According to a research report from Gf Securities, in the first half of 2026, the food and beverage sector underperformed in terms of stock price changes, with holdings and valuations at low levels. The baijiu (Chinese liquor) sector, after a four-year adjustment period, is expected to enter a new development cycle in 2026. For mass-market consumer goods, some sub-sectors had already stabilized in 2025. Looking ahead to 2026, industry prices per ton are expected to rise moderately, and opportunities are seen in individual stocks driven by new products and new channels. The main views of Gf Securities are as follows:
Review of H1 2026: Underperforming Stock Prices, Holdings and Valuations at Lows
In the first half of 2026, the food and beverage industry's performance ranked low among 31 primary Shenwan industries. (1) From a valuation perspective, the valuation of food and beverage relative to the entire A-share market hit a new 20-year low, indicating market pessimism about the long-term outlook. (2) From a holdings perspective, the overweight position in the food and beverage sector continued to decline, with the baijiu sector's overweight ratio falling to a historical low. (3) From a dividend perspective, the dividend yield of the food and beverage sector ranks among the top three in Shenwan's primary industries.
The Baijiu Sector
The baijiu sector's financial statements have been undergoing continuous clearing and adjustment. The extent of the decline in current stock prices, valuations, and earnings forecast revisions is now comparable to the previous adjustment cycle. The proportion of contract liabilities to revenue in the sector is reasonable, and industry inventories are gradually returning to rational levels. Currently, the cash-adjusted P/E ratio for five major baijiu companies is around 10x. The wholesale price of Feitian Moutai has stabilized, and sales in the second half of the year are entering a low-base period. If economic conditions improve and industry fundamentals strengthen subsequently, a potential Davis Double play could emerge.
Food Supply and Catering Industry
This sector is gradually emerging from a stress-test phase and is currently in a stage of weak overall recovery but strong structural upgrading.
(1) Quick-frozen Foods: Following the clearance of small and medium-sized production capacity and the end of price wars, prices per ton for core categories have stabilized and begun to recover. The industry has officially entered a new cycle focused on quality and efficiency improvement. Anjoy Foods is the top pick due to its strong Alpha and dual barriers in both product and channels.
(2) Condiments: Although short-term demand remains in a consolidation phase, prices per ton have stabilized and started to rise, and leading companies continue to gain market share. Recommended stocks include Foshan Haitian Flavouring & Food Co.,Ltd. and Tianwei Foodstuff Co.,Ltd., which have solid fundamentals, high dividends, and support from substantial share buybacks, as well as Angel Yeast Co.,Ltd., which has strong overseas business.
(3) Beer: Against a backdrop of stable total volume, a differentiated trend is evident with regional leaders gaining advantage. As cost benefits from materials like aluminum end, a new round of price increases is expected to catalyze the sector by year-end. Beijing Yanjing Brewery Co.,Ltd. is a key recommendation due to the strong momentum of its major products.
Snack Retail Chains
While the discount retail channel remains active, upstream companies are showing divergence. Stock prices in this sub-sector have generally declined this year, with only Ziyan Food Co.,Ltd., Laiyifen Co.,Ltd., and Ximai Food Industry Co.,Ltd. achieving positive returns. From an industry development cycle perspective, the snack sector, due to its weak cyclical nature, is currently in the middle of a channel dividend cycle and the latter half of a product cycle. The sector awaits industry innovation to drive overall valuation improvement. The outlook prioritizes structure, favoring companies with flexible profitability and potential future catalysts. Recommended stocks include Mingming Hen Mang, Wanchen Group, and Ximai Food Industry Co.,Ltd., with Youyou Foods Co.,Ltd. also worth watching.
Beverage Sector
Priority should be given to companies with strong revenue growth potential and leading cost management capabilities. Against a backdrop of relatively stable industry output and sales value, leading companies have maintained revenue growth over the past few years due to pricing advantages and economies of scale, while smaller companies have seen mixed performance. Currently, PET prices are fluctuating with oil prices, and costs may be entering a new upward cycle. It is advisable to focus on leading companies with the ability to pass on costs.
Key Risks
Potential risks include macroeconomic performance falling short of expectations, slower-than-expected recovery in consumer spending power, and food safety issues.
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