The Zhitong Finance App learned that CITIC Securities released a research report saying that the 2027 proposal focuses on three main lines: 1) the dimension of competition mitigation. Considering the gradual rise in raw material costs, the improvement of product surpluses, and the stabilizing channel structure, the bank is optimistic that competition in the food supply and dairy industry will slow overall in 2027. The bank expects the mass snack industry to slow down in 2027, and the bank believes that competition among leading snack sellers will also become stable and manageable. 2) High dividend dimension: Considering that leading Volkswagen companies continue to maintain a steady increase in share, stable fundamentals and abundant free cash flow, leading Volkswagen companies have the ability to maintain high dividends. 3) Dimensions of healthy growth: Consumer demand for healthy food is expected to continue to grow in 2027. Low GI, low sugar & no sugar, high protein, high fiber, sports and health are worth paying attention to.
CITIC Securities's main views are as follows:
The mass goods sector completed the establishment of a foundation in the three dimensions of valuation, capital, and fundamentals
1) Valuation dimensions. Although the market value of popular goods sectors such as dairy products, food supply, beverages, and snacks has continued to decline over the past 5 years, sector profits have indeed grown steadily, and valuations have been greatly digested. The overall PE sector is in the 10% to 15% valuation fraction over the past 10 years. At the same time, mass goods companies are also continuously increasing their dividend rates. The sector's rolling dividend rate ranking already ranks second in all CITIC's Tier 1 industries, making it highly attractive.
2) In terms of capital, as of the end of June 2026, the share of public funding institutions in the mass goods industry fell further to 0.9%. The share of holdings continued to decline, and the chip structure was improving.
3) Fundamental dimensions. Although demand for terminals is still weak, leading mass product companies have continuously refined their internal skills in the past to cope with changes and challenges in the external environment (weakening economy, channel changes, increased competition, changes in demand, high inventory, etc.). After a round of downturn, leading companies in various popular product sectors have stabilized or increased their share and stabilized fundamentals.
At the same time, considering factors such as rising raw material costs, slowing production capacity investment, stabilizing channel structures, and stricter supervision in some industries, the bank believes that in 2027, competition is expected to slow down, supporting a steady rise in the fundamentals of leading mass goods companies.
Dairy products: The raw milk cycle started upward, and the sector sentiment resonated upward
Dairy product demand stabilized in the past 2 years, and demand for raw milk products stabilized in 2026. Milk prices have bottomed out and rebounded since 2026. Contract milk prices have risen cumulatively by 0.09 yuan since mid-April, ending the 5-year downward trend. Considering the aging herd structure and the 2 to 3 year dairy production expansion cycle, the bank determined that raw milk will enter an upward cycle in 2027 and 2028. Looking ahead to 2027, overall demand for dairy products is expected to be stable, and demand for low-temperature dairy and cheese will continue, while the upward trend in the raw milk cycle will directly drive the elastic profit growth of animal husbandry companies. At the same time, it is expected to drive leading dairy companies' product price recovery, share restoration, and cost optimization, which is beneficial to the performance growth of leading dairy companies.
Catering supply chain: Demand is weak and costs are under pressure, focusing on easing competition and the pace of price increases
After experiencing a short-term recovery in 2026Q1, the food supply industry's prosperity declined significantly month-on-month in 2026Q2. On the cost side, the prices of core raw materials such as soybeans, soybean oil, and surimi have continued to rise since 2026. 26H1 has benefited from low cost inventory. However, the cost pressure is expected to gradually reflect from 26H2. Fortunately, in 2026, the food supply industry continued the competitive mitigation trend starting at 25H2. According to Immediate Win data, CR5 on most food supply segments increased year-on-year in the first three quarters of 2026. Enterprise investment and trade-off efforts continued to slow down, and leading companies represented by Yasui began to try to raise prices to transfer cost pressure. Looking ahead, the bank anticipates that industry demand will hardly improve significantly in the short term, and that cost pressure will gradually be reflected on the corporate reporting side. Therefore, it is recommended to select investment targets in the three directions of continuous revenue boom, price increases, and high dividends.
Beverages: Focus on demand & cost trends to seize individual stock investment opportunities
Industry demand was under pressure in 2026, mainly due to weak consumption and poor weather affecting outdoor travel. At the same time, the sharp rise in PET prices put a lot of pressure on corporate profits (especially 26H2); leading beverage companies performed better than the industry as a whole, but overall sector valuations declined, and only a few companies performed relatively well due to high dividend stock prices. Looking ahead to 2027, the bank believes that demand recovery and cost trends are uncertain, and beverage investment still suggests focusing mainly on key individual stock opportunities.
Snacks: The valuation advantage of mass-selling snacks is highlighted, and branded snacks are waiting for the right time
Since 2026, leading companies selling snacks have accelerated their store openings, while net interest rates have maintained a good increase. Although the opening of mass snack stores this year has exceeded expectations, the market is worried that the store will open too fast and that space for subsequent stores will be squeezed. However, the bank believes that the current valuation fully reflects the market's concerns about the future fundamentals of leading mass snack companies. Considering that there is room to open a store and there is room to improve efficiency in same-store operations, I am optimistic that leading snack sellers will maintain double-digit revenue and profit growth in the next 2 years. At the same time, low PE and abundant cash flow will also support leading companies to be expected to provide shareholders with a high return on cash in the future.
Health products: Continue to recommend Jianhe Group and focus on yeast protein opportunities
Since this year, regulators and e-commerce platforms have taken steps to rectify the chaos in the industry, and regulations on the health products industry have become stricter. Continued strengthening of policies and platforms will disrupt online demand in the health products industry in the short term, but it will also raise the entry threshold for the health products industry and promote industry share concentration. Since 2026, the price of whey protein has skyrocketed, and it is expected that the tight supply and demand for whey protein will continue until 2027.
Risk factors:
Consumer sentiment declined; food and beverage recovery fell short of expectations; price increases fell short of expectations; industry competition intensified; the impact of emerging channels exceeded expectations; raw material prices continued to rise; food safety issues.