Investment Rating - The industry investment rating is "Recommended" [9] Core Views - The economic landscape continues to show resilience, with GDP growth in the first three quarters reaching 101.50 trillion yuan, a year-on-year increase of 5.2%. Despite a marginal decline in growth rate to 4.8% in Q3, the overall economic stability is supported by new productive forces and effective macro policies [4] - Retail sales growth has slowed down, with total retail sales from January to September at 36.59 trillion yuan, a year-on-year increase of 4.5%. In September alone, retail sales were 4.20 trillion yuan, growing by only 3.0% [5] - The beverage sector is performing strongly, with a focus on new consumption opportunities driven by retail channel transformations. Key companies to watch include Huashang Auntie, Tea Baidao, and others [6] Summary by Sections Economic Overview - GDP growth has shown resilience despite external challenges, with a year-on-year increase of 5.2% in the first three quarters [4] - The Q3 GDP growth rate decreased by 0.4 percentage points, attributed to external tariff policy changes and transitional pains in various industries [4] Retail Sales Performance - Total retail sales for the first nine months reached 36.59 trillion yuan, with a growth rate of 4.5% year-on-year. September's retail sales were 4.20 trillion yuan, reflecting a slowdown to 3.0% growth [5] - The decline in growth is linked to the reduced impact of the "old-for-new" policy and the timing of the Mid-Autumn Festival [5] Investment Opportunities - The report highlights several companies with strong recovery expectations in the consumer goods sector, including Weilai Delicious, Ximai Foods, and Youyou Foods [6] - The beverage sector is noted for its robust performance, with a focus on companies like Dongpeng Beverage and others, as well as the impact of new birth policies on dairy demand, highlighting companies such as Yili and Mengniu [6]

Core Viewpoint - Shanxi Fenjiu's stock price closed at 189.72 CNY, down 0.97%, with a total of 45 block trades amounting to 567 million CNY on October 21 [1]. Trading Details - The first block trade occurred at a price of 180.23 CNY for 370,000 shares, totaling 66.68 million CNY, with a discount rate of -5.00% [1]. - Subsequent trades consistently occurred at the same price of 180.23 CNY, with varying volumes and total amounts, all reflecting a -5.00% premium rate [2][3][4][5][6][7][8][9][10][11][12]. - The largest single trade involved 500,000 shares at 180.23 CNY, amounting to 90.12 million CNY, also at a -5.00% premium rate [11]. Recent Performance - Over the past three months, the stock has seen a total of 48 block trades with a cumulative transaction value of 578 million CNY [12]. - In the last five trading days, the stock has declined by 1.10%, while the net inflow of main funds was 7.60 million CNY [12].

Core Insights - On October 21, Shanxi Fenjiu executed a large transaction of 3.1441 million shares, with a total transaction value of 567 million yuan, accounting for 38.76% of the total transaction value for the day [1] - The transaction price was 180.23 yuan, representing a 5% discount compared to the market closing price of 189.72 yuan [1] Summary by Category - **Transaction Details** - Total shares traded: 3.1441 million [1] - Total transaction value: 567 million yuan [1] - Percentage of total daily transaction value: 38.76% [1] - Transaction price: 180.23 yuan [1] - Discount compared to market closing price: 5% [1]

Core Insights - The liquor sector experienced a slight increase of 0.14% on October 21, with *ST Rock leading the gains [1] - The Shanghai Composite Index closed at 3916.33, up 1.36%, while the Shenzhen Component Index closed at 13077.32, up 2.06% [1] Stock Performance Summary - *ST Rock (600696) closed at 5.84, with a rise of 5.04% and a trading volume of 47,600 shares, totaling 27.11 million yuan [1] - Other notable performers include Tianyoude Liquor (002646) at 9.80, up 1.34%, and Qingdao Wenzhou (000995) at 13.97, up 1.31% [1] - Major stocks like Luzhou Laojiao (000568) and Kweichow Moutai (600519) saw minor increases of 0.80% and 0.30%, respectively, with Moutai's closing price at 1462.26 and a trading volume of 25,400 shares, totaling 3.73 billion yuan [1] Capital Flow Analysis - The liquor sector saw a net inflow of 12.19 million yuan from major funds, while retail investors contributed a net inflow of 15.9 million yuan [2] - Conversely, speculative funds experienced a net outflow of 172 million yuan [2] Individual Stock Capital Flow - Kweichow Moutai (600519) had a significant net inflow of 1.26 billion yuan from major funds, while it faced a net outflow of 1.26 billion yuan from speculative funds [3] - Wuliangye (000858) reported a net inflow of 29.16 million yuan from major funds, but a net outflow of 39.27 million yuan from retail investors [3] - *ST Rock (600696) showed a net inflow of 6.38 million yuan from major funds, while retail investors withdrew 5.52 million yuan [3]

Core Viewpoint - The recent performance of the liquor sector, particularly the white liquor stocks, indicates a potential recovery as valuations have significantly declined and market expectations are low, suggesting a favorable environment for quality assets to rebound [1] Market Performance - On October 21, the three major indices collectively rose, with the Shanghai Composite Index closing at 3916.33 points, up 1.36% [1] - The white liquor sector closed at 2298.72, with a slight increase of 0.90%, and 14 out of the white liquor stocks experienced gains [1] Individual Stock Performance - Kweichow Moutai closed at 1462.26 CNY per share, up 0.30% [1] - Wuliangye closed at 120.52 CNY per share, up 0.05% [1] - Shanxi Fenjiu closed at 189.72 CNY per share, down 0.97% [1] - Luzhou Laojiao closed at 134.21 CNY per share, up 0.80% [1] - Yanghe Brewery closed at 69.95 CNY per share, down 0.33% [1] Industry Insights - According to a report from Founder Securities, the 113th Autumn Sugar and Wine Fair was held in Nanjing [1] - The white liquor sector has undergone a prolonged correction, leading to a significant drop in valuations, with a clear bottoming logic for quality assets [1] - In the context of renewed external disturbances and the increasing importance of domestic demand, the sector is expected to experience a valuation switch and recovery trend [1]

Group 1 - The food ETF (515710) showed stable performance with a price increase of 0.16% and a trading volume of 11.51 million yuan, bringing the fund's latest scale to 1.313 billion yuan [1] - Key performing stocks included Yunnan Energy Investment, Luzhou Laojiao, and New Dairy Industry, with increases of 1.8%, 1.25%, and 1.11% respectively [1] - Conversely, Yanjing Beer, New Nuo Wei, and Miao Ke Lan Duo experienced declines of 4.56%, 2.32%, and 1.64% respectively [1] Group 2 - Data from the double festival period indicated strong liquor consumption, with JD Seven Fresh reporting a 109% year-on-year increase in liquor sales, and Douyin's liquor sales up 58% month-on-month [1] - The release of the twelve fragrance standard sample aims to further standardize the industry's quality system [1] - Guizhou Moutai is enhancing brand experience through a wine tourism integration project, promoting innovation in consumption scenarios [1] Group 3 - According to Guotai Junan, the food and beverage industry is primarily driven by growth, with beverage leaders maintaining structural prosperity under the influence of major products [1] - The white liquor industry is experiencing a "low expectation, weak reality" state, with the third-quarter reports being a crucial observation window [1] - As external factors diminish and liquor companies adjust strategies, the industry may enter a substantial destocking cycle, with channel confidence expected to improve [1] Group 4 - According to招商证券, Q3 white liquor sales improved month-on-month, but the financial reports continue to show clearing, with government and business demand under pressure [2] - The performance of consumer goods is mixed, with snacks, beverages, pets, and health products showing good momentum, while traditional consumer goods like dairy, condiments, and beer remain flat [2] - The cost side shows a continued decline in raw material prices, although the rate of decrease is narrowing, while packaging prices have increased month-on-month [2] Group 5 - The food ETF (515710) and its linked funds passively track a segmented food index, with the top ten weighted stocks including Wuliangye, Guizhou Moutai, Yili, Luzhou Laojiao, Shanxi Fenjiu, Haitian Flavoring, Dongpeng Beverage, Yanghe, Jinshiyuan, and Gujing Gongjiu [2]

Core Insights - Shanxi Fenjiu is facing multiple challenges, including shareholder calls for large-scale buybacks, trademark disputes, and slowing revenue growth, indicating a critical juncture for the century-old brand [1][2][4] Shareholder Demands: Strategic Choices Under Capital Pressure - In August 2025, minority shareholders proposed aggressive measures, including an annual investment of 5-10 billion yuan for stock buybacks and collaboration with leading liquor companies to push for industry capacity reduction policies [2][4] - The company's mid-year report showed revenue of 23.964 billion yuan and net profit of 8.505 billion yuan, with growth rates declining by 12.7 and 9.3 percentage points compared to the same period in 2024 [2] Trademark Disputes: Knowledge Property Vulnerabilities - A trademark dispute escalated when Linfen Huanggai Fenjiu accused Shanxi Fenjiu of unfair competition, focusing on the legal status of the "Huanggai Fen" name, which has not been registered as a trademark despite significant sales [5][7] - The case highlights vulnerabilities in Shanxi Fenjiu's intellectual property management, including historical trademark issues and market naming legal blind spots [7][8] Industry Changes: Structural Contradictions in Capacity Reduction - The liquor industry is undergoing a deep adjustment, with the number of large-scale liquor enterprises decreasing by 43% since 2016, yet market concentration has not improved [8] - The actual production capacity exceeds demand by 30%, leading to a collapse in pricing structures and increased inventory cycles for distributors [8][11] Transformation from Scale Expansion to Value Reconstruction - Shanxi Fenjiu's path to overcoming challenges involves a three-dimensional transformation strategy, including capital operations and industry integration [9][11] - The company plans to implement a phased stock buyback and establish an acquisition fund to resolve trademark disputes, while also upgrading its intellectual property strategy [9][11] Modernization of Traditional Brands - The challenges faced by Shanxi Fenjiu reflect broader issues in the transformation of traditional industries in China, requiring a balance between historical legacy and modern business practices [12] - The ongoing trademark dispute and capacity reduction efforts may lead to a re-evaluation of the company's strategic direction, with potential for a shift from a production-oriented to a value-oriented approach [12]

Core Insights - The total brand value of the top 200 Chinese liquor brands in 2025 is 99,305.21 billion yuan, with a growth rate of 4.26%, demonstrating resilience amid structural adjustments [1] Group 1: Huangjiu Market Growth - The Huangjiu market has experienced unexpected growth after years of stagnation, with brand value increasing by 42.91 billion yuan, a rise of 6.27% compared to 2024 [2] - Leading Huangjiu brands such as Guyue Longshan, Kuaijishan, and Shanghai Jinfeng achieved growth rates exceeding 15%, significantly higher than the overall liquor industry [2] - Growth in Huangjiu is driven by market upgrades and innovative products targeting younger consumers, such as low-alcohol canned Huangjiu [2] Group 2: Resilience of Liquor Distributors - Liquor distributors have shown strong resilience during the industry's adjustment period, with the top ten distributors' brand value increasing from 5,177.44 billion yuan to 5,254.41 billion yuan, a growth of 1.49% [4] - The average annual digital investment by distributors has grown by over 40%, enhancing operational efficiency through technology [4] - The success of self-owned brands, such as Jiuxian Network's Rongda Sauce Liquor, indicates a shift in competitive advantage from distribution rights to successful brand development [4] Group 3: White Liquor Market Dynamics - The overall value of sauce-flavored white liquor has surpassed 21,554.5 billion yuan, with a growth rate of 3.72%, although the growth rate has significantly slowed [8] - New brands like Rongda Sauce Liquor have shown exceptional performance, with a value increase of 90.1%, highlighting innovation within the category [8] - The growth of clear-flavored white liquor has been driven by brands like Fenjiu, contributing over 60% of the category's growth in recent years [8] Group 4: Beer and Wine Market Challenges - For the first time in 17 years, the top beer brands, including China Resources Beer and Qingdao Beer, have seen a decline in brand value [10] - The total brand value of the wine sector has decreased from 1999.15 billion yuan to 1911.71 billion yuan, a drop of 4.37%, reflecting ongoing adjustments in the market [10] - The wine industry has faced challenges from imported wines and changing consumer preferences, leading to a significant slowdown in growth rates [10]

Core Viewpoint - The liquor sector shows signs of recovery, with mixed performance among individual stocks, indicating a complex market environment influenced by various consumption scenarios and price segments [1] Industry Summary - The Shanghai Composite Index closed at 3863.89 points, up 0.63%, while the liquor sector index closed at 2278.16 points, up 0.84%, with 13 liquor stocks rising [1] - The high-end liquor segment is experiencing a weak recovery in demand during the peak season, while the mass-market segment is performing well, leading the industry [1] - The next-highest price segment is under pressure, showing significant differentiation in performance [1] - Current industry inventory levels are stabilizing, with some liquor companies reducing inventory to alleviate operational pressure [1] Company Summary - Kweichow Moutai's stock closed at 1457.93 CNY per share, up 0.20% [1] - Wuliangye's stock closed at 120.46 CNY per share, down 0.50% [1] - Shanxi Fenjiu's stock closed at 191.57 CNY per share, down 2.21% [1] - Luzhou Laojiao's stock closed at 133.15 CNY per share, down 1.37% [1] - Yanghe Brewery's stock closed at 70.18 CNY per share, up 0.26% [1]

Investment Rating - The report maintains a "Positive" investment rating for the liquor industry [1] Core Insights - The report analyzes the adjustment phases of the liquor industry, comparing the current phase with the 2013-2016 period, highlighting that the current adjustment is primarily driven by a decline in business demand, which is less severe than the previous round [3] - It emphasizes that the purchasing power of consumers for high-end liquor has significantly improved compared to the lowest price point in 2014, indicating a potential for market recovery [3] - The report identifies three major changes in the liquor market: increased concentration among top companies, the rise of sauce-flavored liquor, and improved market value management practices among liquor companies [3] Summary by Sections 1. Historical Adjustment Phases - The liquor industry has entered a fifth year of adjustment since 2021, with significant impacts from the 2025 policy aimed at reducing government consumption [8] - The report reviews the historical context of the 2013-2016 adjustment, noting that the current environment is different but shares some similarities [8] 2. Current Adjustment Stage - The report indicates that the liquor industry has been in a downward adjustment since the third quarter of 2024, with expectations for recovery around the second quarter of 2026 [42] - It highlights that the current adjustment is less severe than the previous one, with a maximum revenue decline of 5% and profit decline of 8% compared to the previous maximums of 15% and 30% respectively [50] 3. Market Changes Impacting Investment - The concentration of the top six liquor companies has increased significantly, with their revenue share rising from 18.3% in 2013 to 48.1% in 2024, enhancing industry self-regulation [51] - The report notes that the expansion of sauce-flavored liquor production capacity has not yet translated into revenue share, but it is expected to gain traction in the future [3] - It discusses the evolving market value management strategies among liquor companies, including increased dividend payouts and share buybacks, which are expected to enhance investor returns [3]