GF SEC: Southeast Asia is the key region for seasoning products to go overseas, focusing on the progress of domestic seasoning companies going abroad.

GF SEC released a research report stating that apart from compound seasonings and some upgraded products, the growth rate of most categories of seasonings in China is slowing down. Leading enterprises going global expansion are expected to become new growth points, and Southeast Asia is one of the key regions for Chinese seasoning leaders to expand overseas. From the perspective of seasoning enterprises going global, currently only Angel Yeast Co., Ltd. (600298.SH) has a deep overseas layout among listed seasoning companies, Foshan Haitian Flavouring and Food (603288.SH) is expected to expand into the Southeast Asian market, and YIHAI INTL (01579) is expected to follow HAIDILAO to expand into Southeast Asia. It is recommended to pay attention to the progress of domestic seasoning companies' overseas expansion. Main points of GF SEC are as follows: Southeast Asian seasoning industry is in a growth period, a crucial battleground for leading enterprises going global (1) At the macro level, Indonesia, Thailand, the Philippines, Malaysia, Singapore, and Vietnam account for 95.9% of ASEAN's GDP, with strong post-pandemic economic recovery. The population aged 0-14 in Indonesia, the Philippines, Malaysia, and Vietnam is above 20%, while the population aged 65 and above is below 10%, showing a young demographic structure with long-term population dividend. In terms of consumer power, Southeast Asian consumption contributes significantly to the economy, with room for further increase in residents' income and strong consumer confidence. (2) At the industry level, the size of the Southeast Asian seasoning industry is estimated to be around $16.9 billion, with a compound growth rate of over 10% in the next 5 years. The competition is concentrated, led by foreign companies with local support, with Unilever and Ajinomoto taking the lead, but local companies like Indofood and Mason also have a solid position. (3) Looking ahead, the population dividend on the consumer end and income increase, coupled with the expansion of the B-end restaurant market, will drive industry demand growth. Since 2010, Chinese cuisine has accelerated its expansion into Southeast Asia, nurturing Chinese consumption habits. Ajinomoto and Indofood as references, exploring the path to going global in Southeast Asia (1) Foreign entrant - Ajinomoto: Reviewing its process of expanding into Southeast Asia, it has several advantages: it started layout in Southeast Asia in the 1920s with a clear first-mover advantage, and its distribution network has accelerated coverage after World War II; in the 1950s-1960s, it built factories in Southeast Asia, focusing on localization in production and sales to establish cost advantages; as the growth curve of its products shifted downward, it gradually entered the fields of compound seasonings, frozen foods, pharmaceuticals, and semiconductor materials, with continuous product innovation. (2) Local leader - Indofood: Owner of Indonesia's largest plantations and flour mills, its Indomie brand is a globally renowned instant noodle brand. After 1995, through acquisitions, its food business expanded from snacks to seasonings, dairy products, beverages, etc.; in terms of distribution, its independent distribution group has over 1,300 distribution/stocking points in Indonesia; in terms of products, it continues to strengthen the development of flavors such as fried chicken seasoning and chili sauce. (3) Lessons from domestic leaders going global in Southeast Asia: Stronger potential in Indonesia, the Philippines, and Malaysia; targeting the Chinese market for targeted marketing; prioritizing B-end food service channels before expanding to the consumer end, with e-commerce as a potential breakthrough; localization of production channels; seizing demand changes, innovating products to create new breakthroughs. Investment recommendations: On the individual stock recommendation side, it will take time for liquor stocks to shift from absolute returns to relative returns, with core recommendations being Luzhou Laojiao (000568.SZ), Jiangsu King's Luck Brewery Joint-Stock (603369.SH), Shanxi Xinghuacun Fen Wine Factory (600809.SH), Anhui Gujing Distillery (000596.SZ), Anhui Yingjia Distillery (603198.SH), while paying attention to the allocation value of Kweichow Moutai (600519.SH) and Wuliangye Yibin (000858.SZ). Considering competition dynamics and product channel expansion in the mass market, core recommendations are Sichuan Teway Food Group (603317.SH), Yanker Shop Food (002847.SZ), Beijing Yanjing Brewery (000729.SZ), Ligao Foods Co., Ltd (300973.SZ), Angel Yeast Co., Ltd. (600298.SH), Anjoy Foods Group (603345.SH), Eastroc Beverage (605499.SH), Tsingtao Brewery (00168, 600600.SH), TINGYI (00322), Inner Mongolia Yili Industrial Group (600887.SH), MENGNIU DAIRY (02319), and focusing on Chongqing Fuling Zhacai Group (002507.SZ), Foshan Haitian Flavouring and Food (603288.SH), YIHAI INTL (01579), Qianhe Condiment And Food (603027.SH), Zhengzhou Qianweiyangchu Food Co., Ltd (001215.SZ), Juewei Food Co., Ltd. (603517.SH). Risk Warning: Macroeconomic performance below expectations; rising raw material costs; food safety issues.