On December 9, Anji Foodstuff Co.,Ltd. (603696) secured its sixth consecutive daily limit-up, driven by Fujian province's policy supporting Taiwanese entrepreneurs in opening Sha County Snack outlets. The food sector currently trades at historically low valuations but has shown signs of stabilization since Q2 2025, with fundamentals gradually improving.
The October CPI turning positive year-over-year signaled steady consumption recovery, boosting sector sentiment. Seasonal demand and holiday spending in Q4 are expected to directly benefit dining consumption while energizing upstream food and beverage suppliers—from seasonings and frozen ingredients to prepared dishes and beverages—as the entire catering supply chain anticipates inventory replenishment and sales peaks.
Market Rationality Returns Amid Dining Sector Recovery National Bureau of Statistics data shows October catering revenue reached 519 billion yuan (+3.8% YoY), with January-October cumulative revenue at 4.618 trillion yuan (+3.3% YoY). Zhejiang Securities research indicates catering sales from January-September 2025 recovered to about 123% of 2019 levels. China's current catering chain rate (by store count) remains around 16%, similar to 2023. This recovery cycle since early 2023 features more moderate demand rebound but faster supply expansion, intensifying competition and slowing chain rate growth.
Leading chains like Mixue Bingcheng, Guming Tea, Yum China, and Haidilao demonstrate operational resilience, with revenue growth significantly outperforming broader catering recovery. Zhejiang Securities notes that after two years of intense competition, the market is normalizing, and chain rates should resume gradual growth with sustained consumption recovery.
Potential for Davis Double Play: Leading Firms Show Stronger Profit Elasticity Guosen Securities observes that Q3 reports reflect stabilizing industry competition. Though profitability metrics remain at cyclical lows, most companies have optimized cost structures, reduced promotions, and benefited from easing raw material costs—all supporting gradual margin recovery.
"Restaurant supply chains are stabilizing, with leaders poised to benefit from consolidation," noted Guosen Securities, recommending monitoring inventory digestion and new product reception during Q4's critical validation period. The firm highlights valuation repair opportunities in compound seasonings, endorsing sector leaders like Yihai International, Haitian Flavouring, Anjoy Foods, and Qianwei Central Kitchen.
Diverging Views on Recovery Trajectory While some argue for muted dining sector recovery, Zhejiang Securities draws parallels to home appliance subsidies—where national-level billion-yuan stimulus proved far more effective than local million-yuan programs. The firm contends dining's "high-frequency + affordable" nature could deliver stronger rebound than appliances if similarly catalyzed.
For instance, Haidilao's table turnover rate still has ~20% upside versus 2019's 4.8 turns, potentially higher considering extended late-night operations and alignment with "emotional consumption" trends. Under moderate recovery, top brands offer attractive dividends—Yum China yields ~10% (including buybacks), Haidilao ~6%, and Guming's special dividend implies ~4%.
Winter Hot Pot Season Heats Up Institutional Interest Anji Foodstuff Co.,Ltd.'s rally coincides with its established position in compound seasonings—its rib-flavor "King" series leads market share, while natural extract seasonings serve premium restaurants. Q3 2025 results showed revenue up 3% YoY to 467 million yuan, with net profit growing 8.95% to 23.22 million yuan. The company operates six major seasoning categories distributed through wholesale, e-commerce, and foodservice channels.
Industry-wide, China's dining sector shows vibrant segmentation. Zhejiang Securities data reveals rapid expansion in Yunnan cuisine, crayfish, and tea drinks, while saturated segments like bakeries and frog hotpot face consolidation. As of October 2025, fast food leads with over 1 million stores, followed by noodle/hotpot/tea/rice noodle/bakery categories (300k+ stores each).
Guosen Securities recommends winter-focused plays like Haidilao and Yum China, while方正证券 highlights巴比食品's transformation from breakfast specialist to all-day community dining via dine-in expansion, driving higher average revenue per store.
(Mentioned stocks are for illustrative purposes only, not investment advice.)
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