2021.09.11
■ The 1H21 results of condiment, cosmetics, instant noodle and tissue players were below expectations because of higher channel inventory and raw material prices, intensifying competition and a high base in 1H20.
■ The baijiu sector also delivered solid 1H21 results, but the market still has some concerns about the valuation level of baijiu players.
■ Covid volatility has affected domestic consumption in 3Q21, especially in the catering- and tourism-related industries. We expect the sales growth of condiment and beer players to be under pressure in 3Q21F.
■ Our top picks are Li Ning, Tsingtao (H), Mengniu and Wuliangye. The underweight sub-sectors include condiments (Haitian and Jonjee) and supermarkets (Yonghui). is still in the transitional period of adjusting its model.
■ Reiterate Hold with a lower DCF-based of Rmb4.3.
