The food supply industry has entered a critical period of structural transformation, with companies shifting from being "passive supporters" to "active drivers." Currently, industry capital expenditure has become more cautious, price wars are moderating, and as the competitive landscape optimizes, leading companies are gradually abandoning their previous extensive capacity expansion and channel distribution strategies. The performance of industry leaders has shown an improving trend since Q3 2025, indicating that while the industry has not yet entered a phase of high-growth expansion, it has moved past its worst stage. It is currently in a process of stabilization and recovery, expected to gradually achieve a dual boost in both performance and valuation. The main views of GF Securities are as follows:
On the supply side, the peak of capital expenditure has passed, revealing opportunities for structural adjustment. The food supply industry has entered a critical period of structural transformation, with companies shifting from being "passive supporters" to "active drivers." On one hand, the scale of the food supply industry continues to grow, driven by the expansion of the catering industry, an increase in chain rates, and rapid growth in food delivery. On the other hand, over the past few years, industry consolidation has accelerated due to a downturn in downstream catering industry sentiment and an imbalance of oversupply. Currently, industry capital expenditure has become more cautious, price wars are moderating, and as the competitive landscape optimizes, leading companies are gradually abandoning their previous extensive capacity expansion and channel distribution strategies. They are shifting their focus towards providing efficient services to large business clients and refined operations for small and medium-sized business clients, actively pursuing quality and efficient growth through product innovation and customization.
On the demand side, the industry moves in tandem with the overall CPI trend, highlighting its pro-cyclical nature. A review of history shows that when the CPI turns from negative to positive or is in the early stages of an upward trend, market expectations for a consumption recovery often drive capital flows into pro-cyclical sectors like the food supply chain. Company stock prices typically perform well ahead of actual improvements in earnings, a pattern that was particularly evident during the upward phase of the food CPI after 2019. The year-on-year CPI turned positive in October 2025, signifying a mild recovery in consumer demand and creating a favorable macroeconomic environment for fundamental improvement in the food supply sector. Concurrently, the performance of industry leaders has shown an improving trend since Q3 2025, indicating that while the industry has not yet entered a phase of high-growth expansion, it has moved past its worst stage. It is currently in a process of stabilization and recovery, expected to gradually achieve a dual boost in both performance and valuation.
Valuations are at low levels, offering a high margin of safety. GF Securities points out that the valuation of the food supply sector has fallen to a historically low range, and the sector remains under-allocated, possessing a high margin of safety and room for sentiment recovery. Industry leaders are poised for action. (1) Frozen Bakery: The industry maintains rapid growth, with a CAGR of 22.1% from 2020 to 2025. Leading company LiGao Foods shows multiple positive factors; its frozen bakery business benefits from new product launches and channel expansion, offering vast growth potential. Its cream business benefits from the Ministry of Commerce's anti-subsidy regulations, accelerating domestic substitution. (2) Quick-Frozen: Industry price wars have significantly weakened at the margin. Anjoy Foods, as the leader, has established a clear gap from competitors, with leading advantages in management, channels, and production capacity. The company has a rich pipeline of new products for 2025 and is expected to enjoy dual benefits from industry growth and market share gains in the future, further strengthening its advantages. (3) Compound Seasonings: The penetration rate of compound seasonings in China is currently only 25.4%. Compared to the penetration rates of over 50% in mature markets like Europe, the US, and Japan, there is significant room for improvement, indicating strong future growth momentum. Long-term development is看好 for Western-style compound seasoning leader Baoli Foods and Chinese-style compound seasoning leaders Tianwei Foods and Richen Shares.
Investment recommendations suggest the sector is currently in a phase of "double lows" in valuation and institutional holdings, with demand bottoming out and stabilizing for recovery, and a gradually improving policy environment. Industry capital expenditure has declined significantly, and the competitive dynamic is shifting from price wars to a more rational landscape. Coupled with the proactive initiatives of leading companies in new products and channels (membership warehouse clubs/new retail), mergers and acquisitions integration, and R&D-driven growth, the sector offers high certainty and elasticity. For allocation, the advice is to "look to large caps for allocation and small caps for elasticity." It is recommended to closely monitor the performance improvement of Anjoy Foods (603345.SH), LiGao Foods (300973.SZ), and Qianhe Condiment (603027.SH), as well as the growth elasticity brought by new channels and category expansion for Tianwei Foods (603317.SH), Guoquan (02517), and Qianwei Central Kitchen (001215.SZ).
Risks include macroeconomic performance falling short of expectations, rising raw material costs, and food safety risks.