The Zhitong Finance App learned that Ping An Securities released a research report saying that in the first three quarters of this year, the food and beverage industry was affected by insufficient consumer confidence, and demand performance was weak, triggering a spiral decline in the performance and valuation of listed companies. However, since September, a series of fiscal and monetary policy combinations have been introduced, reversing macroeconomic expectations. The current mass product sector in the food and beverage industry has investment value due to the following reasons: the procyclical industry directly benefits from macroeconomic improvements; the sector's valuation is low and is favored by capital; consumer promotion policies such as issuing consumer vouchers directly boost consumer confidence in the mass product sector; compared to liquor, the inventory of popular products is lighter, and the pace of adjustment is faster or earlier; after nearly three years of adjustments, small and medium-sized enterprises in the industry have accelerated their clearance, and the competitive pattern is continuously optimized.

Ping An Securities's main views are as follows:

Focus on procyclical varieties and optimistic about the restoration of the catering industry chain: prepared foods, condiments

Prepared food: Benefiting from restaurant chains for a long time, leading companies have a significant competitive advantage. Currently, under the impetus of a new round of food and beverage vouchers, the restaurant industry is gradually improving, and channels are recovering in the order of small B > big B > C side. Prepared foods can effectively improve meal delivery efficiency, improve the cost structure, and benefit from the increase in the chain rate of downstream catering companies in the long term. At this time, leading companies with scale advantages are expected to quickly seize market share and improve profitability through product structure optimization and refined cost management. Although the C-side is being dragged down by public opinion turbulence and supermarket channels, the development of the industry tends to be standardized under the protection of policy support. I recommend Yasui Foods (603345.SH) and Chef Senmio (001215.SZ).

Condiments: The industry is nearing the end of inventory removal, and internal management has improved. Currently, the basic food and beverage consumption market in the downstream society is being repaired, and the industry is nearing the end of inventory removal. Coupled with costs entering a downward channel, the condiment industry is breaking out of its trough and returning to a period of steady development. At the same time, the results of most companies' structural adjustments, channel reforms, and product innovation during the trough period have gradually been highlighted. Subsequent diversified, healthy, and high-end products will further drive industry growth, and sector profit flexibility is expected to be unleashed. We recommend Haitian Flavors (603288.SH), Baoli Foods (603170.SH), and it is recommended to pay attention to Qianhe Flavors (603027.SH).

The industry is booming, and new channels and new categories continue to bring dividends: snacks

Snacks: Channel bonus beta is still there, and new product dividends continue to be released. The snack industry can simultaneously satisfy emotional value consumption and consumers' pursuit of cost performance, and has become the sub-sector with the strongest growth momentum in the current food and beverage sector. On the channel side, mass snack stores, member supermarkets, emerging e-commerce channels, and traditional supermarket channels are continuously reshaping the new channel pattern of the industry, continuing to bring channel dividends. On the product side, manufacturing enterprises continue to expand and marginally launch new categories, seize consumers' minds, and become the continuous driving force for the industry. It is recommended to pay attention to the three squirrels (300783.SZ) and Yanjin Shop (002847.SZ).

The relationship between supply and demand has improved, and the raw milk cycle is expected to reach an inflection point: dairy products

Dairy products: Increased policies are expected to boost consumption, and milk prices are expected to rise steadily. Demand for dairy products is currently weak, but targeted policies to stimulate consumption have been introduced. Further policy increases are expected to continue to drive consumption of dairy products, and we look forward to marginal demand-side improvements in the future. On the supply side, China's upstream dairy farming industry has carried out a round of large-scale production expansion, compounded by weak demand and an increase in the scissor gap between supply and demand. As a result, the current round of raw milk price declines has exceeded expectations, but it has now entered a moderate production capacity clearance stage. The relationship between supply and demand has improved, and leading dairy companies may enter profit repair channels. We are optimistic about the valuation repair of national dairy companies and the increase in the profitability of regional dairy companies. We recommend Yili Co., Ltd. (600887.SH), Mikolanduo (600882.SH), and we recommend focusing on the new dairy industry (002946.SZ).

Cost elasticity is being unleashed, and there is still room for valuation repair: beer

Beer: Cost dividends contribute to profit flexibility, and long-term high-end development continues. Australia's “double reverse” was cancelled, and the price of packaging materials continued to ease. As cost dividends are transmitted, the profitability of the industry is expected to continue to improve. 2025 will continue to be the period for the beer cost dividend to be realized. Currently, with the upgrading of the product structure, the tonnage price of beer companies continues to rise. Despite being disrupted by weak consumption in the short term, the long-term trend of high-end beer will continue. We are optimistic about sector opportunities. We recommend Yanjing Beer (000729.SZ) and Chongqing Beer (600132.SH), and it is recommended to focus on Tsingtao Brewery (600600.SH).

Risk warning:

1) Risk of macroeconomic fluctuations: The macroeconomic environment directly affects residents' income levels and consumption intentions. If the macroeconomy declines, it will affect consumer demand for mass goods; 2) Consumption recovery falls short of expectations: under the slowdown in macroeconomic growth, national income and employment are affected to a certain extent, and the recovery of residents' consumption capacity and intention in the short term may fall short of expectations, thus affecting the recovery of the consumer sector.

3) The implementation of macroeconomic policies falls short of expectations: If the implementation of this round of macroeconomic policies and consumer stimulus policies falls short of expectations, the pace of industry recovery will slow down.

4) Food safety issues: Food safety is related to consumers' personal safety and is a red line for industry development. Once food safety issues occur, they will have a huge negative impact on the industry, and it may take a long time for the industry to recover.

5) Impact of fluctuations in raw materials: The food industry can mitigate the impact of rising raw materials to a certain extent through price increases, but excessive increases in raw materials will affect the gross margin situation of the industry.

6) Industry competition increases risk: Deterioration in the competitive landscape will affect the price system of the food and beverage industry to a certain extent and adversely affect the industry.