According to a research report from Guotai Haitong, as the industry enters the peak season of 25Q4 and January 2026, competition continues to ease, with Anjoy Food recently moderately rolling back promotional policies on some products. Looking ahead to 2026, the core factor for a significant improvement in the sector's competitive landscape remains on the demand side; if demand shows little change, the bottoming-out period will be prolonged, whereas a marked improvement could lead to significant optimization. The market has already reached a strong consensus that competition in the food supply industry is easing. The main points of divergence regarding the future lie in: first, whether demand can recover; second, whether the improved competitive landscape can be sustained; and third, whether the alpha from new products, new channels, and new markets can deliver sustained and significant incremental growth. Guotai Haitong's main views are as follows:
A consensus is forming that competition is easing. In recent years, amid a weak recovery in the catering sector, overall demand in the food supply industry has been relatively subdued, leading to intensified competition driven by market share ambitions. However, the marginal benefits of price competition have significantly diminished. Leading companies are also consistently conveying views favoring rational competition, a point proven by the rebound in the sector's profit margins in 25Q3. As the industry enters the peak season of 25Q4 and January 2026, competition continues to ease, with Anjoy Food recently moderately rolling back promotional policies on some products. Looking ahead to 2026, the core factor for a significant improvement in the sector's competitive landscape remains on the demand side; if demand shows little change, the bottoming-out period will be prolonged, whereas a marked improvement could lead to significant optimization.
Breaking the deadlock by seeking new growth drivers. Facing industry headwinds, leading companies are also seeking new growth avenues through new products, new channels, and new markets. 1) Anjoy Food: The company made a series of proactive adjustments in 2025: ① Product-wise, it focused on new product-driven growth in 2025, emphasizing improved value-for-money and increasing the pace of new product launches, with positive feedback on new items. ② In new channels, it adjusted its strategy to fully embrace custom orders for supermarket chains, becoming a custom supplier for key accounts like Walmart, Sam's Club, and Pang Donglai. ③ In new markets, it plans to actively explore the halal market, which offers substantial space and lacks a dominant leader, suggesting significant future potential. The company is expected to see active sales in 25Q4, and with the continued momentum from new products and channels, its growth in 2026 is viewed positively. 2) Baoli Food: Its B2B business is intensifying efforts to mine existing customers and acquire new ones; its C-end brand Kongke maintains a steady pace of new product releases, with instant pasta effectively expanding its consumer base and usage scenarios, and it has already entered leading bulk retail channels. The company is expected to achieve relatively rapid growth in 2026. 3) Babe Food: Feedback on the new store format featuring small steamed buns has been positive, with current store efficiency basically stable at 2-3 times that of traditional take-out stores. The number of stores is expected to exceed expectations, potentially opening a new growth cycle for the company characterized by increased store efficiency, reduced closure rates, and accelerated national expansion. 4) YIHAI INTL: It is expected that, with focused company resources, its B2B and overseas businesses will maintain relatively rapid growth; its related-party business is also expected to gradually stabilize off a low base. The company is anticipated to maintain steady growth in 2026.
The sector is poised for a potential Davis Double Play. The market has already reached a strong consensus that competition in the industry is easing. The main points of divergence regarding the future lie in: first, whether demand can recover; second, whether the improved competitive landscape can be sustained; and third, whether the alpha from new products, new channels, and new markets can deliver sustained and significant incremental growth. Guotai Haitong expresses relative optimism on these points: firstly, with CPI continuing to recover, consumer confidence is expected to gradually improve, and further domestic demand stimulus policies are anticipated; secondly, the marginal benefits of low-price promotions are already minimal, rational competition has become an industry consensus, and leading companies have achieved some success in finding new growth drivers, making a renewed intensification of competition unlikely even if demand remains tepid; thirdly, the current cycle for new products, channels, and markets is not something that will conclude within a single quarter and is expected to persist throughout the year or longer, with the short-term peak season of 26Q1 also holding promise. Combined with the sector's currently low valuation levels, if performance exceeds expectations, it could potentially lead to a Davis Double Play.
Investment Recommendation. The food supply sector has passed its worst operational period, competition is gradually becoming more rational, and leading companies are generating alpha through new products, channels, and markets. Given the low valuations, the sector's potential for a rebound is viewed favorably, reiterating an overall bullish outlook. Key recommendations include Anjoy Food (603345.SH, 02648), Baoli Food (603170.SH), Ligo Food (300973.SZ), Babe Food (605338.SH), and YIHAI INTL (01579).
Risk warnings include weak consumption recovery; intensified competition; rising costs; and food safety incidents.
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