Zhitong Financial APP learned that Citic Construction Investment issued a research report saying that the abolition of Australia and Mai's double anti-tax policy is expected to reduce the raw material costs of beer companies in 2024. Superimposing the current downward trend of packing material cost, the profit of beer enterprises in 2024 is expected to show greater flexibility. The beer industry has a counter-cyclical attribute in the weak recovery consumption environment, and the head enterprises maintain the rising trend of profit margin by controlling cost reduction, structural upgrading and other ways. In terms of packaging materials, the prices of aluminum, corrugated paper and glass are lower than the same period last year, and Australian wheat is expected to ease the pressure on the cost of raw materials in 2024.
The main points of CITIC Construction Investment are as follows:
Core viewpoints
On August 4, 2023, the Ministry of Commerce issued the notice on the Review of Anti-dumping measures and countervailing measures applicable to imported Barley originating in Australia. Anti-dumping duties and countervailing duties on imported barley originating in Australia will be terminated as of August 5, 2023.
In recent years, the import price of barley is greatly influenced by climate factors and international political factors, and the cost pressure of beer enterprises is significant. The termination of the double anti-tax policy on Australia and Mai is expected to reduce the raw material cost of beer enterprises in 2024. Superimposing the current downward trend of packaging cost, the profit of beer enterprises in 2024 is expected to show a certain degree of flexibility.
Events:
On August 4, 2023, the Ministry of Commerce issued the notice on the Review of Anti-dumping measures and countervailing measures applicable to imported Barley originating in Australia. In view of the changes in China's barley market, it is no longer necessary to continue to impose anti-dumping and countervailing duties on imported barley originating in Australia. As of August 5, 2023, anti-dumping and countervailing duties on imported barley originating in Australia will be terminated.
Brief comment
Australian wheat used to be the main import of barley in China, and the structure was switched many times after the "double reverse" in 2020.
Barley is a small variety of crops in China, the related policy subsidies are less, and there is no large-scale cultivation. Under the impact of overseas imports, the overall quantity of domestic barley continues to decline, while the proportion of imports continues to increase, and has been close to the 90% level in recent years. Domestic barley imports have been switched many times in recent years, with Australia accounting for a large proportion, reaching a high of 73.1% in 2017 and then falling to 39.1% in 2019.
On May 18, 2020, the Ministry of Commerce issued notices No. 14 and 15 of 2020, imposing anti-dumping and countervailing duties on imported barley originating in Australia. The anti-dumping duty rate is 73.6%, and the countervailing duty rate is 6.9%. The implementation period is five years from May 19, 2020. In 2020, Australia's share of China's barley imports dropped to 18.5%. From 2021, China will no longer import Australian barley.
Among other imports, the proportion of Ukrainian barley increased rapidly after 2018, from 5.6% in 2018 to 25.7% in 2021, and dropped significantly to 4.3% in 2022. Argentine barley has gradually taken on import demand, rising from 1.1 per cent in 2019 to 41.5 per cent in 2022. In addition, Canada and France are also the main sources of domestic barley imports. At present, Argentina, Canada and France account for 41.5%, 30.1% and 17.1% of domestic barley imports, respectively.
"double negative" tax cancellation, further determining the downward trend of industry costs
On April 14, 2023, at the application of the China Wine Association, the Ministry of Commerce decided to review the necessity of continuing to impose anti-dumping duties and countervailing duties on imported barley originating in Australia. On August 4, 2023, the Ministry of Commerce issued the notice on the Review of Anti-dumping measures and countervailing measures applicable to imported Barley originating in Australia. It decided to terminate the imposition of anti-dumping and countervailing duties on imported barley originating in Australia as of August 5, 2023.
The price of domestic imported barley has continued to decline since its peak of US $410 / ton in December 2022, with an average import price of US $347 / ton in June 23, down 4.4% from the same month last year. Under the influence of the decline in the price of imported barley, the cost pressure of malt processing enterprises and beer production enterprises has been reduced, and the downward trend of cost will be further determined after the abolition of the "double reverse" tax.
In recent years, the import price of barley is obviously affected by climate factors and international political factors. the average import price has increased from $233 / ton in 2020 to $356 / ton in 2022. The cost pressure of beer enterprises is obvious. Compared with historical barley import prices, the overall price level of Australian wheat is lower than that of Amai and Jiamai, and Ukraine expects barley prices to remain high in the short term. Domestic beer enterprises generally lock in the barley price of the following year at the end of the year, and the barley cost pressure is still obvious in 2023. The termination of the double anti-tax policy on Australia and Mai is expected to reduce the raw material costs of beer companies in 2024. Superimposing the current downward trend of packing material cost, the profit of beer enterprises in 2024 is expected to show greater flexibility.
Investment advice:The beer industry has a counter-cyclical attribute in the weak recovery consumption environment, and the head enterprises maintain the rising trend of profit margin by controlling cost reduction, structural upgrading and other ways. In terms of packaging materials, the prices of aluminum, corrugated paper and glass are lower than the same period last year, and Australian wheat is expected to ease the pressure on the cost of raw materials in 2024.
Risk Tips:1. Competition aggravates the risk: at present, the concentration of the domestic beer market is increasing, and the increasing number of competitive products may further aggravate the competition in the domestic middle and high-end products market, lead to the continuous growth of advertising, promotion and other market expenses, and affect the profitability of enterprises. Recently, affected by market sentiment, beer plate pullback, Tsingtao Beer, heavy Beer, China Resources and other head enterprises in the current round of adjustment valuation has been in a reasonable range, 23 years PE is about 30 times. 2. The promotion of high-end products is less than expected risk: the industry has entered the era of high-end development, and enterprises improve their profitability by promoting the sales of high-end products. If affected by factors such as the decline of consumption power, the upgrading of product structure is blocked, and the profits of beer enterprises may fall short of expectations. 3. The risk of cost fluctuation of raw materials: raw materials such as beer raw materials and packaging materials account for most of the cost of beer production, and the increase in the price of raw materials will significantly reduce the profit level of enterprises. At present, the cost of packing materials has fallen back from the high point, and the prices of barley and crude oil are still at a high level. If the cost rises sharply, the profit of the enterprise will be lower than expected.