China Securities Co., Ltd.: The fresh snack sector is currently experiencing a surge in stores, and leading brands are expected to stand out in the competition.

China Securities Co., Ltd. released a research report stating that the fresh snack sector represents a new innovation and transformation following the bulk snack channel, focusing on fresh short shelf-life products. It aims to balance short shelf-life, scale, and price and is currently experiencing a surge in store openings. Leading brands are accelerating their national expansion, and in the future, brands that have a strong supply chain foundation, exceptional supply chain management capability, and deep channel resources may stand out in the competition. Attention should be paid to investment opportunities in the supply chain as upstream brands enter the fresh snack sector and channel investment opportunities arising from the integration of stores. The main points from China Securities Co., Ltd. are as follows: What aspects of fresh snacks should we focus on? 1) Development history: A dual revolution in efficiency and quality, with recent emergence of new business models such as bulk snacks and fresh snacks; 2) Competitive landscape: Low industry concentration, with four leading players emerging and three major camps coexisting; 3) Single store model and business model: Fresh snacks currently exhibit characteristics of popular mall stores, emphasizing fresh short shelf-life products. What new changes have occurred in the fresh snack sector at the present moment? 1) Since the beginning of this year, leading brands representing upstream snack brands, downstream bulk channel brands, tea beverage brands, and convenience store channels have all entered the fresh snack sector, with a concentrated pace of store openings in July and August; 2) The opening of fresh snack stores further accelerated from June to August this year, with leading brands speeding up nationalization, as several Quan and Jinli stores expanded across the country. What are the key factors for competition in the future fresh snack sector? 1) The supply chain is the foundation for expansion, and the ability to continuously create popular products is key to maintaining momentum, while food safety is a critical lifeline; 2) Channel resources serve as barriers, with fresh snacks focusing on first-floor/B1 mall locations, which are in high demand and low in supply. What potential opportunities exist in the fresh snack sector from an investment perspective? 1) Significant dividends from new supply chain channels, with attention to supply chain investment opportunities as upstream brands enter the fresh snack sector: Fresh marinated foods: including duck products, chicken feet, beef, pork offal, seafood, vegetables, bean products, etc. Related companies include Juewei Food Co., Ltd., Jinzai Food Group, Yanker Shop Food. Short shelf-life baked goods: covering products like egg tarts, mochi, Swiss rolls, toast, steamed cakes, and meat floss cakes. Related company: Ligao Foods Co., Ltd. Dried and freeze-dried fruits: focused on raw fruit processing, freeze-drying, VF fruit and vegetable crisps, etc. Nuts and fried snacks: mainly including nut processing, mixed dried fruits, and gift box development. Related companies: Chacha Food, Ganyuan Foods. Fresh beverages and refrigerated desserts: including NFC fruit juices, yogurt cups, fresh milk drinks, and refrigerated desserts. Related company: New Hope Dairy. Healthy functional snacks: focusing on concepts like probiotics, low GI, high protein, collagen, and food-medicinal integration. Related company: Guilin Seamild Foods. 2) In the first half, focus on securing store locations, while in the second half, pay attention to mergers and acquisitions, looking for channel investment opportunities arising from store integration. The firm believes several types of companies can be highlighted: 1) BUSYMING and Fujian Wanchen Food Group, which possess channel resources and excellent supply chain management capabilities; 2) Juewei Food, which has a solid supply chain foundation and franchise store operation ability; 3) Giants with deep channel resources, such as China Resources, which, according to Sina Finance, currently has most of the nationwide expansion locations for Jinli stores under its shopping malls (including Wanshanghui, Wanshangtiandi, and Wanshangcheng), and these two may cooperate. Risk warning: Demand recovery may fall short of expectations; economic recovery may not meet expectations; food safety risks.