Pioneer Securities released a research report saying that as the mass snack industry enters the merger and acquisition integration stage, the industry gradually shifts from previous price competition to product supply chain optimization and cost reduction and efficiency. On the other hand, the current pig breeding sector has a high margin of safety, and allocation opportunities are more obvious.
The Zhitong Finance App learned that in the food and beverage industry, in 22-23, some traditional manufacturing snack companies achieved high sales growth through the expansion of mass sales stores and the continuous combination of cooperative products. As the mass snack industry enters the merger and acquisition integration stage, the industry gradually shifts from previous price competition to product supply chain optimization and cost reduction and efficiency. In terms of the agriculture, forestry, animal husbandry and fishery industry, considering that supply in the pig industry was still sufficient in the first half of '24, pig prices are expected to continue to be relatively low in the future. Large-scale farms with high costs and high debt may be impacted one after another, and catalyze the acceleration of the industry's capacity removal process. Currently, the pig breeding sector has a high margin of safety, and allocation opportunities are obvious.
The main views of Pioneer Securities are as follows:
Food and drink:
Recently, Weilong Yummy released its 2023 annual results report. During the reporting period, the company's total revenue was 4.872 billion yuan, up 5.2% year on year; net profit was 880 million yuan, up 481.9% year on year; adjusted net profit was 970 million yuan, up 6.3% year on year. Benefiting from product innovation and channel transformation, Weilong's business performance has grown steadily.
1) In terms of products, the company adheres to the product strategy of multiple categories and large single products, and launched the new spicy spicy strip overbearing panda and the new konjac product, The Little Witch, which further enriched the original product matrix. The new spicy crisps are expected to open up new growth space in the puffed food category;
2) In terms of channels, continue to strengthen the construction of online and offline omnichannel channels, actively embrace the dividends of emerging channels on the basis of the original offline distribution channels, accelerate the layout of offline snack stores in 23 years, and launch customized entertainment packages for this channel.
3) The company's gross margin in '23 was 47.7%, up 5.4 pct year-on-year, mainly benefiting from major product restructuring and upgrading, falling raw material prices, and continuous optimization of cost management. In recent years, konjac has spread to consumption scenarios such as casual snacks and light meal replacements due to its chewy taste, low calorie content, and rich dietary fiber. Deep-processed food categories such as konjac spicy snacks have been rapidly sold, and konjac food is expected to grow into a 10 billion category.
Recently, the 2024 Annual Partnership Conference was held with Zhao Yiming for the mass sale of snack brands. By the end of February 2024, the Snack Very Busy Group had more than 7,500 stores nationwide, with total store revenue exceeding 20 billion yuan in 2023. Mass-selling snacks implied the logic of product cost performance. In line with the recent trend of consumer purchasing decisions from consumption upgrades to focusing on cost performance. In 22-23, some traditional manufacturing snack companies achieved high sales growth through the expansion of mass sales stores and the continuous superposition of cooperative products. As the mass snack industry enters the merger and acquisition integration stage, the industry gradually shifts from previous price competition to product supply chain optimization and cost reduction and efficiency.
Beneficiaries: Yanjin Shop (002847.SZ), Jinzai Food (003000.SZ), Ganyuan Food (002991.SZ).
Agriculture, forestry, animal husbandry and fishing:
According to Pig Search Network, the average price of pigs sold nationwide was 14.89 yuan/kg on 3/22, and pig prices have risen 0.4-0.5 yuan/kg in the past week. Recently, pig prices have been relatively strong. Due to the concentrated release of the market around the Spring Festival, there is not much supply of moderate pig sources. Coupled with the growing market's bullish sentiment about price increases in the second half of the year, enthusiasm for secondary fattening has increased, leading to a further decline in the supply of recently released standard pigs. However, demand for pork is seasonally weak, new orders from slaughter companies are insufficient, and the rapid rise in pig prices is being pressured. It is expected that pig prices will continue to fluctuate in a narrow range in the short term.
According to data from the Ministry of Agriculture and Rural Affairs, by the end of February, the number of breeding sows in the country had dropped to 40.42 million, down 0.6% from the previous month and 6.9% from the previous year. The month-on-month decline rate declined (1.8% month-on-month decline in January). Since the beginning of the year, the enthusiasm for piglets has picked up relatively quickly, and sales of piglets have been profitable, leading to a marginal slowdown in the rate of the industry's capacity removal rate.
Following the initiation of restructuring by *ST Zhengbang and Aonong Biotech, Tianbang Food recently announced that it intends to apply to the court for restructuring and pre-restructuring because it is unable to pay due debts and clearly lacks solvency, but it has restructuring value. Considering that supply in the pig industry was still sufficient in the first half of '24, pig prices are expected to continue to be relatively low in the future. Large-scale farms with high costs and high debt may be impacted one after another, and catalyze the acceleration of the industry's capacity removal process. Currently, the pig breeding sector has a high margin of safety, and allocation opportunities are obvious.
Beneficiaries: Muyuan Co., Ltd. (002714.SZ), Wenshi (300498.SZ), Huatong (002840.SZ), Superstar Farming (603477.SH), Jingji Zhinong (000048.SZ), Dongrui (001201.SZ), Shennong Group (605296.SH), Xinwufeng (600975.SH), Tang Renshen (002567.SZ).
Risk warning: Risk of fluctuations in livestock and poultry prices, risk of sudden outbreaks of epidemics. Increased industry competition and food safety risks.