Core Viewpoint - The liquor industry maintains a medium-term optimistic outlook, emphasizing the importance of positioning over rhythm, with a focus on marginal stabilization signals at the cycle bottom [1] Revenue Side: Gradual Bottoming and Increasing Disparity - In FY2024, the liquor sector's revenue grew by 8.2% year-on-year, while net profit attributable to shareholders increased by 7.2%, with a noticeable deceleration in H2 compared to H1 [2] - Major liquor companies are enhancing dealer management and making appropriate adjustments, emphasizing binding core distributors to drive network penetration and sales performance [2] - In Q4 of 2024 and Q1 of 2025, most liquor companies experienced cash collection growth rates lower than apparent return growth rates, indicating ongoing cash pressure in channels [2] Profit Side: Pressure on Gross Margin and Tax Rate, Decline in Net Profit Margin - The gross margin for the liquor sector in FY2024 was 82.93%, a year-on-year increase of 0.41 percentage points, while Q1 of 2025 saw a gross margin of 82.61%, up by 0.09 percentage points [3] - Sales expense ratios increased in FY2024 and Q1 of 2025, while management expense ratios decreased, indicating a cautious approach to expense management amid a stable pricing environment [3] - Profit growth rates for high-end liquor were 11.31% in FY2024 and 8.47% in Q1 of 2025, while sub-high-end and real estate liquor experienced declines, primarily due to challenges faced by certain brands [3]

Core Viewpoint - Hong Kong Central Clearing Limited has significantly increased its stake in Shanxi Fenjiu, becoming the third-largest shareholder, with a total holding of 46.99 million shares, representing 3.85% of the company as of Q1 2025, reflecting a substantial investment trend since 2024 [2][8]. Group 1: Shareholding Changes - Hong Kong Central Clearing Limited's shareholding increased by 13.41 million shares from the end of 2024 to Q1 2025, with an investment amounting to approximately 2.658 billion yuan [2]. - The company first appeared in Shanxi Fenjiu's top ten shareholders in 2018, holding 7.83 million shares (0.90%), and has consistently increased its holdings over the years [3]. - By the end of 2024, Hong Kong Central Clearing Limited held 33.58 million shares, marking a 92.22% increase from the previous year [8]. Group 2: Financial Performance - Shanxi Fenjiu's stock price surged from 8.44 yuan per share in 2019 to a peak of 368.82 yuan per share, achieving a maximum increase of 42.70 times [5]. - The company reported a revenue of 36.01 billion yuan in 2024, a 281.30% increase from 9.444 billion yuan in 2018, and a net profit of 12.24 billion yuan, up 712.21% from 1.507 billion yuan in 2018 [5]. - The dividend payout for 2024 was 36 yuan per ten shares, totaling 7.393 billion yuan, which accounted for 60.40% of the net profit [8]. Group 3: Market Position and Strategy - Shanxi Fenjiu has become a key player in the Chinese liquor market, with a market share increase from 11% to 20% since 2018, establishing a competitive landscape alongside Moutai and Wuliangye [11]. - The company has expanded its marketing efforts outside of Shanxi, with 3,718 distributors outside the province, an increase of 598 from the previous year [13]. - Shanxi Fenjiu is actively pursuing international markets, with a 20% increase in export volume in 2023, reaching approximately 6 million liters [13].

Investment Rating - The report maintains an "Accumulate" rating for the liquor industry, indicating a positive outlook for the mid-term [1]. Core Insights - The liquor industry is experiencing continued pressure, with a focus on quality over speed in growth. The recovery in demand is showing signs of being uneven, leading companies to prioritize prudent growth strategies [12][18]. - The high-end liquor segment is seeing stable pricing control, while the mid-range segment is under pressure, indicating a divergence in performance across different price tiers [1][12]. Summary by Sections 1. Demand Recovery and Quality Focus - The liquor sector's revenue for FY 2024 grew by 8.2% year-on-year, with net profit increasing by 7.2%. For Q1 2025, revenue growth slowed to 2.3% and net profit to 2.6% [12][18]. - Consumer confidence remains weak, particularly in the mid to low-end segments, while high-end banquet consumption is showing signs of recovery from a low base [12][18]. 2. Revenue Trends - Revenue growth is gradually bottoming out, with increasing differentiation among companies. The high-end segment remains relatively stable, while the mid-range segment faces significant challenges [18][27]. - The report highlights that many liquor companies are tightening control over distributors and focusing on core products to drive sales [18][27]. 3. Profitability Analysis - The gross profit margin for the liquor sector in FY 2024 was 82.93%, a slight increase from the previous year. However, many companies are facing pressure on their gross margins due to pricing and product mix challenges [2][3]. - Sales and management expense ratios have seen slight increases, indicating a cautious approach to spending amid a challenging market environment [2][3]. 4. Investment Recommendations - The report suggests that leading liquor companies are expected to show resilient growth, supported by effective channel management and digital tracking strategies. Companies like Guizhou Moutai and Shanxi Fenjiu are recommended for their solid performance and valuation safety margins [3][12].

Core Viewpoint - The white liquor industry is experiencing a slowdown in growth, with revenue growth rates declining from double digits to single digits, and cash flow growth lagging behind revenue growth [1][2]. Fundamental Analysis - The white liquor industry achieved a total revenue of 427.218 billion yuan in 2024, representing a year-on-year growth of 8.38%, and a net profit of 166.805 billion yuan, up 7.41% [2]. - In Q1 2025, the industry reported revenues of 148.535 billion yuan, a year-on-year increase of 2.43%, and a net profit of 63.097 billion yuan, growing by 2.71% [2]. - Combining Q4 2024 and Q1 2025, the industry generated revenues of 247.491 billion yuan, with a year-on-year growth of 2.11%, and a net profit of 98.491 billion yuan, up 0.86% [2]. - Revenue growth rates are highest for high-end liquor, followed by mid-range and then sub-high-end liquor, while net profit growth rates follow the same order [2]. Cash Flow and Prepayments - By the end of 2024, the industry had prepayments of 60.328 billion yuan, an increase of 18.601 billion yuan from Q3 2024 [3]. - In Q1 2025, prepayments decreased to 49.177 billion yuan, down 11.151 billion yuan from Q4 2024 [3]. - The operating cash flow net amount for the industry in 2024 was 148.331 billion yuan, a year-on-year increase of 7.72%, while cash received from sales was 465.847 billion yuan, growing by 6.25% [3]. - In Q1 2025, the operating cash flow net amount was 48.645 billion yuan, up 62.29%, with cash received from sales at 150.192 billion yuan, a 16.65% increase [3]. Valuation Analysis and Dividends - As of April 30, 2025, the absolute PE ratio for the white liquor sector was 19.7x, below the historical average of 30.6x since 2011 [4]. - The relative PE ratio compared to the Shanghai Composite Index was 1.39x, also below the historical average of 2.04x [4]. - Most companies in the sector increased their annual dividend rates in 2024, with dividend yields rising above 3% [4]. - The current valuation reflects market expectations of continued demand pressure, suggesting limited downside for leading brands if demand stabilizes [4]. Recommended Stocks - Key recommendations include Kweichow Moutai (600519), Shanxi Fenjiu (600809), Wuliangye (000858), Jinshiyuan (603369), and Yingjia Gongjiu (603198) [5].

Group 1 - The core viewpoint emphasizes the recovery of domestic demand, suggesting a more optimistic outlook for investment opportunities in the food and beverage sector, with potential for a dual boost in fundamentals and valuations in the second half of the year [1] - The major consumption ETF has shown a year-to-date maximum drawdown of 5.57%, indicating some volatility, but it has also outperformed its benchmark with a one-year annualized excess return of 2.18% [2] - The latest price-to-earnings ratio (PE-TTM) for the major consumption index is 19.84, which is considered low compared to historical levels, indicating potential undervaluation [2] Group 2 - The top ten weighted stocks in the major consumption index account for 67.16% of the index, highlighting the concentration of investment in a few key players [3] - The performance of individual stocks within the index shows mixed results, with notable increases in stocks like Hai Tian Wei Ye (3.06%) and declines in others like Dong Peng Beverage (-0.89%) [5] - The report indicates that the liquor industry is entering a bottoming phase, with expectations for recovery as companies manage inventory more effectively in the latter half of the year [1]

Investment Rating - The report rates the food and beverage sector as "Overweight" for 2024 and Q1 2025 [1] Core Insights - The food and beverage sector is experiencing a slowdown, with 2024 revenue and net profit expected to grow by 2% and 4% year-on-year, respectively. For Q1 2025, revenue and net profit are projected to increase by 1% and 0.2% year-on-year, indicating overall deceleration [2][4] Summary by Sections 1. Food and Beverage Sector Overview - The food and beverage sector's total revenue for 2024 is projected at 1,089.8 billion, with a year-on-year growth of 2%, and net profit at 220.2 billion, with a year-on-year growth of 4%. The growth rate has decreased by 4.9 percentage points for revenue and 12.7 percentage points for net profit compared to the previous year [7][8] 2. Subsector Performance 2.1. Baijiu (Chinese liquor) - The baijiu sector is facing demand pressure, with revenue growth for high-end, mid-range, and regional baijiu expected to be 12%, 3%, and 0% respectively in 2024. Net profit growth is projected at 11%, -1%, and -7% respectively, indicating a clear performance differentiation among brands [12][14] 2.2. Beer - The beer sector is showing signs of recovery, with Q1 2025 revenue increasing by 4% and net profit by 11%. However, the average price per ton is under pressure, with a slight decline in prices observed [47][48] 2.3. Snacks - The snack segment is experiencing structural growth, with revenue growth of 18% in Q4 2024 and 2% in Q1 2025, although the latter is affected by high base effects and the timing of the Spring Festival [4][8] 2.4. Soft Drinks - The soft drink sector maintains a good growth trajectory, with revenue growth of 3% and net profit growth of 1% in Q1 2025, driven by strong performance from leading brands [4][8] 2.5. Dairy Products - The dairy sector faced a decline in 2024, with revenue down 7% and net profit down 27%. However, there are signs of improvement in Q1 2025 [4][8] 2.6. Seasonings - The seasoning sector is showing marginal improvement, with revenue growth of 3% and net profit growth of 7% in Q1 2025 [4][8] 2.7. Food Supply Chain - The food supply chain sector is under pressure due to increased competition, with revenue down 5% and net profit down 13% in Q1 2025 [4][8] 3. Investment Recommendations - The report suggests overweight positions in high-quality growth stocks within the baijiu sector, such as Shanxi Fenjiu and Guizhou Moutai, as well as in snack companies like Three Squirrels and Yanjin. In the beer sector, it recommends stocks like Qingdao Beer and Zhujiang Beer [4][8]

Investment Rating - The investment rating for Shanxi Fenjiu is maintained as "Buy" [4] Core Views - The report highlights the healthy development of inventory and focuses on new products and mid-tier products for 2025. The company is expected to continue optimizing its product structure, with an emphasis on high-end liquor and expansion into markets outside its home province [1][2][3] Financial Performance - In 2024, the company achieved a revenue of 360.11 billion yuan, a year-on-year increase of 13%, and a net profit of 122.43 billion yuan, up 17% [8] - For Q1 2025, the revenue was 165.23 billion yuan, reflecting an 8% year-on-year growth, while net profit was 66.48 billion yuan, a 6% increase [8] - The gross margin for 2024 was 76%, with a net margin of 34%. In Q1 2025, the gross margin increased to 79% [1][3] Product and Market Strategy - The company reported that the revenue from mid-to-high-end liquor increased by 14% to 265.32 billion yuan in 2024, while other liquor categories saw a 9% increase to 93.42 billion yuan [2] - The company is expanding its dealer network, adding 15 dealers in its home province and 598 dealers outside, indicating a strong focus on provincial expansion [2] Earnings Forecast and Valuation - The revenue growth forecast for 2025 is adjusted to 10%, with net profit growth forecasted at 8%. The EPS for 2025 is projected to be 10.84 yuan, with a corresponding P/E ratio of 19 times [3][4]

Core Viewpoint - The liquor industry is entering a phase of bottoming out, with signs of pressure relief expected in the second quarter of 2025, leading to potential recovery in the second half of the year [1][3] Liquor Sector - The liquor sector is showing signs of bottoming out, with significant structural differentiation among companies, particularly the resilience of leading brands [1][2] - In 2024, the overall demand for liquor is expected to weaken, leading to a decline in cash flow and profit for most listed liquor companies, except for Moutai [1][2] - For Q1 2025, major liquor companies have adopted a more pragmatic approach, with revenue growth of 1.6% and profit growth of 0.3% compared to the previous year [2] Leading Brands - Moutai's revenue grew by 11.7% and profit by 13.8%, significantly outperforming the industry, while Wuliangye achieved positive growth in the thousand-yuan price segment [2] - Regional leaders like Gujing and Jinshiyuan have also shown stronger performance compared to their competitors [2][4] Capital Market - Major liquor companies are enhancing shareholder returns through high dividends and significant buybacks, which helps to bolster market confidence [2] Consumer Goods Sector - The dairy and beer sectors have emerged from their bottoming phase, while snacks and beverages are performing well [2][3] - The overall revenue and profit for the consumer goods sector increased by 2.4% and 8.4% respectively in Q4 2024 and Q1 2025 [2] New Opportunities - New channels and product categories are driving growth in the snack and beverage sectors, with significant expansion in snack retail and innovative beverage offerings [3][4] - The food and beverage industry is expected to gradually recover, with potential for both fundamental and valuation improvements in the second half of the year [3][4]

Investment Rating - The investment rating for the company is "Buy" [15] Core Views - The company is expected to achieve total operating revenue of 36.01 billion yuan in 2024, representing a year-on-year growth of 12.79%. The net profit attributable to shareholders is projected to be 12.24 billion yuan, with a growth rate of 17.29% [3][9] - The company is focusing on enhancing channel management capabilities and accelerating market response through organizational restructuring, which is expected to improve performance in 2024 and beyond [9] Financial Performance Summary - For 2024, the company anticipates a gross margin of 76.2% and a net profit margin of 34%, with respective year-on-year increases of 0.9 and 1.31 percentage points [3] - The company achieved a total revenue of 4.65 billion yuan in Q4 2024, which is a decrease of 10.24% year-on-year, with a net profit of 893 million yuan, down 11.32% [4] - The company expects to see revenue growth in both high-end and other liquor categories, with projected revenues of 26.53 billion yuan and 9.34 billion yuan respectively for 2024 [5] Earnings Forecast - The company forecasts revenues of 39.68 billion yuan, 43.78 billion yuan, and 50.48 billion yuan for 2025, 2026, and 2027 respectively, with year-on-year growth rates of 10.17%, 10.34%, and 15.32% [11] - The projected net profit for the same years is 13.51 billion yuan, 14.94 billion yuan, and 17.45 billion yuan, with growth rates of 10.32%, 10.63%, and 16.76% [11][12]

Investment Rating - The report maintains a "Buy" recommendation for the food and beverage industry, indicating a gradual bottoming out for the liquor sector and a positive outlook for consumer goods [2]. Core Insights - The liquor sector is showing signs of bottoming out with significant structural differentiation among companies, while the consumer goods sector is recovering from a downturn [4][7]. - The report emphasizes the importance of domestic demand recovery, suggesting that new market scenarios and product categories present structural investment opportunities [4]. Summary by Sections 1. Liquor Sector: Signs of Bottoming Out and Structural Differentiation - The liquor industry experienced a slowdown in Q4 2024, but maintained positive growth in Q1 2025 despite high base effects, with significant differentiation among companies [7]. - Major liquor companies like Moutai and Wuliangye are outperforming the market, with Moutai's revenue growth at 10.7% and profit growth at 11.6% in Q1 2025 [12][16]. - The overall revenue for the liquor sector in 2024 was 4,417.7 billion, with a growth rate of 7.7%, while Q1 2025 saw a revenue of 1,533.6 billion, reflecting a growth of 1.8% [12][15]. 2. Consumer Goods Sector: Recovery and Bright Spots - The consumer goods sector, including dairy and beer, is showing signs of recovery, with revenue and profit growth of 2.4% and 8.4% respectively in Q1 2025 [4][16]. - New channels and product categories are driving growth in snacks and beverages, with companies like Dongpeng and Nongfu showing strong performance [4][16]. - The report suggests a positive outlook for the consumer goods sector, with expectations of a dual boost in fundamentals and valuations in the latter half of the year [4][16]. 3. Investment Recommendations - The report recommends focusing on leading companies in the liquor sector, such as Moutai and Wuliangye, as they are expected to benefit from the recovery phase [4][16]. - For consumer goods, it suggests investing in snack and beverage companies that are leveraging new channels and product innovations, highlighting the potential for significant growth [4][16].