Hua Long Securities: Catering Supply Chain Mildly Recovers, Liquor Bottom Building Continues to Clear

Huolong Securities released a research report stating that the valuation of the food and beverage sector is oscillating and forming a bottom, positioned at a lower level. Boosting consumption is the focus of current macroeconomic policies. The firm believes that under the positive policy orientation of expanding domestic demand, the food and beverage sector is expected to see a recovery, and the firm maintains a "recommended" rating for the industry. In the first quarter of 2026, the liquor industry showed signs of marginal improvement. The overall revenue growth of the dairy sector slowed down, and profitability came under significant pressure. Huolong Securities' main points are as follows: Event In 2025, the revenue and net profit of the food and beverage industry declined year-on-year, but the year-over-year growth rate turned positive in Q1 2026. In terms of sub-sectors, snacks and soft drinks had the highest revenue growth in 2025, while soft drinks, pre-processed food, snacks, and seasonings had the highest revenue growth in Q1 2026. As of May 15, 2026, the PE ratio of the food and beverage industry index of Shanwang Level 1 was 22.5X. Among the Shanwang Level 3 sub-industries, the PE ratios were white wine (20.6X), beer (20.0X), seasonings (29.1X), dairy products (21.4X), pre-processed food (27.2X), soft drinks (27.1X), snacks (18.3X), and bakery products (33.2X). The liquor industry is currently in an accelerated phase of consolidation, showing a pattern of "total pressure and structural optimization" in its development. The market share of liquor continues to concentrate on leading brands and enterprises. With the continuous improvement of the macroeconomic environment, stable policy environment, continuous enhancement of various industry support policies, and release of emerging consumption potential, the industry is expected to gradually enter a period of recovery after a period of adjustment. In the medium to long term, the industry will return to a benign development track in accordance with the scale of market economy development. In 2025, the liquor industry as a whole experienced soft demand, decline in revenue and profit, and increasing differentiation. In the first quarter of 2026, the liquor industry showed signs of marginal improvement. In the first quarter of 2026, the beer industry showed good performance on the financial statements, with both revenue and net profit growing positively year-on-year. In 2025, the snack sector maintained resilience in overall revenue, and in Q1 2026, recovery momentum was evident despite a high base. Companies like Yanker Shop Food, Chacha Food, Haoxiangni Health Food, Bestore Co., Ltd. achieved impressive growth. The soft drink sector achieved revenue of 39.713 billion yuan in 2025, a year-on-year increase of 11.07%. The sector as a whole maintained steady revenue growth, with a clear differentiation among companies. In the first quarter of 2026, the soft drink industry performed well on the financial statements, with both revenue and net profit growing positively year-on-year. The sector as a whole achieved revenue of 12.481 billion yuan, a year-on-year increase of 27.26%; net profit attributable to shareholders was 2.592 billion yuan, a year-on-year increase of 34.76%; net profit attributable to shareholders after deducting non-recurring items was 2.457 billion yuan, a year-on-year increase of 31.43%, showing enhanced recovery momentum. In recent years, the dairy consumption demand has been somewhat suppressed due to the imbalance of supply and demand of raw milk in 2025. As a daily necessity, dairy products have certain characteristics of rigid consumption. With the gradual recovery of consumer confidence, the development of the dairy industry shows certain differentiation. In 2025, the pre-processed food sector achieved revenue of 39.955 billion yuan, a year-on-year increase of 3.53%, maintaining stable revenue growth as a sector, with leading enterprises showing steady growth. In the first quarter of 2026, the performance of the pre-processed food industry on the financial statements improved significantly, with both revenue and net profit growing positively year-on-year. The sector as a whole achieved revenue of 11.288 billion yuan, a year-on-year increase of 22.81%; net profit attributable to shareholders was 932 million yuan, a year-on-year increase of 33.33%, showing significant recovery momentum. In 2025, the seasoning sector achieved revenue of 70.743 billion yuan, a year-on-year increase of 6.56%, maintaining steady revenue growth as a sector, with leading enterprises showing outstanding growth resilience. In the first quarter of 2026, the seasoning industry performed well on the financial statements, with both revenue and net profit growing positively year-on-year. The sector as a whole achieved revenue of 21.148 billion yuan, a year-on-year increase of 18.39%; net profit attributable to shareholders was 4.217 billion yuan, a year-on-year increase of 22.41%. The baking food sector as a whole was under pressure, with revenue of 24.186 billion yuan/5.708 billion yuan in 2025/2026Q1, a year-on-year increase of 2.71%/7.45%; net profit attributable to shareholders was 1.412 billion yuan/0.228 billion yuan, with year-on-year changes of -18.01%/-25.72%; net profit attributable to shareholders after deducting non-recurring items was 1.285 billion yuan/0.202 billion yuan, with year-on-year changes of -20.14%/-26.03%, showing a slowdown in revenue growth and significant pressure on profitability. Guilin Seamild Foods performed well in terms of financial performance. Investment advice LiquorThe liquor industry is currently at a bottoming phase with further differentiation. The revenue and net profit growth rates of listed liquor companies in Q1 2026 have seen some recovery compared to 2025. The valuation of the sector is low, with sufficient safety margin. With the marginal recovery of business and banquet demand, as well as the implementation of consumption promotion policies, the liquor consumption environment is expected to improve. Companies like Kweichow Moutai, Shanxi Xinghuacun Fen Wine Factory, Anhui Gujing Distillery, and Jiangsu King's Luck Brewery Joint-Stock are recommended. Food Supply ChainThe recovery of the catering channel continues, with marginally improved financial performance and stronger profitability restoration momentum for leading enterprises. Anjoy Foods Group is worth paying attention to; Dairy ProductsUpstream farms continue to clear out while downstream demand marginally recovers. Leading dairy companies are leading in the recovery process. Inner Mongolia Yili Industrial Group and New Hope Dairy are recommended. SnacksThe snack industry is benefiting from category and new channel dividends,... Risk Warning: Food safety risks, slower-than-expected consumption recovery, rising costs, slower-than-expected performance growth, intensified industry competition, and risks of deviations in third-party data statistics.