Liquor plate has been pulled back from the high after the holiday has reached about 30%, among which the low point of Moutai this week has fallen by 24%, Wuliangye by 29%, Laojiao by 37%, and Shanxi Fenjiu, the leading sub-high-end, has fallen by 38%. The main sectors’ valuation has reached a high level from the extreme, and the post-holiday catalytic empty window period, and the expected liquidity contraction has caused a significant drop in valuation. We believe that liquor plate this year is not a fundamental problem, the industry boom upward trend has not changed, but more is a problem of buying at the right price.
What price is it worth buying? Liquor plate has returned to a reasonable value range, and then down to the time to buy. A significant expansion of liquor plate valuation, liquidity aside short-term factors, such as the valuation reflects the high-end liquor refactoring is done, from the international perspective, such as MAO five high-end liquor value corresponding to the 40-45 times PE range, has comparable international high-end valuation center (hermes, LVMH luxury goods, such as target valuation center around 40 times PE, diageo and Pernod ricard liquor group under the background of steady-state growth in single digits, valuation center also reaches 25 to 30 times PE, more than 10% of the domestic liquor sustained growth, higher valuation center can see), and the second is domestic institutional investors liquor, Has realized the shift from the perspective of cycle products to high-end consumer goods, the market recognized the industry steady growth expectations, which makes the liquor valuation center from 20-25 times PE to 40 times PE above. We believe that high-end liquor as the valuation anchor of the plate, the current valuation of Moutai fell to 47 times PE this year, Wuliangye 43 times PE, the plate as a whole has reached the reasonable value range, although it is difficult to judge the short-term low because of the behavior of funds, but if the plate continues to pull back, the more it is worth buying.
Are there fundamental risks in the industry? Prosperity has not changed, the Spring Festival sales to lay a good foundation, the annual business rhythm adjustment room is sufficient. In the medium and long term, the steady growth trend and core competitiveness of middle and high-end famous wine enterprises have not changed, while high-end and sub-high-end old famous wine brands are still excellent assets; From the point of view of the year, the Spring Festival sales recovered strongly, high-end and sub-high-end wine demand is strong, post-holiday channel inventory generally digested to the low level, for the achievement of annual performance targets to lay a good foundation, wine companies throughout the year operating rhythm adjustment room is sufficient, business achievement and growth quality are guaranteed. However, according to the recent feedback from the road show, the current market expectation is still in a stable stage, and the risk of performance failure is not large. Therefore, we expect that the annual performance support has sufficient guarantee, and each disclosure of the statement will further strengthen the valuation.
Plate expected income space how to look? Earn revenue from performance growth. Considering in the liquidity tightening expectations, and the horizontal valuation comparison with other industries, liquor sector valuation expansion again has not been sustainable, it is recommended to reduce the annual expected yield. This year the sector income mainly comes from performance growth, the core wine label to the second half of the valuation switch, earning performance growth income space has been gradually clear. From the perspective of long-term capital income, according to the PE central valuation of 40-45 times, the compound income space of Moutai and other high-quality assets in the next 3-5 years will return to more than 10%, and its attraction to long-term capital will increase again.
Latest investment strategy: white liquor drop to buy, the mass dairy, beer has been a point of purchase. On the basis of the interpretation of the core focus of the liquor market, we updated the latest recommendations of the food and beverage sector as follows:
(1) Liquor sector: the fundamentals are strongly supported. Spring sugar and quarterly results are expected to be the next stage of catalysis. High-end liquors are given priority, and sub-high-end elastic targets are selected. Fundamentals solid support plate, plate valuation digestion has basically entered the value range, and then it will be worth buying, is expected to start in late March, spring sugar and quarterly reports will gradually become the next stage of catalysis. On the recommendation of the target, it is recommended to give priority to the high-end liquor Mao, five and lu with both scarcity and certainty. The profit space for earning performance growth has been gradually clear. The sub-high-end price belt is generally expected to usher in high growth under the low base in the year. Combined with the current valuation, cost performance and growth elasticity, it is recommended that the current Yuan, Shui Jing Fang, Fenjiu, Gujing Gong and Yanghe.
(2) Mass products: prioritize dairy and beer, and grasp the varieties with safe valuation and sustained high growth. Dairy industry, raw milk in the year continued upward or catalytic price increase range expansion, the Spring Festival peak season dynamic sales are strong, Q1 is expected to usher in a good start, reiterate the leading Yili recommendation, increase attention to Hong Kong stock Mengniu; Beer plate is still in the next few years the tendency of industry the most industries, domestic wine enterprise item high-end larger size and high-end market share improve direction and speed did not change, to ensure future performance increase ability, strong buy recommendation (H shares) and ale (A + H shares and H shares valuation discount, suggested increasing attention), focus on heavy beer, recommend valuations have other food plate margin of safety, and have continued industry targets, including Angela, unique flavor, Ann Wells, shuanghui, bobby, tomson, can concern.