食品饮料行业专题研究：现金流专题——框架篇：食品饮料新周期，回归PB-ROE框架

Industry Investment Rating - The report maintains a positive outlook on the food and beverage industry, particularly highlighting the potential for high ROE and undervalued PB valuations in leading companies [1][2][40] Core Views - The food and beverage industry is entering a new cycle characterized by reduced operational scale and a return to the PB-ROE framework, with a focus on high-quality growth and demand recovery [1][2] - The industry is shifting towards a "volume reduction, price increase" model, similar to the US in the 1980s and Japan in the 1990s, with companies reducing leverage, cutting capacity, and improving free cash flow [1][2] - The market is expected to shift back to valuing high ROE companies as demand recovers and EPS expectations are revised, with leading companies in the sector likely to benefit [1][2] Macroeconomic Context - Short-term demand remains weak, with a long-term GDP growth target of around 5% [1][9] - The industry is expected to benefit from potential policy support, including fiscal measures and real estate inventory reduction, which could drive demand recovery in the second half of 2024 [9] Industry Trends - The liquor industry has seen a stabilization in production after three years of decline, with prices expected to align with PPI trends [13] - The mass consumer goods sector is following a similar path to the US and Japan, with declining volumes and rising prices, particularly in mature categories like beer and dairy [14][15] - Companies are reducing leverage, cutting capital expenditures, and improving free cash flow, which is expected to support higher dividend payouts [18][19] Free Cash Flow and Dividends - The food and beverage industry has strong free cash flow generation capabilities, with leading companies already offering dividend yields above 5% [2][30] - In a low-growth environment, companies are expected to improve free cash flow, leading to more high-dividend companies [2][30] - The PB-ROE model suggests that some companies are undervalued, with potential for higher ROE and dividend payouts [40] Investment Recommendations - The report recommends leading companies such as Kweichow Moutai, Wuliangye, Luzhou Laojiao, Shanxi Xinghuacun Fenjiu, and Mengniu Dairy, which are seen as undervalued with potential for ROE and dividend growth [2][40] - Growth opportunities are identified in companies like Yanjing Beer, Qianhe Condiment, Qianwei Central Kitchen, and Dongpeng Beverage, which could benefit from improving demand [2] Market Performance and Shareholder Returns - In weak market conditions, high-dividend assets tend to outperform, as seen in both domestic and international markets [46] - Companies like China Shenhua and Yangtze Power have seen significant stock price increases following increases in dividend payouts, driven by policy and market value considerations [48][49]