The Zhitong Finance App learned that Guotai Junan released a research report saying that the phased stabilization of inflation is compounded by spring sugar exchanges and catalysts, the market's expectations for the consumer boom are no longer being lowered, new expectations are gradually being formed, and the allocation value of food and drink is prominent; in the annual dimension, the “volume” of consumption is more rigid than the “price.” The bank said that new expectations were formed for the liquor sector, and spring sugar helped the sector to recover; the volume of the beer sector was expected to recover; the volume of the beer sector was expected to recover, and the allocation value was highlighted; and the mass product sector had a growth target and a high dividend target.

Guotai Junan's main views are as follows:

Sorting out the clues behind the spring sugar and wine fair: 1. As new expectations are being formed, the value of food and drink allocation is once again highlighted. We believe that the recent market deals with the consumer sector focus more on the following two points: 1) phased stabilization at the CPI level, the market is no longer revising the performance expectations of the sector, and the pro-cyclical sector allocates value prominently in a relatively undervalued state; 2) from a global perspective, foreign investors are paying new attention to the domestic equity market. Standing now, considering that the market's expectations for the economy are stabilizing, the allocation value of consumer targets, especially the food and beverage sector, is once again highlighted.

2. Returning to consumption power, “quantity” is more rigid than “price”. Under the residents' mentality of “limited budget but rigid spending”, most food and beverage products have found a better “low price replacement” within their own product line. In a sense, the “volume” of food and beverage consumption is more rigid than the “price.”

3. Market aesthetics are changing, and “stability” is a priority. Under the market's basic assumption of economic trends based on short-term economic data, investors are increasingly paying attention to the sustainability of growth rather than performance flexibility for individual food and beverage stocks. Compared with prices and product structures, investors are more concerned about the ability to remove product inventory or share stability. We believe that the nature of recent market improvements in Wuliangye is also a sign of changes in market aesthetics.

Liquor: New expectations are formed, and spring sugar helps the sector recover. The phased correction of inflation expectations helped the market to form new expectations, compounded by the spring sugar and wine event. Liquor was based on short-term performance resilience, and the proposed increase was: 1) The main overfalling main lines with performance resilience: Wuliangye, Luzhou Laojiao, and Jinshiyuan; 2) Stable inventory and marketing ratios: Shanxi Fenjiu, Yingjiao Gongjiu, Gujing Gongjiu, Jinhui Liquor; 3) High dividend expectations: Kweichow Moutai, Yanghe Co., Ltd.

Beer: Volume expectations have been restored, and configuration values have been highlighted. Inventory levels improved sequentially after Oktoberfest, and the structural rise continued. Due to the base effect, it is expected that the sales growth rate in the sector will recover quarterly in the second quarter of '24. We believe that the beer stock price fully reflects the market's conservative expectations of a high sales base and profit adjustments. The sector's risk release is sufficient, allocation value is prominent, and it is recommended to increase holdings: Tsingtao Brewery, Yanjing Brewery, and Hong Kong stock China Resources Beer.

Popular products: those with growth targets and high dividend targets. Currently, Volkswagen is at the bottom of the valuation, focusing on both high growth and undervaluation. It is recommended to increase the share: 1) targets on the growth circuit: three squirrels, Yanjin Shop, Jinzai Food, Dongpeng Drink; 2) High dividend or pan-stable targets: Shuanghui Development, Yili Co., Ltd., Chengde Lulu, Chongqing Beer; 3) Catering supply chain: Baoli Foods, Qianwei Food, Yasui Foods, Ziyan Foods, Tianwei Foods, and Qianhe Wei.

Risk warning: Economic recovery falls short of expectations; industry competition intensifies; food safety risks.