Huatai Securities: The takeaway war continues to escalate, and food and beverage packaging companies are expected to benefit

According to the Zhitong Finance APP, Huazhong Securities released a research report stating that at the beginning of July, the "subsidy war" among giants in instant retail suddenly escalated and quickly evolved into a "volume competition" concerning the future market landscape. As consumers become more reliant on takeout, large food and beverage companies are strengthening quality control over dining utensils and increasingly prefer environmentally friendly and biodegradable materials. Listed companies in food and beverage packaging are deeply tied to global leading dining brands, with a significant proportion of revenue coming from environmentally friendly and biodegradable products. Affected by the takeout war in the downstream of the industry chain, the revenue of related listed companies is expected to rise. Relevant targets include HXIN (301501.SZ), ZX Packing Group (603091.SH), Nanwang Technology (301355.SZ), Jialian Technology (301193.SZ), and Fuling Co., Ltd. (001356.SZ). The main points of Huazhong Securities are as follows: Giants compete, the takeout war continues to escalate Since April, JD.com and Meituan have launched a takeout subsidy war. On April 30, Ele.me joined forces with Taobao Shanguo to make a high-profile entry, launching subsidies worth billions, free milk tea, large red envelopes, and other discounts, pushing the situation to a climax. In May, the State Administration for Market Regulation interviewed JD.com, Meituan, Ele.me, and other companies, leading to a ceasefire in the takeout war. At the beginning of July, the "subsidy war" among giants in instant retail suddenly escalated and quickly evolved into a "volume competition" concerning the future market landscape. Meituan and Taobao Shanguo issued a large number of takeout red envelope coupons, including several large coupons such as "25 off 21" and "16 off 16," while JD.com also issued 10 million exclusive "Su Chao takeout" coupons. On July 5, Meituan's instant retail daily orders exceeded 120 million, with restaurant orders surpassing 100 million. On July 7, the combined daily order number of Taobao Shanguo and Ele.me exceeded 80 million. The "subsidy war" intensifies, and dining companies benefit significantly With the launch of large subsidy coupons, the daily orders of various takeout companies have all broken records. On a certain day, JD.com's takeout exceeded 5 million orders, with beverage orders accounting for nearly half. Among them, Kudi Coffee's orders approached 900,000, while the second-ranked Luckin Coffee and other national coffee and milk tea brands such as Cha Bai Dao, Hu Shang A Yi, and Xi Tea all exceeded 100,000 orders. Kudi Coffee's promotional products contributed 80% of the sales, with at least 500 orders daily, far exceeding the previous natural peak season level of 350 orders. During the May Day holiday, the takeout volume of milk tea in places like Guangzhou and Shenzhen surged by 200% compared to the same period last year; within 24 hours of Taobao Shanguo's launch, the takeout order volume for Nayuki's Tea increased by 200% year-on-year; the two products of the tea brand Jasmine Milk White each sold over 100,000 cups. On July 2, the first day of the new round of subsidies, the business of restaurant chain brands and small and medium-sized merchants on Taobao Shanguo increased by 170% and 140% respectively, driving the order volume of various food categories such as coffee, beverages, desserts, snacks, and Western fast food to increase by over 150% month-on-month, stimulating order growth in afternoon tea and nighttime scenarios by over 170%. Takeout food packaging shows trends of recyclability, easy recycling, and biodegradability The "General Requirements for Takeout Food Packaging" stipulates that takeout food packaging should comply with national, industry, and local regulations regarding the prohibition and restriction of the use of non-degradable plastic products and the promotion of alternative materials and products. It also recommends that merchants use recyclable, easily recyclable, and biodegradable materials as raw materials for producing takeout food packaging, encouraging the reduction of packaging while ensuring performance requirements The "Guidelines for Reducing Packaging in Food Delivery" propose to reduce the number of packaging layers, recommending the use of paper bags in the absence of soup, while in other situations, fully biodegradable plastic bags should be prioritized; in cases where there are weight-bearing requirements, single-material non-woven bags can be chosen; for composite material packaging bags with insulation functions, they can only be used in scenarios where insulation is needed. Huazhang Securities pointed out that by the end of 2020, the national catering industry prohibited the use of non-degradable disposable plastic straws, and major tea beverage companies responded by starting to experiment with PLA material eco-friendly straws. Currently, according to the ESG reports disclosed by listed tea beverage companies, all enterprises have achieved the unified use of PLA straws or biodegradable plastic straws across all stores, promoting the formation of green and low-carbon production and lifestyle. Risk Warning Risks of macroeconomic growth being lower than expected; risks of corporate operating conditions being below expectations; risks of rising raw material prices; risks of exchange rate fluctuations; risks of intensified competition