Minsheng Securities' food and beverage 24Q4 fund holdings analysis: Baijiu holdings continue to decrease, while the proportion of snacks, soft drinks, and beer holdings increases.

Minsheng Securities has released a research report stating that in the fourth quarter of 2024, the food and beverage sector accounted for 7.51% of the holdings in actively managed equity funds, continuing its downward trend compared to the previous quarter. Specifically, the performances of different sub-sectors within the food and beverage industry varied, with the top three in terms of increased holdings being: snacks, soft drinks, and beer. However, the liquor sector saw the largest decrease in holdings, but in terms of absolute percentage, funds are still heavily concentrated in liquor stocks. The bank believes that with the resilience of liquor demand during the Spring Festival and the marginal restoration of channel confidence, attention can be paid to post-holiday restocking situations. In terms of popular brands, the focus should be on product innovation and supply chain optimization, as mergers and acquisitions integration is expected to improve the competitive landscape, and traditional industries may improve industry concentration through restructuring. Key points from Minsheng Securities are as follows: This report analyzes changes in holdings of the food and beverage sector in four types of active equity funds: ordinary stock funds, equity-oriented mixed funds, balanced mixed funds, and flexible allocation funds, while passive index funds and index-enhanced funds are not included in this analysis. Industry perspective: In the fourth quarter of 2024, the food and beverage sector accounted for 7.51% of holdings in actively managed equity funds, ranking fourth among the Shenzhen tier-one industries, behind electronics (13.41%), power equipment (10.81%), and pharmaceuticals (10.71%). This represents a decrease of -0.66 percentage points compared to the previous quarter, and has more than halved from the peak of 17.82% in the second quarter of 2019, falling back to levels seen in the second quarter of 2017. In the fourth quarter of 2024, the performances of various sub-sectors within the food and beverage industry varied: the liquor sector (Shenzhen tier-two) accounted for 5.73% of the holdings in the top funds, a decrease of -1.24 percentage points from the previous quarter; among the three sub-sectors excluding liquor, the top three in terms of increased holdings were snacks (+0.15 percentage points), soft drinks (+0.14 percentage points), and beer (+0.13 percentage points). Though liquor saw the largest decrease in holdings, the sector still maintains a concentrated fund allocation. Individual stocks perspective: In the fourth quarter of 2024, the top ten holdings in the food and beverage sector included six liquor stocks, a decrease of one compared to the previous quarter. The top ten holdings in the liquor sector were Kweichow Moutai, Wuliangye Yibin, Luzhou Laojiao, Shanxi Xinghuacun Fen Wine Factory, Anhui Gujing Distillery, and Jiangsu Yanghe Distillery, with Anhui Yingjia Distillery dropping out of the top ten. Among the remaining four positions, Tsingtao Brewery A+H shares occupied two, while the other two were Inner Mongolia Yili Industrial Group and Eastroc Beverage. Inner Mongolia Yili Industrial Group saw the largest increase in holdings, while Kweichow Moutai saw the largest decrease. The change in the proportion of individual stock holdings compared to total fund holdings in the quarter was used to measure the increase or decrease in holdings of individual stocks. The top three increases in the food and beverage sector in the fourth quarter of 2024 were Inner Mongolia Yili Industrial Group, Tsingtao Brewery, and Eastroc Beverage; the top three decreases were Kweichow Moutai, Luzhou Laojiao, and Shanxi Xinghuacun Fen Wine Factory. Popular consumer brands showing fundamental improvements and channel efficiency improvements have become favored by institutional investors. Investment recommendations: Liquor: Focus on destocking processes, as channel confidence is expected to marginally recover with the resilience of demand during the Spring Festival. Recommended brands include Kweichow Moutai (600519.SH), which has strong brand and pricing power, the Wuliangye Yibin (000858.SZ) which controls production firmly during peak periods and has a strong demand for products in the medium to lower price range, and Shanxi Xinghuacun Fen Wine Factory (600809.SH) which is a leading brand in the high-end segment expected to break through customer barriers. Recommendations for the real estate wine sector include Anhui Yingjia Distillery, which has a trend of structural improvement, and Jiangsu King's Luck Brewery Joint-Stock, which is expected to benefit from local competition easing and increased market penetration. Beer: The trend towards premiumization continues, and the recovery of immediate consumption scenarios is expected to drive simultaneous increases in both volume and price in the industry in 2025. Recommended stocks include Tsingtao Brewery (600600.SH), which benefits from a youthful image, scene recovery, and proactive implementation by new management teams, and Beijing Yanjing Brewery (000729.SZ), which has strong profits and enhanced efficiency supported by excellent single product performance. Popular consumer brands: Focus on product innovation and supply chain optimization, as well as mergers and acquisitions integration which may improve competitive landscapes, as traditional industries may enhance industry concentration through reorganization. Recommendations include Three Squirrels Inc. (300783.SZ), a casual snack company benefiting from channel dividends, category extension, and seasonal gift boxes; Inner Mongolia Yili Industrial Group (600887.SH), a dairy industry leader poised to benefit from improving industry supply and demand dynamics and high dividend support; YIHAI INTL, a catering supply chain company expected to benefit from channel recovery due to domestic demand improvement; and Eastroc Beverage (605499.SH), an energy drink brand benefiting from strong industry sentiment and channel expansion. Risk warning: Unexpected adjustments to regulatory policies in the liquor industry, a slower than expected recovery in consumer scenarios and the effectiveness of related stimulus policies, higher than expected increases in raw material prices, slower than expected progress in company reforms, diversion of consumer demand towards competitor products and downstream demand recovery not meeting expectations.As expected, food safety risks, etc."Bonjour, comment puis-je vous aider aujourd'hui?" "Hello, how can I help you today?"