Investment Rating - The report maintains a "Recommended" rating for the food and beverage industry [1] Core Insights - The report highlights that the sales of liquor are expected to face pressure during the upcoming Mid-Autumn Festival and National Day, but there are opportunities for bottom recovery in the sector [5] - The overall performance of the food and beverage sector has lagged behind the Shanghai Composite Index, with a decline of 1.48% over the past two weeks [14] - The report emphasizes the importance of monitoring the recovery of the liquor market and suggests that the worst phase for the industry has passed [5] Summary by Sections Recent Trends - In August, the retail sales of tobacco and liquor fell by 2.3% year-on-year, while restaurant income increased by 2.1%, indicating a gradual recovery in dining consumption [5] - The price of Feitian liquor has shown weakness, with a decline in wholesale prices [5] Market Performance - The food and beverage sector's performance over the last month was 1.3%, 4.6% over three months, and 20.8% over the past year, compared to the Shanghai Composite Index's performance of 6.6%, 17.1%, and 40.9% respectively [3] Key Recommendations - The report recommends several liquor companies for investment, including Luzhou Laojiao, Shanxi Fenjiu, and Kweichow Moutai, among others [5][25] - For consumer goods, it suggests focusing on companies like Bai Run Co., Wei Long, and Salted Fish [8][25] Valuation Insights - As of September 19, 2025, the dynamic price-to-earnings (PE) ratio for the food and beverage sector is 21.1x, indicating a relatively low valuation compared to other sectors [22] - The report notes that the liquor sub-sector has the highest valuation at 50.42x [22] Focused Companies and Earnings Forecast - The report provides a detailed earnings forecast for key companies, including Kweichow Moutai with an expected EPS of 74.19 yuan for 2025 and a PE ratio of 19.79 [28]

Core Viewpoint - The stock price of Yingjia Gongjiu has experienced a significant decline this year, with a 21.00% drop, and recent trading activity shows continued selling pressure from major funds [2][3]. Company Overview - Yingjia Gongjiu Co., Ltd. is located in Huoshan County, Lu'an City, Anhui Province, established on November 28, 2003, and listed on May 28, 2015. The company specializes in the research, production, and sales of liquor [2]. - The main business revenue composition includes: 80.26% from mid-to-high-end liquor, 14.31% from ordinary liquor, 3.38% from packaging materials, and 2.05% from other sources [2]. Financial Performance - For the first half of 2025, Yingjia Gongjiu reported operating revenue of 3.16 billion yuan, a year-on-year decrease of 16.51%, and a net profit attributable to shareholders of 1.13 billion yuan, down 18.02% year-on-year [2]. - Since its A-share listing, the company has distributed a total of 7.28 billion yuan in dividends, with 3.12 billion yuan distributed over the past three years [2]. Stock Performance - As of September 23, the stock price of Yingjia Gongjiu was 41.43 yuan per share, with a market capitalization of 33.144 billion yuan. The stock has seen a trading volume of 115 million yuan and a turnover rate of 0.35% [1]. - The stock has seen a net outflow of 17.03 million yuan from major funds, with significant selling pressure observed [1]. Shareholder Structure - As of June 30, 2025, the top ten circulating shareholders include the China Securities Index White Wine Index A, holding 20.32 million shares, and Hong Kong Central Clearing Limited, holding 8.95 million shares [3].

Summary of the Conference Call on the Baijiu Industry Industry Overview - The overall sales volume in the baijiu industry has declined, with distributors expecting a 20%-30% drop in sales during the upcoming double festival period. Sales volume decreased by 40%-50% in July and August [1][2] - High-end baijiu wholesale prices are weak, with Feitian Moutai priced around 1,780 RMB. Demand for baijiu in banquet scenarios remains stable, while mid-range products perform more consistently [1][4] Key Points and Arguments - **Sales Performance**: The baijiu industry is facing significant sales pressure, with actual sales declines exceeding previous market expectations. Most regions, except for Henan, are experiencing sales drops greater than anticipated [2] - **Inventory Levels**: From June to August, the average sales volume decreased by 50%, leading to a slight increase in inventory levels compared to last year. Most distributors have higher inventory levels than the same period last year [3] - **Price Trends**: High-end baijiu products like Feitian Moutai and Wuliangye are experiencing weak wholesale prices. Feitian Moutai's price is expected to fluctuate between 1,700 and 1,800 RMB during the double festival period [4][8] - **Company Performance Adjustments**: Guizhou Moutai has lowered its annual growth target but maintains a steady collection rate compared to last year. Wuliangye is also expected to adjust its growth target due to market conditions [6][9] Company-Specific Insights - **Guizhou Moutai**: The company is increasing promotional activities for its series of products and expects a slight downward adjustment in annual growth targets, which may benefit investors by releasing risks [8] - **Wuliangye**: The company is shifting its focus from absolute growth to long-term competitiveness, with a return rate of approximately 60%-70% [9][10] - **Luzhou Laojiao**: The company is implementing a price stabilization strategy and focusing on expanding its terminal market through targeted promotions [11] - **Shanxi Fenjiu**: The company is facing significant sales declines but is maintaining a stable price point due to good relationships with distributors [13] Investment Recommendations - The report suggests focusing on companies with potential for policy-driven growth and those that can adapt to market changes, such as Jiu Gui, She De, and Shui Jing Fang. Mid-range products like Gu Qing Gong and Ying Jia Gong are also highlighted for their recovery potential [5][7] - The overall sentiment is that the baijiu industry is currently at a low point, but there are opportunities for recovery and growth in specific segments and companies [27] Additional Considerations - The impact of external factors, such as government inspections and coal supply pressures, has affected consumption patterns in various regions [12][14] - The performance of next-tier baijiu products is weaker compared to high-end and mid-range products, indicating a need for careful monitoring of new product launches [21] This summary encapsulates the key insights and trends discussed in the conference call regarding the baijiu industry, highlighting both challenges and potential investment opportunities.

Group 1 - The traditional liquor industry is under pressure, affecting market optimism for the recovery of the liquor sector, with the Wind liquor index declining by 2.64% this week [1] - Only Kuozi Jiao had a slight rebound of 0.32% this week, while other liquor stocks, including Yingjia Gongjiu and Gujing Gongjiu, saw declines exceeding 5% [1] - The liquor industry is currently in a phase of bottoming out, with expectations for gradual improvement in the fundamentals by 2026 [1] Group 2 - The beer, wine, and yellow wine sectors also experienced poor performance this week, with only a few companies like Yanjing Beer and Chongqing Beer showing gains [2] - Yingjia Gongjiu has faced a significant decline in both performance and stock price, with a year-to-date drop of 17.86% as of September 19 [2] - Yingjia Gongjiu's revenue for the first half of 2025 was 3.16 billion yuan, a year-on-year decrease of 16.89%, and net profit fell by 18.19% [2][3] Group 3 - The mid-to-high-end products of Yingjia Gongjiu saw a revenue decline of approximately 14%, while ordinary liquor revenue plummeted by 32.47% [3] - The company is facing challenges due to the underperformance of mid-to-low-end products, weak expansion outside Anhui province, and inventory pressure [3] - There is potential for recovery in the second half of the year if sales improve during the peak season, alongside industry recovery expectations [3]

Core Insights - The report highlights the performance pressure in the liquor industry, particularly in the first half of 2025, with a focus on the upcoming festive season as a potential opportunity for investment [1][2][3] Performance Summary - In the first half of 2025, the liquor industry experienced a revenue decline of 0.8% year-on-year, totaling 241.42 billion yuan, with the second quarter seeing a more significant drop of 4.9% to 88.06 billion yuan due to policy impacts [9][10] - High-end liquor maintained growth with a revenue increase of 6.2% in the first half and 3.4% in the second quarter, while mid-tier and regional brands faced substantial declines, with some experiencing drops as severe as 31.1% [10][12] - The overall net profit for the liquor industry decreased by 1.18% in the first half and 7.5% in the second quarter, indicating a challenging environment for profitability [20][28] Short-term Strategy - The report suggests focusing on the upcoming festive season, with expectations of improved sales performance despite ongoing pressures [2][3] - It emphasizes the need for liquor companies to balance market share and structural upgrades while managing pricing and sales dynamics [2][3] Long-term Outlook - The liquor index shows a strong correlation with the Producer Price Index (PPI), with a potential turning point noted in August 2025, which could signal a recovery phase for the industry [2][3] - The report indicates that the liquor sector possesses high return on equity (ROE) and dividend characteristics, with valuations currently positioned in the mid-to-lower range of the industry [2][3] Investment Recommendations - The report recommends focusing on brands that are expected to perform well during the festive season, including high-end brands like Guizhou Moutai and Shanxi Fenjiu, as well as mid-tier brands like Zhenjiu Lidong and Luzhou Laojiao [3][4] - It suggests that the current market conditions may present a buying opportunity as the industry approaches a potential bottom in performance expectations [3][4]

Core Viewpoint - Yingjia Gongjiu, once considered a "dark horse," experienced a significant decline in both revenue and profit in the first half of 2025, marking the first time in five years that such a downturn occurred [1][2]. Financial Performance - In the first half of 2025, Yingjia Gongjiu's revenue target is set at 7.6 billion yuan, reflecting a year-on-year growth of 3.49%, while the net profit target is 2.62 billion yuan, indicating a growth of 1% [1]. - The company's revenue from Anhui province decreased by 12% year-on-year in the first half of 2025, with a more pronounced decline of 20.29% in the second quarter [1]. Market Conditions - The overall market conditions are challenging, with consumer fatigue and weak demand impacting sales both within and outside Anhui province [2]. - The company is focusing on expanding its presence in external markets, particularly in Shanghai and Jiangsu, while introducing the "Dongcang series" as a growth driver [2]. Cost and Efficiency Challenges - Despite a significant drop in operating costs due to reduced sales volume, both selling and administrative expenses increased, with management expenses rising by 17% year-on-year [3]. - The management has not provided a clear explanation for the substantial increase in expenses but aims to enhance profitability through refined operations and efficiency improvements [3]. Stock Performance - Yingjia Gongjiu's stock price has fallen nearly 18% this year, continuing a downward trend for two consecutive years [3]. - As of September 19, the stock closed at 42.7 yuan per share, with a market capitalization of approximately 34.16 billion yuan [4].

Core Viewpoint - Yingjia Gongjiu, known as a "dark horse," experienced a significant decline in performance in the first half of 2025, marking the first time in five years that both revenue and profit decreased in the same period [2] Financial Performance - In the first half of 2025, Yingjia Gongjiu's revenue target is set at 7.6 billion yuan, reflecting a year-on-year growth of 3.49%, while the net profit target is 2.62 billion yuan, indicating a year-on-year growth of 1% [2] - The company has historically met its financial budget targets during periods of high growth, but the recent double-digit decline raises concerns about achieving the annual performance goals [2] Market Conditions - The majority of Yingjia Gongjiu's revenue comes from Anhui Province, where revenue in the first half of 2025 decreased by 12% year-on-year, with a more pronounced decline of 20.29% in the second quarter, indicating severe demand challenges [4] - The company plans to continue focusing on the Anhui market while addressing the weak demand and consumption fatigue [4] - In external markets, the company also faced significant declines, attributed to weak demand and insufficient brand influence outside of Anhui, with Shanghai and Jiangsu identified as key markets for growth [4] Cost and Efficiency Challenges - Despite a significant drop in operating costs due to reduced sales volume, both sales and management expenses increased year-on-year, with management expenses rising by 17% [6] - The management has not provided a clear explanation for the substantial increase in expenses but aims to enhance profitability through refined operations and efficiency improvements [6] Stock Performance - Yingjia Gongjiu's stock price has dropped nearly 18% this year and has seen a continuous decline for two consecutive years, with a closing price of 42.7 yuan per share and a market capitalization of approximately 34.16 billion yuan [7]

Core Viewpoint - The company, Yingjia Gongjiu, reported a significant decline in both revenue and net profit for the first half of 2025, marking the first time in five years that both metrics have decreased, primarily due to the impact of new alcohol consumption restrictions and an industry-wide cyclical adjustment [1][3]. Financial Performance - Revenue for the first half of 2025 was 3.16 billion yuan, a year-on-year decrease of 16.89% - Net profit attributable to shareholders was 1.13 billion yuan, down 18.19% year-on-year [1][3]. Market Challenges - The company faces challenges in both domestic and external markets, with a notable decline in performance in its primary market of Anhui, which accounts for over 60% of total revenue [3][4]. - Domestic revenue decreased by 12% to 2.364 billion yuan, raising concerns among investors [3][4]. - Revenue from external markets fell by 30% to 625 million yuan, with its share of total revenue dropping to less than 20% [6]. Strategic Plans - The company aims to achieve a revenue target of 7.6 billion yuan for the year, representing a growth of approximately 3.49%, and a net profit target of 2.62 billion yuan, with a growth of about 1% [3]. - Management plans to stabilize prices, optimize the distributor structure, innovate products, expand market reach, and enhance digital marketing and channel transformation to drive high-quality marketing development [3][6]. Sales and Marketing - Despite an increase in sales expenses to 307 million yuan, up 1.39% year-on-year, this did not translate into improved performance, leading to a rise in the sales expense ratio [7]. - The management indicated a focus on refined operations and efficiency improvements to enhance profitability moving forward [7].

Core Insights - The company held a performance briefing for the first half of 2025 on September 19, focusing on strategic developments and market positioning [1] Group 1: Strategic Focus - The company is prioritizing the provinces outside of its home market, specifically targeting Shanghai and Jiangsu [1] - The company aims to stabilize the development of existing products while fully introducing the Dongcang series [1] - The company is advancing the "Dual Core Project" in its distribution channels [1] Group 2: Market Development - The company will continue to deepen its presence in the domestic market [1] - The company is on track with its plans for the upcoming dual festivals [1]

Group 1 - The food and beverage sector experienced a decline on September 18, with the Food ETF (515710) dropping by 0.63% [1] - Within the sector, liquor stocks were notably weak, with companies like Yingjia Gongjiu falling over 2% and others like Jiu Gui Jiu and Lu Zhou Lao Jiao declining more than 1% [1] - Despite the current downturn, some analysts suggest that the liquor sector may have entered a bottoming phase, with potential for recovery during the upcoming festive season [1][4] Group 2 - According to Open Source Securities, the retail sales growth rate has slowed down, primarily due to diminishing effects of the "old-for-new" policy and a gradual recovery in consumer demand [3] - The food and beverage sector is expected to benefit from improving macroeconomic conditions and rising consumer income and willingness to spend [3] - The current valuation of the food and beverage sector is at a low point, making it a potentially good time for investment [3] Group 3 - Future outlook indicates that the liquor sector is undergoing adjustments due to policy impacts, with a noticeable decline in demand [4] - There are signs of recovery in consumer behavior, particularly in personal drinking and social gatherings, which could lead to improved sales figures [4] - Analysts predict that the worst phase for the liquor sector has passed, and there is cautious optimism for the upcoming Mid-Autumn Festival and National Day [4] Group 4 - The Food ETF (515710) tracks the CSI segmented food and beverage industry index, with a significant portion of its holdings in leading high-end liquor stocks [5] - Investors can also access core assets in the food and beverage sector through the Food ETF linked funds [5]