Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Views - The food and beverage index increased by 2.1% from August 25 to August 29, ranking 7th among 28 sectors, underperforming the CSI 300 by approximately 0.6 percentage points. The snack (+10.2%), dairy (+2.7%), and liquor (+2.1%) sectors performed relatively well [4][12] - In Q2 2025, the food and beverage sector's revenue grew by 5.6% year-on-year, showing a slight recovery compared to Q1 2025 (+4.6%). However, profits declined by 2.1%, a decrease from Q1 2025 (+0.3%). The liquor sector saw a significant revenue growth decline of -5.0% in Q2 compared to +1.7% in Q1, primarily due to the impact of alcohol bans [4][12] - The report indicates a further widening of performance differentiation among companies, with leading firms like Kweichow Moutai and Haitian Flavor Industry maintaining stable growth, while some second-tier brands experienced revenue slowdowns. This reflects an increasing market share trend for leading companies amid external pressures [4][12] - The report suggests that most industries are expected to continue a recovery process in the second half of 2025, with a potential gradual upward shift in demand curves. It recommends focusing on leading companies for investment [4][12] Summary by Sections Weekly Insights - The food and beverage index increased by 2.1%, ranking 7th among sectors, and underperformed the CSI 300 by about 0.6 percentage points. The snack, dairy, and liquor sectors showed relative strength [12][13] Market Performance - The food and beverage sector's performance was below the market average, with a 2.1% increase, while snacks, dairy, and liquor sectors outperformed [12][13] Upstream Data - Some upstream raw material prices have decreased. For instance, the price of fresh milk was 3.0 CNY/kg, down 5.6% year-on-year, while pork prices were 20.0 CNY/kg, down 27.4% year-on-year [19][22] Liquor Industry News - The 29° Wuliangye "One Heart" has begun pre-sale, with a price of 399 CNY per bottle. Kweichow Moutai also launched a high-end product priced at 998 CNY per bottle [41][42] Memorandum - Attention is drawn to the shareholder meeting of Salted Fish on September 5, 2025, along with other companies holding meetings [43][47]

Core Viewpoint - The Chinese liquor industry is undergoing a deep adjustment period, facing challenges such as production contraction, consumption differentiation, and weak terminal sales, leading to a shift from rapid growth to declining production and sales profits [1] Industry Overview - The release of half-year reports from listed liquor companies indicates a significant change in the industry, with increased sales expenses and fierce competition among well-known brands for first-tier markets [1][12] - The overall profitability of the industry is declining, with many companies experiencing double-digit declines in revenue and profit, alongside rising inventory pressures and deteriorating product liquidity [11] Company Performance - Guizhou Moutai reported a total revenue of 91.094 billion, a year-on-year increase of 9.16%, and a net profit of 45.403 billion, up 8.89% [3] - Wuliangye achieved a revenue of 52.771 billion, growing 4.19%, and a net profit of 19.492 billion, up 2.28% [3] - Shanxi Fenjiu's revenue reached 23.964 billion, a 5.35% increase, with a net profit of 8.505 billion, up 1.13% [3] - Luzhou Laojiao reported a revenue of 16.454 billion, down 2.67%, and a net profit of 7.663 billion, down 4.54% [5] - Yanghe's revenue was 14.796 billion, down 35.32%, with a net profit of 4.344 billion, down 45.34% [5] - Other companies like Water Well and Shede also reported significant declines in revenue and profit, indicating the widespread impact of the industry's challenges [5][6][7] Market Trends - The industry is seeing a shift towards product innovation and channel transformation, with companies launching lower-alcohol and light bottle products to attract younger consumers [12][13] - The market is characterized by a need for companies to adapt to changing consumer preferences and enhance brand influence and channel efficiency [7][12] - Analysts suggest that the current environment is not isolated, and the liquor industry will eventually recover as consumption and the economy improve [13]

Group 1 - The Fourth China (Macau) International High-Quality Consumption Expo and Hengqin World Bay Area Forum will be held from September 3 to 7, showcasing a diverse array of global wine brands [1] - The event will feature a wide range of alcoholic beverages, including Chinese liquor brands like Moutai and Wuliangye, alongside international classics such as Hennessy and Penfolds, highlighting a cross-border tasting experience [1] - Despite structural adjustments in the global consumption market, the wine industry still shows significant growth potential, with a projected increase of $34 billion in the global core alcoholic beverage market by 2034 according to IWSR [1] Group 2 - The expo will serve as a key communication platform for top global wine brands, leveraging Macau's unique position as a cultural crossroads to explore new consumption scenarios and invigorate market dynamics [2]

Group 1 - The fourth China (Macau) International High-Quality Consumption Expo and the Hengqin World Bay Area Forum will take place from September 3 to 7, showcasing a diverse array of global wine brands [1] - The event will feature a wide range of alcoholic beverages, including Chinese liquor brands like Moutai and Wuliangye, alongside international classics such as Hennessy and Penfolds, highlighting a competitive atmosphere among renowned brands [1] - Despite structural adjustments in the global consumption market, the wine industry still shows considerable growth potential, with a projected increase of $34 billion in the global core alcoholic beverage market value by 2034 according to IWSR [1] Group 2 - The expo will provide immersive experiences through wine displays, tastings, and cultural explorations, allowing attendees to appreciate the rich heritage and innovative spirit of both Eastern and Western wine cultures [2] - Leveraging Macau's unique position as a cultural crossroads, the event aims to serve as a significant platform for top wine brands to explore new consumption scenarios and invigorate market dynamics [2]

Core Viewpoint - Shanxi Fenjiu has successfully entered the second phase of its revival after completing the first phase, as evidenced by its recent semi-annual report released on August 28 [1][13]. Financial Performance - For the reporting period, the company achieved revenue of 23.964 billion yuan, a year-on-year increase of 5.35%; net profit reached 8.505 billion yuan, up 1.13%, laying a solid foundation for achieving annual strategic goals [2]. Phase One Completion - The first phase of the revival program, from 2022 to 2024, focused on development transformation and management upgrades, with revenues increasing from 26.214 billion yuan in 2022 to 36.011 billion yuan in 2024, and net profits rising from 8.096 billion yuan to 12.243 billion yuan, successfully entering the top three of A-share liquor stocks [3][6]. - The company expanded its market presence, increasing the number of external distributors from 2,869 to 3,718, and external revenue grew from 16.0 billion yuan in 2022 to 22.37 billion yuan in 2024 [3]. Product Strategy - Shanxi Fenjiu has maintained a focus on high-quality product lines, with significant revenue growth in its premium offerings, including the Qinghua Fenjiu series and others, ensuring stable pricing across core products [4]. Phase Two Initiatives - The second phase, starting in 2025, aims for comprehensive transformation and modernization of governance, with a focus on consolidating achievements and creating conditions for high-quality development [7]. - The new strategic framework includes a market strategy emphasizing national expansion, youth engagement, and internationalization, with specific initiatives to deepen market penetration and enhance brand presence [9]. Industry Context - Despite a contraction in the overall liquor market, Shanxi Fenjiu has demonstrated resilience, maintaining stable growth while the broader industry faced challenges, such as a decrease in the number of large-scale enterprises and a decline in production and profits [11].

Core Viewpoint - The current adjustment in the liquor industry is characterized by "overall contraction and intensified differentiation," putting significant pressure on overall industry development. Shanxi Fenjiu has shown resilience by achieving revenue growth amidst this challenging environment, indicating its strong internal capabilities and market positioning [1][3]. Group 1: Company Performance - Shanxi Fenjiu reported a revenue of 23.964 billion yuan, a year-on-year increase of 5.35%, and a net profit of 8.505 billion yuan, up 1.13% year-on-year, making it one of the few companies in the industry to maintain positive growth [1][3]. - The company's performance serves as a "health check" during the industry's deep adjustment period, demonstrating its ability to withstand risks and maintain strategic stability [3][4]. Group 2: Strategic Shifts - The transition from rapid growth to stable growth is a necessary response to the industry's deep adjustment, highlighting the company's operational resilience [4]. - Shanxi Fenjiu's growth strategy has shifted from absolute "high speed" to more certain "high quality" and "high resilience," reflecting a long-term commitment to sustainable development [4]. Group 3: Product and Channel Strategy - The company's growth is supported by its core competitive advantages in product and channel development, allowing it to navigate the industry's challenges effectively [5]. - In the first half of the year, Fenjiu's product sales reached 23.391 billion yuan, accounting for 98% of total revenue, with a growth rate of 5.75%, driven by a focus on high-end products and a balanced market approach [5][6]. - The company has increased its R&D investment to 75.1792 million yuan, indicating a commitment to enhancing product quality and supporting high-end upgrades during the industry adjustment [5][6]. Group 4: National Strategy - Shanxi Fenjiu's revenue from the domestic market was 8.732 billion yuan, a year-on-year increase of 4.04%, while revenue from outside the province reached 15.143 billion yuan, up 6.15%, showcasing its successful transition to a national brand [6]. - The company's deep distribution and channel construction have significantly enhanced its brand influence and risk resistance, allowing it to maintain stability during industry adjustments [6][7]. Group 5: Long-term Outlook - The current actions taken by Shanxi Fenjiu during the industry's turbulence are seen as necessary preparations for future growth, with expectations of long-term value increase as consumer demand recovers [7].

Core Viewpoint - Shanxi Fenjiu is focusing on quality-driven development by allocating resources differently across various product price segments and enhancing marketing strategies to achieve multiple objectives such as price competition and channel order [1][2]. Financial Performance - In the first half of 2025, Shanxi Fenjiu reported a revenue increase of 5.35% to 23.96 billion yuan, with net profit rising by 1.13% to 8.505 billion yuan [2][3]. - The revenue for Q2 showed a slight increase of 0.45% to 7.441 billion yuan, while the revenue for Fenjiu specifically grew by 5.8% to 23.39 billion yuan in the same period [2][3]. Product Performance - The sales revenue for Fenjiu in the first half of 2025 was 23.39 billion yuan, compared to 22.12 billion yuan in the same period of 2024, indicating a growth [3]. - The Qinghua series, particularly Qinghua 20 and 30, has achieved over 15% growth in the high-end market segment, contributing significantly to profits [4]. Marketing and Distribution Strategy - The company has implemented a resource allocation strategy of 1:3:3:3 for its key products, focusing on enhancing the competitiveness of its high-end offerings [4]. - Shanxi Fenjiu is optimizing its distributor structure and adjusting regional marketing expenses dynamically, with a notable increase in the number of distributors [6][8]. Regional Performance - Revenue from the domestic market increased by 4% to 8.73 billion yuan, while revenue from outside Shanxi rose by 6.1% to 15.14 billion yuan, with the latter accounting for 63% of total revenue [6][8]. - The company aims to enhance its market presence outside Shanxi, targeting a 65% market share in the future [6]. Digital Management and Cost Control - Shanxi Fenjiu is focusing on improving online payment management and enhancing the efficiency of its marketing expenses through a three-tier authorization system [9]. - The company reported stable tax and sales expense rates, with a sales expense rate of 11.5% in Q2 [9].

Core Insights - Shanxi Fenjiu reported a year-on-year increase in both revenue and net profit for the first half of 2025, with total revenue reaching 23.964 billion yuan, up 5.35%, and net profit attributable to shareholders at 8.505 billion yuan, up 1.13% [1] - The second quarter showed a slight revenue increase of 0.45% year-on-year, but net profit decreased by 13.5% [1] Financial Performance - Total revenue for 2025 was 23.964 billion yuan compared to 22.746 billion yuan in 2024, reflecting a growth of 5.35% [1] - Net profit attributable to shareholders for 2025 was 8.505 billion yuan, a slight increase from 8.41 billion yuan in 2024 [1] - Gross margin stood at 76.65%, a decrease of 0.05% year-on-year, while net margin was 35.57%, down 3.97% [1] - Total expenses (selling, administrative, and financial) amounted to 2.989 billion yuan, accounting for 12.47% of revenue, an increase of 8.33% year-on-year [1] - Earnings per share (EPS) for 2025 was 6.97 yuan, up from 6.89 yuan in 2024 [1] Cash Flow and Debt - The company reported cash and cash equivalents of 13.927 billion yuan, indicating a healthy cash position [1] - The ratio of cash assets to current liabilities was noted to be 81.73%, suggesting a need for monitoring cash flow [5] Investment Sentiment - Analysts expect the company's performance for 2025 to reach 12.122 billion yuan, with an average EPS forecast of 9.93 yuan [5] - Notably, two prominent fund managers have increased their holdings in Shanxi Fenjiu, indicating positive sentiment towards the stock [5] - The largest fund holding Shanxi Fenjiu is the招商中证白酒指数(LOF)C, with a current scale of 10.128 billion yuan and a recent net value increase of 2.46% [6]

Investment Rating - The report maintains an "Accumulate" rating for Shanxi Fenjiu with a target price of 212.80 CNY, compared to the last closing price of 197.61 CNY [1][7]. Core Insights - The company reported a revenue of 23.964 billion CNY for H1 2025, reflecting a year-on-year increase of 5.35%. The net profit attributable to shareholders was 8.505 billion CNY, up 1.13% year-on-year [4][5]. - In Q2 2025, the company achieved a revenue of 7.441 billion CNY, a slight increase of 0.45% year-on-year, but the net profit attributable to shareholders decreased by 13.50% to 1.857 billion CNY [4][5]. Revenue and Profit Analysis - For H1 2025, revenue from Fenjiu and other liquor categories was 23.391 billion CNY and 0.484 billion CNY, respectively, showing increases of 5.75% and a decrease of 10.55% year-on-year. In Q2 2025, revenue from Fenjiu was 7.179 billion CNY, up 0.56%, while other liquor categories saw a decline of 3.54% to 0.216 billion CNY [5]. - The company’s gross margin for H1 2025 was 76.65%, down 0.04 percentage points year-on-year, while Q2 2025 saw a gross margin of 71.88%, down 3.21 percentage points year-on-year [6]. Regional Performance - In H1 2025, revenue from within Shanxi province was 8.73 billion CNY, up 4.0% year-on-year, while revenue from outside the province was 15.14 billion CNY, up 6.1% year-on-year. In Q2 2025, the provincial revenue decreased by 5.3% to 2.65 billion CNY, while external revenue increased by 4.0% to 4.75 billion CNY [5]. Financial Forecast - The report projects revenue growth rates of 2%, 6%, and 6% for 2025, 2026, and 2027, respectively. The net profit growth rates are forecasted at -2%, 8%, and 8% for the same years. The expected earnings per share (EPS) are 9.83 CNY, 10.64 CNY, and 11.49 CNY for 2025, 2026, and 2027, respectively [7][8].

Investment Rating - The investment rating for Shanxi Fenjiu (600809.SH) is "Recommended" [1][4][5] Core Views - The company has shown stable growth in markets outside its home province, with ongoing national expansion efforts. The revenue for the first half of 2025 reached 24 billion yuan, a year-on-year increase of 5.4%, while the net profit attributable to shareholders was 8.5 billion yuan, up 1.1% year-on-year [4][7] - The report indicates that the overall consumption environment may be under pressure in the second half of the year, leading to adjustments in profit forecasts for 2025-2027 [7][9] Summary by Sections Financial Performance - In Q2 2025, the company achieved revenue of 7.4 billion yuan, a year-on-year increase of 0.4%, with net profit of 1.9 billion yuan, down 13.5% year-on-year [4][7] - The gross margin for Q2 2025 was 71.9%, a decrease of 3.2 percentage points year-on-year, attributed to a decline in product mix [7][9] Revenue Breakdown - In Q2 2025, revenue from Fenjiu was 7.2 billion yuan, up 0.6% year-on-year, while other liquor revenue was 220 million yuan, down 3.5% year-on-year [7] - Revenue from wholesale channels in Q2 2025 was 6.9 billion yuan, an increase of 0.3% year-on-year, while group purchase and e-commerce direct sales generated 500 million yuan, up 3.0% year-on-year [7] Future Projections - The company has adjusted its net profit forecasts for 2025-2027 to 11.9 billion, 12.7 billion, and 14.1 billion yuan respectively, down from previous estimates [7][9] - Long-term growth is expected to be driven by the full price range of products, including Qinghua, Laobai Fen, and Bolan [7][9] Key Financial Metrics - For 2025, the projected revenue is 36.5 billion yuan, with a net profit of 11.9 billion yuan, reflecting a year-on-year decrease of 3.0% [6][9] - The projected gross margin for 2025 is 73.9%, with a net margin of 32.5% [9]