Investment Rating - The industry investment rating is "Outperform" and is maintained [2] Core Insights - The new tea and coffee market in China has become an important consumption sector, with Mixue Group emerging as a significant player due to its unique market positioning and strong supply chain capabilities [2][16] - Mixue Group's brands, Mixue Ice City and Lucky Coffee, have distinct market positions and clear development strategies, indicating long-term growth potential [2][16] - The group effectively leverages the synergy between its tea and coffee brands, with Mixue Ice City focusing on mass tea consumption and Lucky Coffee targeting the coffee market with a beverage-oriented product strategy [3][22] Summary by Sections Industry Overview - The food and beverage sector's performance this week saw a decline of 2.49%, ranking 26th among 30 sectors, underperforming the CSI 300 index by 3.56 percentage points [10][31] - Only the soft drink segment experienced an increase, with a rise of 0.86% [10][32] Company Developments - Mixue Group has a total of 53,014 stores globally, with 48,281 in China and 4,733 overseas, focusing on lower-tier markets [16][23] - Lucky Coffee has rapidly expanded, surpassing 8,000 stores by August 2025, targeting entry-level coffee consumers [16][23] - Wanchen Group submitted its IPO application in Hong Kong, reinforcing its leading position in the Chinese snack retail sector, with plans to use the funds for network expansion and product diversification [25][26] Market Dynamics - The competitive landscape in the coffee sector shows Lucky Coffee adopting a beverage-oriented strategy, differentiating itself from specialized coffee brands [3][22] - The potential for expansion in lower-tier cities remains significant, with Mixue Ice City and Lucky Coffee poised to capture unmet demand in these markets [4][23] - The overall market sentiment is cautious, with expectations of a significant decline in sales during the Mid-Autumn Festival, although some brands are showing signs of recovery [27][30]

Core Viewpoint - The rapid expansion of instant retail in China's liquor market is expected to maintain double-digit growth in the coming years, driven by the competitive landscape of food delivery services by 2025 [1][3] Group 1: Instant Retail Growth - China's retail industry has evolved through traditional retail, e-commerce, and new retail, with instant retail significantly shortening delivery times and enhancing consumer choices [1][2] - The liquor instant retail market has seen a surge since its inception on platforms like 1919 and Jiuxiaoer, with four main channel models emerging: vertical, platform-based, warehouse-store integrated, and front warehouse models [1][2] Group 2: Drivers of Instant Retail - The rise of instant retail in liquor is attributed to changing consumer habits, with a growing demand for convenience and quick fulfillment of spontaneous needs [2] - Cost efficiency is achieved by reducing distribution layers and operational costs, coupled with subsidies from some platforms, leading to significant price advantages [2] - Supply-side drivers include channel partners seeking to capture new growth and brand owners willing to collaborate with channels for new product launches and promotions [2] Group 3: Impact on the Liquor Industry - Instant retail presents both opportunities and challenges for the liquor industry, offering efficient fulfillment and better reach to younger consumers, while potentially impacting brand image and pricing structures [3] - Historical trends indicate that changes in the liquor cycle often coincide with channel transformations, and the current deep adjustment in the industry necessitates adaptation to instant retail [3] - The instant retail market for liquor in China is projected to reach 100 billion yuan by 2027, with a compound annual growth rate approaching the mid-double digits, benefiting core categories like baijiu and beer [3] Group 4: Investment Recommendations - The liquor retail channel is undergoing structural growth, with instant retail emerging as a highlight; recommended stocks include leading national brands and regional players with strong channel development capabilities [4] - Specific recommendations for baijiu include Guizhou Moutai, Shanxi Fenjiu, Wuliangye, Luzhou Laojiao, Yingjia Gongjiu, Jiansiyuan, and Guqingongjiu, while short-term elastic stocks include Zhenjiu Lidu and Shede Liquor [4] - For beer, which is the second-largest category in liquor, recommended stocks include Qingdao Beer, Zhujiang Beer, and China Resources Beer, reflecting high participation in instant retail [4]

Core Viewpoint - The event "Entering Zero Carbon Factory: 'Dual Carbon' Services to Strengthen Enterprises and Supply Chains" was held, highlighting the achievements of Yingjia Group in green and low-carbon transformation, marking a significant step in sustainable development for traditional industries [1] Group 1: Achievements and Recognition - Yingjia Group was awarded the Zero Carbon Factory certificate, following its recognition as the first "National Green Factory" in the liquor industry, showcasing its leadership in green transformation [1] - The event was co-hosted by the China Certification and Accreditation Association and the China Alcoholic Drinks Association, emphasizing the collaborative effort in promoting sustainability in the industry [1] Group 2: Company Initiatives and Philosophy - Yingjia Group's Vice President, Gong Dejiang, shared the company's experience in creating a zero-carbon factory, highlighting its early adoption of the "Ecological Brewing" concept in the 1990s [1] - The company has developed a comprehensive ecological system consisting of six components: ecological production areas, ecological water sources, ecological brewing techniques, ecological recycling, ecological aging, and ecological consumption [1] - Chairman Ni Yongpei stated that the zero-carbon factory will serve as a new starting point for the company to enhance technological progress and embrace a green, low-carbon development path while fulfilling social responsibilities [1]

Market Overview - The liquor sector experienced a decline of 0.58% on September 25, with Yingjia Gongjiu leading the drop [1] - The Shanghai Composite Index closed at 3853.3, down 0.01%, while the Shenzhen Component Index closed at 13445.9, up 0.67% [1] Individual Stock Performance - Key stocks in the liquor sector showed varied performance, with Guizhou Moutai at 1439.00, down 0.21%, and Wuliangye at 121.52, down 0.69% [1] - Yingjia Gongjiu closed at 40.72, down 1.97%, with a trading volume of 65,800 shares and a transaction value of 270 million [2] Capital Flow Analysis - The liquor sector saw a net outflow of 1.539 billion from institutional investors, while retail investors had a net inflow of 897 million [2] - The capital flow data indicates that major stocks like Shuijingfang and Laobaigan experienced significant net outflows from institutional investors [3] Detailed Stock Capital Flow - Shuijingfang had a net outflow of 19.34 million from institutional investors, while retail investors contributed a net inflow of 14.63 million [3] - Laobaigan saw a net outflow of 19.42 million from institutional investors, with a retail net inflow of 15.57 million [3]

Core Viewpoint - The stock price of Yingjia Gongjiu has experienced a significant decline in 2023, with a year-to-date drop of 22.39% and a recent 5-day decline of 5.39% [1] Financial Performance - For the first half of 2025, Yingjia Gongjiu reported a 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% [2] - Cumulative cash dividends since the company's A-share listing amount to 7.28 billion yuan, with 3.12 billion yuan distributed over the past three years [2] Shareholder Structure - As of June 30, 2025, the number of shareholders for Yingjia Gongjiu increased to 66,800, a rise of 69.86%, while the average circulating shares per person decreased by 41.13% to 11,973 shares [2] - The top ten circulating shareholders include notable entities such as the China Securities Index White Wine Index A and Hong Kong Central Clearing Limited, with varying changes in their holdings [2] Market Activity - On September 25, 2023, Yingjia Gongjiu's stock fell by 2.02%, trading at 40.70 yuan per share, with a total market capitalization of 32.56 billion yuan [1] - The stock saw a net outflow of 22.76 million yuan in principal funds, with significant selling pressure observed [1]

Market Overview - The liquor sector experienced a decline of 0.72% on September 24, with Luzhou Laojiao leading the drop [1] - The Shanghai Composite Index closed at 3853.64, up 0.83%, while the Shenzhen Component Index closed at 13356.14, up 1.8% [1] Individual Stock Performance - Luzhou Laojiao (code: 000568) closed at 131.91, down 0.53%, with a trading volume of 62,600 and a transaction value of 826 million [2] - Kweichow Moutai (code: 600519) closed at 1442.00, down 0.37%, with a trading volume of 30,700 and a transaction value of 4.443 billion [2] - Yanghe Brewery (code: 002304) closed at 69.11, down 0.30%, with a trading volume of 31,300 and a transaction value of 217 million [2] - Wuliangye (code: 000858) closed at 122.37, up 0.15%, with a trading volume of 130,600 and a transaction value of 1.598 billion [2] Capital Flow Analysis - The liquor sector saw a net outflow of 394 million from institutional investors, while retail investors contributed a net inflow of 93.998 million [2] - The table of capital flow indicates varying levels of net inflow and outflow among individual stocks, with some stocks like Jinhuijiu (code: 600809) showing a net inflow of 369.30 million from retail investors [3]

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]