In the investment world, the food and beverage industry is the concentration of long cattle, which is also reflected in its ability to make money. Food and beverage industry, the market value of the largest ten companies ten years average ROE for 24.3%, and a high ROE industry, the overall money-making earn to soft industry. Institutional views that, in addition to fully competitive segments, there are still some high-quality track can grasp the high growth dividends, such as casual food, cheese, pets, etc., is also expected to run out of some brand power and channel power are good dark horse.
High ROE in the food industry "good business"
In November, the limit above the unit of grain, oil and foodstuff commodities year-on-year growth of 8.9%, down 0.1 percentage points from October, to continue to maintain a stable and relatively fast growth; beverages, tobacco and alcohol and daily necessities category of goods increased by 13.9% year-on-year, compared with the same period in October. Daily necessities commodities year-on-year growth of 13.0%, 8.3% and 17.5%, the growth rate than in October to accelerate 3.5, 3.9 and 5.5 percentage points.
In the investment community, the food and beverage industry is a concentration of long bulls, which is also reflected in its ability to make money. Food and beverage industry, market capitalization of the ten largest companies in the ten-year average ROE of 24.3%, another high ROE industry, the overall money making to earn a soft industry. Market capitalization of the top ten companies in addition to the beer sector Tsingtao Beer to 11% ROE pull back. The rest of the company has an enviable high ROE. 30% of the Guimao, Haitian 30%, 28% of the Yanghe, 30% of the Shuanghui, 27% of the cellar, and Wuliangye, Yili, Fenjiu, such as higher than 20% ROE varieties.
Guangfa Food and Beverage Wang Yongfeng team summarized the history of food and beverage stocks experience, that food and beverage leaders have always been long cattle stock camp, in high ROE, low PE when investing in food and beverage leaders can bring excess returns.
The idea of value investment in stock selection is to choose a "good business" with commercial barriers, with commercial barriers quantified by financial indicators for the long term sustained high ROE. The ROE of the food and beverage companies have been maintained at more than 30% for a long time. A-share food and beverage industry high ROE stocks to the famous white wine and food leaders.
Food sector in the spices leading Haitian Taste ROE in the last ten years basically maintained at 30%; dairy products leading Yili shares in the last ten years ROE basically maintained at more than 20%; short to keep bread leading Tao Li bread, brine products leading Jiemei Foods in the last five years ROE is basically maintained at more than 20%.
Shuanghui price increase does not change the growth momentum
In the food leader, Shuanghui development successive price increase does not change the performance growth momentum. The ex-factory price of Shuanghui meat products has been raised since December 2018, and the cumulative total of six price increases up to November 2019 has been raised by an average of about 20%, of which the price increase in November was the highest, amounting to 8%, and the short-term price increase has boosted channel profits and hedged against cost upturns. Price increase + cost dividend, performance elasticity is great. Long-term can be improved through management, meat product structure upgrade + slaughter market share.
? In addition, Shuanghui development to enhance channel profits. According to the grassroots research of the Anxin Securities food medical team, 600g of King of Kings, for example, channel profits from 8 yuan / piece to 11-13 yuan / piece, channel margins rose slightly; hedge against cost upward: Q3 meat products tons of price increase of 7.3%, operating margins of 21.5%, year-on-year increase of 0.4 pct, ring comparison of 5.4 pct (ring comparison of the reasons for the increase and the cost of chicken downward)
The operating margin was 21%, up 0.4pct year-on-year and 5.4pct sequentially (also due to lower chicken costs).
It is worth noting that Shuanghui earns profits from the whole industry chain by supplying its own packaging (including aluminum buckles), food additives, proteins and so on, saving the cost of intermediate transactions, and earning profits from the whole industry chain. According to the report on the 2012 major asset restructuring, Shuanghui's net interest rate for the packaging and food additives business was between 14-20%, significantly higher than that of the net interest rate of the meat products and slaughtering business (side by side). The company's net profit margin is significantly higher than the net profit margin of the meat products and slaughtering business (reflecting the fact that Shuanghui has improved its profitability by integrating the whole industry chain).
Quality track PK Segmentation still has high growth rate expectations
In addition to the fully competitive segmentation, there are still some high-quality tracks that can grasp the high growth dividend. Focusing on the high quality of the high growth track, the configuration of the performance of the high certainty of growth, the long-term value of the space wide subject. Food and beverage in addition to the traditional has a high penetration rate, the leader has been determined by the mature industry, there are still some segments of the industry still has a good growth rate, such as casual food, cheese, pets, etc., is also expected to run out of some of the brand power and channel power of the dark horse.
According to Tmall International this year, "Double 11" the most popular imported goods statistics, cat food over infant milk powder in the first place, the day of the pet category only took 65 minutes to break through last year's turnover, an increase of nearly 130%. Jingdong platform, a Canadian pet food turnover increased 668 times year-on-year.
China's pet food market this track, stepping up the layout of the Mars, Nestle and other international food giants, but also the new hope group. More than a year ago, New Hope spent 5 billion yuan to acquire Australia's largest local pet food company. Over the past year, New Hope has promoted the entry of pet food into the Chinese market and business landing, and acquired the offshore Sincere Love Pet Food Company. This pet food company's China business development head Dong Hengliang revealed that from July last year to do the first single business, to October this year, to achieve nearly 100 million yuan in sales.
This article was originally published by Investment Express