Liquor Sector: Leading The Market In 2020

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Recently, the liquor sector has been in the forefront of gains, and Kweichow Moutai[600519:CH] has also stood firm at 2,000 points. In fact, in the entire A-share market, the liquor sector has performed very well in the past two years.

Individual Stock Gains

Since 2020, the average rise and fall of liquor stocks has been 147%. Among them, 14 of the 19 liquor stocks have doubled, and the remaining stocks have the lowest increase of 34%.

From the data I compiled above, we can see that although Kweichow Moutai is only 61% not the largest increase, they have a guiding effect on the entire sector, and the total market value is still the first. Generally speaking, the current funds have spread from the top brands to the second and third-tier varieties. In particular, Huangtai Winery [000995:CH] was able to successfully go public, thanks to the company's successful turnaround in 2019. At the same time, the biggest upward momentum is running on the good track of liquor stocks.

Sector Valuation

As Moutai's share price continues to hit new highs, the entire liquor stocks follow the rise, and the valuation will naturally increase. In fact, looking at the valuation, it should be said that starting from the end of 2018, the valuation of liquor stocks began to increase linearly, reaching the highest level since 2013, of which the valuation of the liquor sector was 55 times. At present, the price-earnings ratio of the liquor index is constantly reaching new highs. There is obviously a speculative element behind this, and there is no need to mention the premium space. In terms of investment logic, the current liquor stocks are more like the 2017 market driven by performance. The fundamentals are its core support. The industry is still in a structural upward trend, and the dimensionality of 3-5 years is relatively certain. In terms of valuation, it has shifted from a cyclical attribute to a consumption attribute (high-end consumption).

Key Positions

Calculated according to key position data, food and beverage positions accounted for 8.6% of the market value of public equity fund stocks in the third quarter of 2020, an increase of 1.56%, reaching a high this year. Among them, the proportion of baijiu holdings continued to rise by 1.2% to 6.7%. Public funds are still increasing positions in the third quarter of 2020, among which high-end liquor institutions have heavy positions. In the third quarter of 2020, the overall increase in warehouse holdings was relatively high, including Wuliangye (0.36%), Luzhou Laojiao (0.3%), and Moutai (0.22%). It can also be seen from other data that funds like to buy liquor stocks very much.

To sum up, the liquor sector is a hot sector this year, and it has certain investment value from the perspective of valuation and institutional holdings. In addition, the performance growth of the stocks in the liquor sector is stable, the brand value is high, and the investment value is relatively large. It is a rational choice made by the institution from the perspective of fundamentals.

Part of the viewpoint reference:

Data comes from wind

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