as CPI and social zero data have not shown a strong performance. We believe that the slack and peak seasons may be the market normalcy in recent years. In the process of bottoming out business demand, more consumption is driven by residents' demand, which has strong seasonal characteristics, and the release of slack season consumption scenarios is not strong, In the context of low expectations of per capita disposable income, residents' consumption is more conservative. We believe that the current industry demand is still in a slow recovery process, but we can also see that some positive factors are emerging. In terms of the external environment, the unexpected changes in the real estate policy are promoting the improvement of the overall economy; From the perspective of the sector itself, the channel order was relatively stable in the off-season, the inventory of leading enterprises did not continue to increase, the market rating of high-end liquor remained stable, and the industry was accumulating potential energy to prepare for the arrival of the next peak season. After the recent correction, the valuation of the sector has approached the level at the beginning of the year, which implies the market's expectation of weak economic growth in the future. At present, the internal differentiation of the plate is increasing, and the leading enterprises can still maintain stable growth by virtue of brand and channel advantages, with strong performance certainty and sustainability. In addition, most leading enterprises have the trend of increasing dividends, and "stable growth, undervalued, multi dividend" may become the common characteristics of leading enterprises in the future. At present, the capital market is more inclined to theme investment. The industry rotates quickly and lasts for a short time. However, food and beverage are at the bottom of the fundamentals and the market is expected to be low. It is suggested to pay more attention to the low level layout. In the short term, we can focus on the consumption of the upcoming Dragon Boat Festival. We select four main lines of food and beverage: first, select varieties with stable and upward fundamentals, and arrange liquor leaders at various prices; Second, pay attention to the sub industries with rising prosperity and still in the dividend period, such as leisure snacks; Third, pay attention to the investment opportunities that enterprises are in reverse dilemma due to their own business cycle; Fourth, considering the changes in upstream costs, the layout of cost falling varieties.
Recommended portfolio: Wuliangye, Shanxi Fenjiu, Guizhou Maotai, Fuling Zhacai (1) Wuliangye: 2024Q1 performance meets expectations, the company strictly controls goods, the rating continues to rise, and channel confidence increases. 1618. Low alcohol Wuliangye and other non-standard liquors carry more achievements, and the company has entered the channel improvement cycle. (2) Shanxi Fenjiu: The revenue of the first quarter report met the expectation, and the profit exceeded the expectation. Fenjiu continues its prosperity, with a high certainty of growth in the medium term. At the same time, Xinghua Village and Zhuyeqing are working hard to upgrade the product structure of Fen brand, and the process of nationalization is accelerated. (3) Guizhou Moutai: 2024Q1 revenue slightly exceeded expectations, and the reform process will be deepened in the future. After the price increase, the momentum will be released, and the company's potential accumulated in this cycle will enter the release period. (4) Fuling pickle: the company has laid out catering channels and e-commerce platforms, and new channels may contribute to the increase; At the same time, we will increase the promotion of the ground pile, and the traditional channel will probably recover. In addition, the price of raw vegetables fell back, and the company's performance in 2024 is likely to accelerate.
Risk warning: economic downturn, food safety, fluctuations in raw material prices, lower than expected recovery in consumer demand, etc.
