Hu Lin, a researcher at Southern Finance and Economics, comprehensively reported that the beer sector is stronger today, and Tsingtao Beer's A-share rise and stop H-shares once rose by more than 10%, because the institution expects a wave of beer companies to increase prices from the fourth quarter to the beginning of next year.
On October 26, the concept plate of Tonghuashun Beer ranked at the top of the list of gains. Most of the individual stocks in the A-share beer sector opened high, the leading Qingdao Beer opened nearly 3%, and after just 10 minutes, the stock price was reported at 91.86 yuan / share, the transaction amount exceeded 2.1 billion yuan, and the latest market value was 63.927 billion yuan. As of the close, Chongqing Beer was up 4.72 percent and Pearl River Beer was up more than 2 percent. Yanjing Beer, Huiquan Beer and Lanzhou Yellow River fell back in the intraday, with an increase of more than 1%. Previously, from August to yesterday, Tsingtao Beer rose or fell within 1%.
Since the beer sector peaked in June this year, it has been volatile and falling, and the sector has fallen sharply in many trading days in mid-to-late July this year. During the Mid-Autumn Festival and National Day consumption season, liquor, soy sauce and other beneficiary consumption upgrade sectors have rebounded sharply, while beer stocks have rebounded very weakly, and even leading stocks have continued to decline after a slight rebound.
Entering the fourth quarter, beer entered the off-season of consumption. Some brokers believe that after the third quarter report, it is a better time to lay out the beer sector, and the expectation of beer price increases in the fourth quarter has increased.
Previously, a number of food companies have issued price increase announcements. Haitian Flavor industry announced a price increase on October 12, saying that the factory price of some products such as soy sauce, oyster sauce and sauce will be adjusted, and the adjustment range of the main products will range from 3-7%. The new price execution will be implemented on October 25, 2021. On October 22, Chaqi Food announced an increase in the ex-factory price of some of the company's products, ranging from 8% to 18%.
<h4>Production improved sequentially in September, and short-term sales were affected by the pandemic</h4>
In terms of production, the beer industry improved slightly in September. Since 2001, China's beer market has begun to grow rapidly for more than a decade, and total production peaked in 2013. Since 2014, the total beer production has declined rapidly, to 34.1111 million kiloliters of beer production in 2020, during which the new production capacity has also declined, but the decline in total production has narrowed.
From July to September 2021, the output of the beer industry was 377.1, 352.9 and 2.989 million kiloliters, respectively, an increase of -7.0%, -6.4% and -5.7% year-on-year, and -6.3%, -10.0% and -3.5% respectively compared with the same period in 2019. Beer industry production in January-September 2021 increased by 4.1% year-on-year, slowing down from 10.3% in the first half of the year. In the third quarter, due to the repeated and obvious epidemics, the total amount of the beer industry was under pressure, but with the effective control of the epidemic since September, the decline in production in September compared with the same period in 2019 was significantly narrowed, and August was the bottom of the largest decline. After entering the low season of beer consumption in October, the total amount had less impact on the annual performance.
In terms of sales, the beer sector was affected in the peak season. Since the third quarter, due to the weather disasters and repeated epidemics in Henan, the catering industry and night shows in Jiangsu, Hubei, Henan and other regions have been impacted, and the peak season sales of the beer sector have been affected. Soochow Securities pointed out that due to the impact of the epidemic, the beer industry has strengthened the construction of online sales channels, and online channels will continue to grow rapidly in the future.
<h4>Structure: The market pattern is stable, and the trend of high-end product structure remains unchanged</h4>
At present, the pattern of China's beer market is stable. According to sales statistics, in 2020, the market shares of China Resources Beer, Tsingtao Beer, AB InBev, Yanjing Beer and Carlsberg reached 25.10%, 18.00%, 15.20%/8.30%/6.40% respectively. Among them, China Resources Beer channels throughout the country, many places market share occupies the first and second; Tsingtao Beer market is mainly for North China, Part of East China; AB InBev Market is mainly South China, Part of East China; Yanjing Beer Market is mainly North China and Northwest, Southwest and South China sporadic regions; Chongqing Beer (Carlsberg) Market is mainly Northwest and Southwest China.
Huafu Securities believes that because the current brands have their own strong markets, their respective market shares are difficult to seize, the future of mainstream beer manufacturers will continue to practice healthy competition, the cost will be more accurately put into the brand image of high-end, pay attention to the strong market on the high-end beer consumption education. Therefore, the overall profitability quality optimization of the beer industry is supported.
<h4>Industrial high-end + cost transmission mechanism may promote the price increase of leading enterprises in the off-season</h4>
Under the trend of consumption upgrading, the beer industry has begun to transform and upgrade at a high-end level. At present, mainstream brewers have laid out high-end layouts through endogenous products, purchased brands or cooperation, and the overall high-end strategy is clear. According to the feedback from the channel survey, China Resources Beer has upgraded the packaging and raised the price of Yongtianya; Chongqing Beer has also raised the price of Wusu in Xinjiang; Carlsberg continues to promote the "big city" plan; UsuBazar has gradually expanded in 27 cities outside Xinjiang; and Green Beer has focused on category positioning, promoting high-end products such as white beer, pilsen, amber lager and so on.
China Merchants Securities Research Report said that although the price of raw materials in the third quarter slowed down, but the first half of the year but a rapid rise, coupled with packaging materials, freight continued to rise, it is expected that from the fourth quarter of this year to the beginning of next year, the beer companies will have a wave of price increases.
Zhongtai Securities believes that under the background of the steady advancement of high-end, the beer industry is facing pressure on raw material costs to rise quarter by quarter, and it is expected to open price increases in the off-season. According to the feedback from the channel survey, China Resources Beer has upgraded the packaging and raised the price of Yongtianya, Chongqing Beer has also raised the price of Wusu in Xinjiang, and the subsequent Budweiser, Green Beer and other dragons are also expected to make price adjustments.
CITIC Construction Investment Securities pointed out that on the cost side, the price of packaging materials such as glass bottles and cans has risen more since this year, and the company has offset the rising cost by locking prices in advance and improving operational efficiency on the one hand; on the other hand, it does not rule out direct price increases and package upgrades to hedge cost pressure. In the medium and long term, the beer sector is still in a 3-5 year high-end structure upgrade to contribute to the profit release dividend period, it is recommended to pay attention to the progress of price increases in the later period and the progress of mainstream beer companies' high-end structure.
<h4>Investment logic</h4>
Zhongtai Securities believes that the sales performance of the beer sector in the third quarter is weak, and the expected enhancement of price increases in the off-season is expected to catalyze the short-term market; while the logic of accelerating the high-end of beer in the medium and long term remains unchanged, combined with the current valuation level, it is recommended to actively layout, focusing on recommending Tsingtao Beer, China Resources Beer and Chongqing Beer.
Debon Securities believes that in the short term, the performance of the beer sector is subject to the pessimistic expectations of sales volume and performance in the third quarter, and after the three quarters or a better time of layout, the fourth quarter or under the expectation of some beer price increases. In the medium and long term, the beer industry has entered a gradual release period of high-end performance, and it is recommended to pay attention to Chongqing beer with a good high-end layout, as well as China Resources Beer, which has a relatively advantageous valuation.
CITIC Construction Investment Securities pointed out that the investment proposal and valuation, the fundamental perspective to maintain China Resources Beer, Chongqing Beer tied for the first judgment, Tsingtao Beer, Pearl River Beer second; from the valuation point of view, China Resources Beer, Chongqing Beer, Tsingtao Beer, Pearl River Beer corresponding to 2021 PE (according to the reduced beer net profit) of 38, 51, 38, 29x respectively.
(Report source: China Merchants Securities, CITIC Construction Investment Securities, Debon Securities, Zhongtai Securities, Huafu Securities, Soochow Securities)
(The information in this article does not constitute any investment advice, the content is from licensed securities institutions, does not represent the views of the platform, and investors are invited to make independent judgments and decisions.) ）
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