In 24Q3, the cost benefits of raw materials for mass consumer goods continued, with soybean and fresh milk prices further declining month-on-month, while white sugar and palm oil prices remained low, easing cost pressures on the enterprise side. In terms of performance, it is expected that the performance of mass consumer goods in Q3 will continue to be differentiated.
Zhixin Finance APP learned that Guolian Securities released research reports stating that dining demand in 2024Q3 remains weak. According to Wind data, the compound growth rates of dining revenue in July and August 2024 compared to 2019 were 3.63% and 2.25% respectively, showing a flat performance. However, since September, multiple consumption stimulus policies have gradually taken effect and transmitted, expecting the restoration resilience of mass dining and anticipating stabilization and improvement in demand. It is worth noting that in 24Q3, the cost benefits of raw materials for mass consumer goods continued, with soybean and fresh milk prices further declining month-on-month, while white sugar and palm oil prices remained low, easing cost pressures on the enterprise side. In terms of performance, it is expected that the performance of mass consumer goods in Q3 will continue to be differentiated.
Guolian Securities' main points are as follows:
Dining industry weak recovery, expecting restoration resilience.
Dining demand in 2024Q3 remains weak. According to Wind data, the compound growth rates of dining revenue in July and August 2024 compared to 2019 were 3.63% and 2.25% respectively, showing a flat performance. However, since September, multiple consumption stimulus policies have gradually taken effect and transmitted, expecting the restoration resilience of mass dining and anticipating stabilization and improvement in demand: According to the survey on the operation of the catering industry during the 2024 National Day holiday conducted by the China Cuisine Association, the operating income of the surveyed catering companies during the holiday increased by 2.0% compared to the 7 days of the previous National Day holiday; the customer traffic increased by 5.6% compared to the 7 days of the previous National Day holiday.
Household sector differentiation, demand expected to stabilize.
The differentiated characteristics of the household sector continued in 2024Q3, with slight pressure in tier-1 cities and sufficient resilience in tier-3 cities: In July and August, zero growth in rural consumption maintained its lead, with year-on-year increases of +4.6% and 3.9% respectively, driving consumption towards diversification and branding, supporting the resilience of household consumption. With the implementation of the comprehensive policies since September, such as lowering loan rates, stabilizing core assets, and direct stimulus from consumption vouchers, demand in tier-1 cities is expected to gradually stabilize. The "three guarantees" + policy stimulus have improved residents' income and consumption expectations in low-tier cities, and demand is expected to remain strong and resilient.
In 2024Q3, the cost dividend of mass-market enterprises was further released.
In 2024Q3, most of the raw material prices of mass-market products continued to decline month-on-month, further releasing the cost dividend: The raw materials of mass-market products started to rise in 2021, and the conflict between Russia and Ukraine in 2022 further led to a sharp increase in prices. From 2023, most raw material prices gradually returned to normal levels. In 2024Q3, the cost dividend of mass-market raw materials continued, with soybeans and fresh milk prices further declining on a month-on-month basis, while sugar and palm oil prices remained low, easing cost pressures on the business side.
In 2024Q3, the performance differentiation of mass-market products continued.
In 2024Q3, the performance differentiation of mass-market products was significant: Dining supply chain: With the implementation of the 'comprehensive' policy, the mass-market dining sector is expected to see recovery. Expectations for demand elasticity release, condiments (basic and compound condiments) and frozen food sectors on the operational side are expected to gradually improve. Dairy product industry chain: The pressure on leading companies in 2024Q3 still exists, but looking ahead, with the recovery of mass-market gift-giving scenarios, dairy product demand is expected to recover under consumption stimulus policies. The worst period for the industry may have passed, with an optimized competitive landscape and concentrated market share. Expect a new cycle in the dairy product industry chain brought about by stability in raw milk prices. Snacks: Yanker Shop Food's new channels and category dividends may continue.
Investment advice: Focus on the improvement in demand, high-quality fundamentals of leading mass-market consumer expectations stabilizing, and continued cost dividends. The individual performance of stocks in 2024Q3 is expected to continue differentiation, maintaining a rating of 'outperform the market' in the industry. It is recommended to focus on the improvement in demand and high-quality fundamentals of leading mass-market products: Recommend high-quality leaders in the dining supply chain benefiting from mass-market dining recovery Foshan Haitian Flavouring and Food, Sichuan Teway Food Group, Yihai Intl, Anjoy Foods Group; Recommend focusing on investment opportunities brought by the dairy product industry chain cycle, recommending Inner Mongolia Yili Industrial Group and Mengniu Dairy at the bottom of the valuation with improved return on investment.
Risk Warning: Risks of macroeconomic underperformance, intensified industry competition, and food safety.