Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6] Core Views - The company reported a stable revenue performance in Q2 2025, with total revenue and net profit attributable to the parent company reaching 527.71 billion and 194.92 billion yuan respectively, reflecting a year-on-year increase of 4.19% and 2.28% [1] - The growth in the liquor business is primarily driven by volume, although the price per ton is under pressure due to structural declines [2] - The company has adjusted its profit forecast for 2025-2027, expecting revenues of 895 billion, 933 billion, and 977 billion yuan, and net profits of 319 billion, 333 billion, and 351 billion yuan respectively [4] Financial Performance - In H1 2025, the liquor segment generated revenues of 491.20 billion yuan, with the flagship product Wuliangye contributing 409.98 billion yuan, both showing year-on-year growth of 4.26% and 4.57% respectively [2] - The gross profit margin for the liquor segment was 82.20%, with a slight decrease of 0.39 percentage points year-on-year [2] - The company’s operating cash flow increased by 18.40% year-on-year to 152.88 billion yuan [4] Channel Performance - In H1 2025, the revenue from distribution and direct sales channels was 279.25 billion and 211.95 billion yuan respectively, with direct sales showing a stronger growth of 8.60% year-on-year [3] - The number of Wuliangye distributors decreased by 20 to 2,510, while the number of distributors for other liquor brands increased by 127 to 1,077 [3] Cost and Profitability - The company faced pressure on profitability due to increased expenses, with the gross margin and net profit margin for Q2 2025 at 74.69% and 29.26% respectively, both showing declines year-on-year [4] - The sales and management expense ratios increased to 18.88% and 4.90% respectively, indicating higher operational costs [4] Future Outlook - The company is expected to maintain a strong cash flow position, with contract liabilities increasing by 19.11% year-on-year to 100.87 billion yuan [4] - The projected earnings per share (EPS) for 2025 is 8.21 yuan, with a price-to-earnings (P/E) ratio of 14.75 [5]

Core Viewpoint - The liquor industry, particularly the baijiu sector, is currently in the bottoming phase of its third major cycle in the past thirty years, with significant similarities to the period from 2012 to 2016 [1] Industry Summary - On October 9, the three major indices collectively rose, with the Shanghai Composite Index closing at 3933.97 points, up 1.32%. However, the baijiu sector closed at 2241.33 points, down 0.46%, with 18 baijiu stocks declining [1] - Major baijiu stocks experienced the following closing prices and declines: - Kweichow Moutai at 1436.78 CNY/share, down 0.50% - Wuliangye at 121.16 CNY/share, down 0.26% - Shanxi Fenjiu at 190.39 CNY/share, down 1.87% - Luzhou Laojiao at 129.86 CNY/share, down 1.56% - Yanghe at 67.61 CNY/share, down 0.49% [1] Company Performance Outlook - CITIC Securities anticipates that the fundamental bottom for the baijiu industry may appear in the third quarter of 2025, with the second half of this year expected to be the most challenging period for the financial performance of baijiu companies [1] - The earliest potential turning point for sales activity is projected for the first quarter of 2026, influenced by factors such as inventory, pricing, policy impacts, recovery of consumption scenarios, and the financial performance of listed companies [1]

Core Viewpoint - The ongoing price conflict between e-commerce platforms and liquor companies is intensifying, with promotional prices for major liquor brands falling below wholesale prices, putting pressure on offline channels [3][4]. Group 1: Price Dynamics - Major liquor brands are offering significant discounts, with prices for products like Feitian Moutai dropping from a market retail price of approximately 1900 RMB to 1700 RMB, while the wholesale price is around 1780 RMB [3]. - Wuliangye's core product, Pu Wuliang, is being sold at a promotional price of 769 RMB, compared to a wholesale price of 840 RMB [3]. - The trend of lower prices is not limited to top brands; other well-known brands like Shanxi Fenjiu and Jian Nan Chun are also selling below wholesale prices [3]. Group 2: Impact on Distribution Channels - Due to price fluctuations, offline distributors are hesitant to stock up, affecting the sales rhythm of distributors [3]. - Traditionally, liquor prices would rise before major holidays, but this year has seen no increase, with expectations of further price declines post-holiday [3][4]. Group 3: E-commerce Influence - The rise of e-commerce has disrupted the traditional pricing control that liquor companies had, leading to a significant increase in online price competition [4]. - The internet penetration rate for liquor sales has increased from under 10% to around 20% due to recent e-commerce promotions, with projections suggesting it could reach 50% in the next five years [4][5]. Group 4: Future Outlook - The shift towards online sales necessitates changes in the sales model for liquor companies, as e-commerce now offers traceability and lower prices [5]. - Analysts predict that within three years, half of the traditional offline liquor stores may exit the market, prompting liquor companies to rethink their strategies [5].

Core Insights - The liquor sector experienced a decline of 0.72% on October 9, with Gujing Gongjiu leading the drop [1] - The Shanghai Composite Index closed at 3933.97, up 1.32%, while the Shenzhen Component Index closed at 13725.56, up 1.47% [1] Liquor Sector Performance - Gujing Gongjiu's stock price fell by 2.91% to 155.90, with a trading volume of 31,800 shares and a transaction value of 495 million [2] - Other notable declines included Shanxi Fenjiu (-1.87% to 190.39), Luzhou Laojiao (-1.56% to 129.86), and Jiu Gui Jiu (-1.86% to 61.15) [2] - The overall liquor sector saw a net outflow of 1.686 billion from institutional investors, while retail investors contributed a net inflow of 830 million [2][3] Capital Flow Analysis - Major stocks like Kweichow Moutai and Luzhou Laojiao experienced significant net outflows of 887 million and 161 million respectively from institutional investors [3] - Retail investors showed a preference for stocks like Jiu Gui Jiu, which saw a net inflow of 122 million [3] - The data indicates a mixed sentiment in the market, with institutional investors pulling back while retail investors are more active [3]

Investment Rating - The report maintains a "Recommended" investment rating for the food and beverage industry [9][59]. Core Viewpoints - The liquor sector shows marginal improvement in sales during the double festival period, although it remains under pressure year-on-year. Inventory levels are slightly decreasing but still high, leading to anticipated price pressures as companies focus on controlling volume to maintain prices [6][57]. - The consumer goods and new consumption sectors are recovering, with significant increases in cross-regional mobility during the National Day holiday, reaching 2.432 billion people, a historical high. Retail and catering sales during this period grew by 3.3% year-on-year, indicating a positive trend for the restaurant chain industry [7][58]. - The report highlights the potential for growth in the tea beverage sector, driven by high travel rates and promotional activities, suggesting a focus on companies like Mixue, Cha Bai Dao, and Gu Ming [7][58]. Summary by Sections Industry News - The report notes the official release of a public standard for the Fen Yang production area and reports on the production and revenue figures for the liquor and tea manufacturing industries [1][18]. Company News - Key developments include Moutai's launch of "instant delivery" services and the acquisition of Fresh Beer by Mixue Group for 297 million yuan [1][18]. Key Company Feedback - The report provides a detailed analysis of stock performance for key companies in the food and beverage sector, highlighting both gainers and losers over the past week [30][31]. Core Data Trends - The liquor industry saw a cumulative production of 4.145 million tons in 2024, a decrease of 7.72% year-on-year, while revenue reached 796.4 billion yuan, an increase of 5.3% [34][34]. - The seasoning industry is projected to grow significantly, with the market size expected to increase from 259.5 billion yuan in 2014 to 687.1 billion yuan by 2024, reflecting a CAGR of 10.23% [37][39]. Investment Strategy - The report suggests focusing on high-dividend leaders in the liquor sector such as Kweichow Moutai, Wuliangye, and Luzhou Laojiao, as well as flexible stocks that have corrected to attractive levels [6][57]. - In the consumer goods sector, attention is drawn to companies like Ximai Food, Youyou Food, and Dongpeng Beverage, which are expected to benefit from ongoing recovery trends [7][58].

Core Viewpoint - The overall performance of the liquor industry during the holiday season is expected to decline by approximately 20%, aligning with pre-holiday expectations, although there are some positive indicators in specific segments [3][5]. Group 1: Liquor Sales Performance - Liquor sales showed marginal acceleration about a week before the holiday but gradually slowed down afterward, with an overall expected decline of around 20% [3]. - High-end products, particularly from Moutai and Wuliangye, demonstrated good turnover, while mid-range products like Wuliang Chun and Honghua Lang saw double-digit growth in certain regions [3][4]. - Demand for large gatherings remains relatively strong, with positive growth reported in Jiangsu, Henan, and Sichuan, particularly in the mid-price range [3]. Group 2: Regional Performance - Performance varies significantly by province, with Henan, Shandong, and Sichuan showing slightly better-than-expected results, while other regions like Hunan and Anhui met expectations with declines of over 20% [3][4]. - Feedback from various regions indicates that while some areas experienced a decline, the overall performance was not as poor as initially anticipated [3]. Group 3: Channel Inventory and Pricing - Channel inventory is experiencing slight depletion but remains at a high level, with a balance between incoming and outgoing shipments expected to continue into Q4 2025 and H1 2026 [5]. - Pricing remains stable with slight increases, although there is anticipated downward pressure in the coming months due to seasonal factors and promotional activities [5]. Group 4: Company Strategies and Market Dynamics - Companies are generally reducing their promotional spending, focusing more on consumer-end products rather than channel products, with a notable shift towards secondary products [6]. - Despite reduced spending, leading brands are still managing to increase their market share in specific segments, indicating a competitive market landscape [6]. - The overall collection and shipment progress for companies is lagging by over 10% compared to last year, with some brands maintaining their targets while others are struggling [6]. Group 5: Investment Recommendations - The current liquor cycle is seen as entering a bottoming phase, with recommendations to focus on companies with lower performance risks, those expected to confirm performance bottoms, and those undergoing significant transformations [7]. - Specific companies such as Guizhou Moutai and Shanxi Fenjiu are highlighted as priority investments due to their resilience [7]. - Attention is also drawn to companies like Yanghe and Jiuzi Li Du, which are undergoing changes that could lead to future growth [7].

Investment Rating - The industry maintains a "Recommendation" rating, indicating a positive outlook for the sector [2]. Core Insights - The report highlights that the overall performance of the food and beverage sector during the Mid-Autumn Festival and National Day was stable, with retail and catering sales increasing by 3.3% year-on-year [6][13]. - The report indicates a differentiation in performance across segments, with snacks showing the highest growth, followed by beverages, catering chains, dairy products, and finally, liquor [6][14]. - High-end liquor and banquet scenarios performed better than expected during the holiday period, while overall liquor sales were down approximately 20% year-on-year, aligning with pre-holiday expectations [6][22]. Summary by Sections Section 1: Holiday Feedback - The report notes that consumer and travel activities were relatively stable during the holiday, with a daily average of 304 million people traveling, a 6.2% increase year-on-year [6][13]. - The performance of various segments is ranked as follows: snacks > beverages > catering chains > dairy products > liquor, with seasoning benefiting from the recovery in catering [6][14]. Section 2: Investment Recommendations - The report suggests continued focus on high-growth sectors, particularly as the catering peak season approaches, and recommends monitoring the performance of liquor companies and catering chains [6][22]. - Specific investment targets include: 1. Snack sector growth stocks such as Ximai Foods and attention to Weilong Delicious [22]. 2. Continued recommendations for Hong Kong-listed leaders like Nongfu Spring and H&H International, with a focus on Haitian Flavor Industry [22]. 3. New consumption areas highlighting Zhongchong Co., Guobao Pet, and Bairun Co., with attention to Yuanfei Pet and Petty Co. [22]. 4. Traditional consumption focusing on leading liquor brands such as Shanxi Fenjiu, Luzhou Laojiao, and Kweichow Moutai [22]. 5. Consumer staples with a focus on stable performers like Haitian Flavor Industry and dividend-supported leaders like Yili Co. [22].

Core Viewpoint - The white liquor sector experienced a decline in stock prices despite a general market increase, indicating potential challenges in the industry [1]. Market Performance - On October 9, the Shanghai Composite Index rose by 1.24% to 3931.07 points, while the white liquor sector closed at 2232.28 points, down by 0.86% [1]. - Among 20 white liquor stocks, notable declines included: - Kweichow Moutai: closed at 1427.92 CNY/share, down 1.11% - Wuliangye: closed at 120.4 CNY/share, down 0.89% - Shanxi Fenjiu: closed at 188.09 CNY/share, down 3.05% - Luzhou Laojiao: closed at 128.87 CNY/share, down 2.31% - Yanghe Brewery: closed at 67.60 CNY/share, down 0.50% [1]. Industry Insights - According to Kaiyuan Securities, the improvement in the white liquor market's sales dynamics depends on two key factors: - The pace of social inventory reduction - The distribution strategies of liquor manufacturers [1]. - If manufacturers lower their payment collection requirements and slow down delivery schedules, it could alleviate channel inventory pressure and lay the groundwork for a sales recovery [1].

Core Viewpoint - The performance of the Hu-Shen 300 ESG ETF (561900) shows a mixed trend among its major holdings, with some stocks experiencing gains while others decline, reflecting the current market volatility [1] Group 1: ETF Performance - As of the midday close on October 9, the Hu-Shen 300 ESG ETF (561900) increased by 1.54%, priced at 0.990 yuan, with a trading volume of 247,200 yuan [1] - Since its inception on July 6, 2021, the fund has reported a return of -2.42%, while the return over the past month is 3.54% [1] Group 2: Major Holdings Performance - Among the major holdings, Kweichow Moutai decreased by 1.11%, China Merchants Bank fell by 0.79%, while Contemporary Amperex Technology Co. (CATL) rose by 3.91% [1] - Other notable movements include: Yangtze Power up by 0.62%, Industrial Bank down by 0.40%, Midea Group down by 0.89%, BYD up by 2.12%, Industrial and Commercial Bank of China down by 0.27%, Wuliangye down by 0.89%, and Ping An Insurance down by 0.49% [1]

Investment Rating - The report maintains a "Recommendation" rating for the liquor industry, expecting the industry index to outperform the benchmark index by more than 5% in the next 3-6 months [22]. Core Viewpoints - The liquor industry is experiencing a marginal recovery in demand while supply continues to clear out, with expectations of a 20% year-on-year decline in sales during the holiday period [5][6]. - High-end products like Moutai and Wuliangye are showing better turnover, while mid-range products are performing relatively well in certain regions [5]. - The report suggests prioritizing investments in companies with stable performance, those undergoing significant transformation, and those with quality products that are clearing out inventory [5]. Industry Basic Data - The liquor industry consists of 20 listed companies with a total market capitalization of 31,219.12 billion [2]. - The circulating market value stands at 31,214.28 billion [2]. Relative Index Performance - The absolute performance of the liquor industry over the past 1 month, 6 months, and 12 months is -4.0%, -6.4%, and -15.6% respectively [3]. - The relative performance compared to the benchmark index is -7.2% over 1 month, -24.9% over 6 months, and -31.1% over 12 months [3]. Sales Performance Insights - During the holiday period, liquor sales are expected to decline by approximately 20%, aligning with pre-holiday expectations [5]. - High-end gifting demand has improved slightly before the holidays, while mid-range business group purchases are still under pressure [5]. - Regional performance varies, with provinces like Henan, Shandong, and Sichuan showing slightly better-than-expected results [5]. Brand Performance - Moutai and Wuliangye are performing well, while other brands are experiencing significant declines in sales [5][6]. - The report highlights that brands like Gujing and Jiuzi are expected to confirm performance bottoms and drive growth through market share [5]. Channel and Inventory Insights - Channel inventory is slightly decreasing, with supply and demand remaining in a tight balance [5]. - The report anticipates that Q4 will focus on inventory digestion, with price stability expected despite some downward pressure [5]. Investment Recommendations - The report recommends focusing on companies with low performance risk, those confirming performance bottoms, and those undergoing deep transformations [5]. - Specific companies highlighted for investment include Moutai, Fenjiu, and Gujing, with a focus on dividend yield for Wuliangye and monitoring the performance of Laojiao [5].