Guosen: The signals of bottom grinding in the fundamentals are obvious. Pay attention to the upward elasticity of the food and beverage sector.

Guosen released a research report stating that as the impact of consumer policies in the second quarter gradually weakens, the demand for the catering supply chain and other industries is entering a phase of gradual recovery. Positive signals are also emerging on the supply side, such as frequent mergers and acquisitions by industry leaders driving industry concentration up. Industry competition has not intensified further, and market expenditure is gradually becoming more rational. The bank believes that the industry is expected to gradually enter an improvement phase. Based on historical experience, with intensive macro policies in the fourth quarter, changes in supply and demand dynamics may catalyze stock price increases in a backdrop of low fundamentals, low expectations in the capital market, and low institutional holdings. Since 2025, there have been frequent policies aimed at boosting domestic demand and service consumption, many of which involve the catering industry. It is recommended to focus on the policy-sensitive catering supply chain sector. Guosen's main points are as follows: Industry: fundamentals are bottoming out, valuation levels are low As of October 17, the seasoning index (CSI) has fallen by 6.1% since the beginning of 2025, underperforming the Shanghai and Shenzhen 300 Index by 24.3 percentage points and the food and beverage sector by 3.5 percentage points. The processed food index (CSI) has fallen by 6.4%, underperforming the Shanghai and Shenzhen 300 Index by 24.6 percentage points and the food and beverage sector by 3.8 percentage points. Since August, the food and beverage sector has risen by 3.0% due to market rotation, with seasoning and food and beverage trends being similar, mainly driven by large market value targets like Haitian and resonating with the broader market; processed food has fallen by 0.6% in weak expectations and realities. The fundamental trend of the catering supply chain is clearly bottoming out, with some improvement in the seasoning sector and low institutional holdings, and the valuation center is biased downwards. Key stocks: building momentum, with potential for elasticity (1) Foshan Haitian Flavouring and Food: showing leadership advantages through self-innovation across cycles. (2) Zhongyin Babi Food: driven by both store and group meal operations, expanding new store types to improve all-hours management capabilities. (3) Anjoy Foods Group: stable core operational capabilities, clear product and channel strategies. (4) Zhengzhou Qianweiyangchu Food Co., Ltd: channel structure optimization, new channels expected to become a driving force. (5) YIHAI INTL: solid foundation from related parties, maintaining a high dividend rate, with clear growth points. Risk factors: risks include slower-than-expected recovery in catering industry demand, sustained weak consumer spending, significant increases in raw material prices, and reputational risks from food safety issues.