During the Spring Festival, sales of liquid milk were strong during the Spring Festival, and leading sales strategies were divided; the competitive pattern of cheese eased, and freshness improved year-on-year; sales of basic condiments were steady, and the trend of health was remarkable; the variety of compound condiments increased, and leading sales were impressive.
The Zhitong Finance App learned that Dongwu Securities released a research report saying that during the Spring Festival, liquid milk sales were strong during the Spring Festival, leading sales strategies were divided; the competitive pattern of cheese eased and freshness improved year-on-year; sales of basic condiments were steady, and the trend of health was remarkable; the abundance of compound condiments increased, and leading sales were outstanding.
The bank suggested that in terms of dairy products, the gift box is expected to exceed expectations, and sales of the leading dairy products Yili terminal are expected to increase by double digits year-on-year during the Spring Festival in '24. Current inventory is healthy, and revenue is expected to grow steadily throughout the year under a good start. It focuses on recommending Yili Shares (600887.SH), a leader with steady performance and high undervaluation and high dividends.
In terms of basic condiments, Haitian's terminal sales are expected to increase by single digits year on year from January to February '24, Zhonghe's shipping side increased by double digits year on year from January to February '24, and Qianhe's 23Q4+24Q1 revenue side is expected to achieve positive year-on-year growth on a high base. We recommend Zhonghe Hi-Tech (600872.SH), which continues to release reform dividends, and Qianhe flavor (603027.SH), which has strong marketing potential in terminal research.
In terms of rebalancing, Tianwei's shipments in January '24 are expected to increase by double digits; Yihai International's third party's year-on-year growth is relatively good; the performance of related parties during the Spring Festival exceeds expectations; revenue for January '24 is expected to increase by double digits year on year. We recommend Tianwei Food (603317.SH), which has improved marketing and is expected to open up new channels on the small B-side in 24, and Yihai International (01579), which had a positive sales performance during the Spring Festival.
The views of Soochow Securities are as follows:
Demand for gifts is strong, liquid milk is selling well during the Spring Festival, and the cheese pattern is improving
1. Liquid milk sales are strong during the Spring Festival, and leading sales strategies are differentiated: 1) Heap display: Leading companies focus on gift categories and actively seize the shelves. Jindian and An Musi account for a similar proportion of Yili product displays, while Mengniu displays focus on Telunsu. 2) Promotion intensity: Yili's different products are promoted. Jindian's promotion is strong, Mengniu's price market is increasing year on year, promotion policies are tightened, leading promotion intensity differentiation is mainly due to differentiation in sales strategies. Yili sales staff directly supervise dealer fee usage and terminal activity development, and direct terminal promotion is strong. Mengniu focuses on fixing the Telunsu channel profit and price system, and providing more subsidies and expenses at the dealer level. 3) Channel operation: In addition to traditional giveaway promotions, dairy companies also carried out promotional activities such as outdoor greenhouse displays, thousand box piles, and raffles during the Spring Festival, making promotion activities closer to consumers.
2. The competitive pattern of cheese has eased, and freshness has improved year over year: 1) Competition pattern: During the Spring Festival, the proportion of Miocelanduo shelves in East China was higher than that of other brands. Compared with the Spring Festival in '23, brands such as Enzebao and Miaofei had fewer displays, and the competitive pattern eased. 2) Freshness: The stock age for the Spring Festival in '24 was around January. Product freshness improved year-on-year, and industry inventories were healthy. 3) Promotion intensity: The discount rate for Yili and Bagefu cheese sticks contracted year-on-year during the Spring Festival in '24, and the price market rebounded, and the Mikolanduo promotion was strong.
Sales of basic condiments are steady, and sales of leading mixed-use products are strong.
1. Sales of basic condiments are steady, with significant health trends: 1) Display & promotion: During the Spring Festival, Haitian, Qianhe, and Xinhe all increased their efforts to promote health products such as zero additives, organic, etc., and the discount rate for health products was higher than that of ordinary products; Chubang focused on promoting main products such as Chubang Soy Sauce, and the sales strategy was more active than other brands. 2) Freshness: The freshness of Haitian products improved year-on-year during the Spring Festival. The shelf life is mostly less than 3 months, and the company's inventory is normal; Qianhe's shelf life has increased compared to 23 years, but it is still at a normal level. Currently, the channel inventory is 1.6 months, and the channel momentum is sufficient. 3) Sales: Qianhe shelves are empty, some products are out of stock, and sales performance is good.
2. The variety of compound condiments has increased, and the leading sales are impressive: 1) Increased variety of categories: Traditional brands occupy the main position on the shelves, but some small brands also stand out on the shelves. The products are mainly new flavors such as cold juice, mixed sauce, and Thai base, and the product packaging is also more stylish. 2) Freshness: Multi-blended products are generally within 3 months, and industry stocks are relatively healthy. 3) Sales: Leading products in East China, such as Yihai International's non-spicy soup and Tianwei handmade butter fondue base, are all out of stock, and leading sales are strong. 4) Promotion intensity: The compound discount rate is lower than that of basic condiments, and the strong price market is expected to be mainly due to strong demand.
Investment advice:
1) Dairy products: Gift boxes exceed expectations. Sales of leading dairy products Yili terminals are expected to increase by double digits year-on-year during the Spring Festival in '24. Current inventory is good, and annual revenue is expected to grow steadily under a good start. The focus is on recommending Yili shares, a leader with steady performance and undervaluation and high dividends.
2) Basic condiments: We expect that Haitian's terminal sales will increase by single digits year on year from January to February '24, Zhonghe's shipping side will increase by double digits year on year from January to February '24, and Qianhe's 23Q4+24Q1 revenue side total is expected to achieve positive year-on-year growth on a high base. We recommend Zhonghe Hi-Tech, which continues to release reform dividends, and Qianhe flavor, which has strong marketing potential in terminal research.
3) Readjustment: Tianwei's shipments in January '24 are expected to increase by double digits; Yihai International's third party's year-on-year growth is good, the performance of related parties during the Spring Festival exceeds expectations, and revenue for January '24 is expected to increase by double digits year on year. We recommend Tianwei Food, which has improved marketing and is expected to open up new channels on the small B-side in 24 years. Yihai International showed positive sales performance during the Spring Festival.
Risk warning: Food and beverage recovery falls short of expectations, risk of rising cost-side pressure, worsening competitive landscape, falling short of expectations in consumption power recovery, and food safety issues.