According to Zhitong Finance APP, GTHT released a research report stating that from 2019-2022, the industry enjoyed high prosperity and the market granted relatively high valuations. From 2023 to present, with declining prosperity and performance pressure, pessimistic expectations have led to gradually declining sector valuations, currently fluctuating around 20x PE. The firm believes the industry's long-term development logic remains solid, with leading companies still having considerable growth potential. These companies are actively adjusting and pursuing incremental growth, and if they deliver better-than-expected performance results, the sector may welcome a bottom rebound. Meanwhile, the sector's capital expenditure began declining in 2024, free cash flow improved significantly, and shareholder returns are also increasing.
GTHT's main viewpoints are as follows:
**Demand Under Pressure, Long-term Space Still Large**
Against the backdrop of weak consumption recovery, the revenue growth rate of the restaurant industry from 2019-2024 has significantly slowed to low single digits, leading to evident pressure on the demand side of the frozen food industry. Listed companies in the sector have experienced noticeable deceleration or even decline in performance over the past two years, with no clear turning point in sight. Consequently, the market holds pessimistic expectations regarding the industry's long-term development space and leading companies' growth ceiling. The firm believes industry development drivers remain intact, the industrial trend toward food freezing is irreversible, long-term industry development space remains broad, and leading companies still have considerable room to increase market share.
**Supply-Demand Mismatch, Active Adjustments**
The sector's performance pressure over the past two years stems not only from unfavorable external environment but also from substantial supply increases following aggressive capacity expansion in previous years under optimistic industry expectations. Weak demand, increased supply, and fragmented market structure have intensified competition, while mainstream manufacturers' pursuit of market share remains higher than profits, directly leading to increased promotional discounts and marketing investments, resulting in declining capital returns for the sector. In 2024, sector capital expenditure significantly turned downward, while total employee count has also begun to slow its growth recently, indicating the industry recognizes the supply-demand mismatch contradiction and has begun active adjustments.
**Breaking Internal Competition, Creating Incremental Growth**
The firm also observes some companies within the sector actively seeking breakthrough strategies, deploying combination strategies of expanding new categories, launching new products, and developing emerging channels to find new growth increments.
①Anjing Food: As a frozen food leader, the company demonstrates strong operational resilience with performance significantly outperforming competitors in recent years. Under trends of rational consumption and channel fragmentation, product strength becomes increasingly critical. The company emphasizes product-driven growth for 2025, intensifying new product launches while tilting new products toward the C-end to improve profit margins.
②Qianwei Yangchu: The company has higher restaurant exposure, facing greater short-term performance pressure, but has continuously increased R&D and sales personnel in recent years, improving channel capabilities in both large B and small B segments. Additionally, the company is creating new incremental growth by embracing new retail channels and expanding into dishes/baking categories.
**Risk Warnings:** Weak consumption recovery; intensified competition; rising costs; food safety incidents, etc.