Core Viewpoint - Yanghe Co., Ltd. has reported its worst performance since going public, with all major revenue indicators declining, leading to a significant drop in stock price and market confidence [2][3][8] Financial Performance - In 2024, Yanghe's net profit attributable to shareholders decreased by 33.37% to 6.673 billion yuan, marking the largest drop since its IPO and returning to 2017 levels [3] - Revenue for 2024 was 28.876 billion yuan, a significant decline from previous years, resulting in a drop from the third to the fifth position in the industry rankings [3] - The company experienced a comprehensive collapse in revenue across various segments, including mid-to-high-end products, regional sales, and online channels, with declines of 14.79%, 11.43%, and 9.7% respectively [4][5] Market Impact - Following the issuance of the strict "ban on alcohol" policy on May 18, 2025, Yanghe's market capitalization fell below 100 billion yuan, with a total market value loss exceeding 300 billion yuan since its peak in 2021 [3][6] - The stock price has dropped nearly 20% in 2025, reflecting a broader trend of declining stock prices in the liquor sector [5][6] Management Response - At the recent shareholders' meeting, Chairman Zhang Liandong apologized multiple times, attributing the company's issues to management shortcomings and acknowledging outdated brand strategies and rigid marketing models [3][5] - The company plans to focus on developing core products like "Hai Zhi Lan" as part of its strategic initiatives moving forward [5] Regulatory Environment - The new "ban on alcohol" has significantly impacted the liquor industry, particularly affecting high-end brands that relied on government consumption [6][7] - The policy has prompted many liquor companies to pivot towards market-driven strategies rather than relying on government contracts [6][7] Future Outlook - The effectiveness of initiatives to promote "intangible cultural heritage" in enhancing brand value and restoring market confidence remains uncertain for Yanghe [2][8]

Group 1: 2024 Market Characteristics - The liquor industry is undergoing a deep adjustment period in 2024, showing a "declining volume but increasing profit" trend, with production down 1.8% to 4.145 million kiloliters, while sales revenue increased by 5.3% to 796.38 billion yuan [1][21][22] - The profit total reached 250.87 billion yuan, a year-on-year increase of 7.8%, with A-share listed liquor companies reporting a total revenue of 442.23 billion yuan, up 7.3% [1][22] - The CR6 companies (Moutai, Wuliangye, Shanxi Fenjiu, Luzhou Laojiao, Yanghe, and Gujinggong) accounted for 86% of the industry's total profit, indicating a significant increase in industry concentration [1][22][27] Group 2: 2025 Market Conditions - In Q1 2025, liquor production fell by 7.2% to 1.032 million kiloliters, continuing the trend of declining production [2][40] - Listed companies showed resilience with a revenue of 153.42 billion yuan, up 1.7%, and a net profit of 64.91 billion yuan, up 2.3% [2][40] - The industry faces challenges with "declining volume and price, and rising costs," as 59.7% of companies reported reduced operating profits [2][49] Group 3: Market Environment Changes and Competitive Landscape - The revised regulations in May 2025 expanded the ban on alcohol consumption, impacting market sentiment and causing a 2-3% overall decline in the liquor sector [3] - The CR6 brands accounted for 87.6% of the revenue of the 20 A-share liquor brands in Q1 2025, indicating further concentration in the market [4] - The younger consumer demographic is emerging, with those born between 1985 and 1994 becoming a key market segment, although business and management personnel still represent 85.1% of the consumer base [4] Group 4: Market Outlook and Development Suggestions - Companies are adopting pragmatic strategies, with 64.9% focusing on core products and 40.4% targeting the mass market [5] - Recommendations for industry health include optimizing capacity and focusing on high-quality development, with a shift from quantity-driven growth to quality-driven strategies [6] - Emphasis on digital marketing and technological innovation is crucial, with 34.9% of companies prioritizing instant retail channel expansion [7] Group 5: Online Sales and Consumer Behavior - Online sales in the first five months of 2025 exceeded 60 million bottles, generating over 30 billion yuan, although national brands are struggling with growth [2][53] - The average online sales revenue for A-share listed companies was 5.0% of total revenue, reflecting a slight increase from the previous year [53] - Consumer behavior is shifting, with a notable decline in traditional consumption scenarios, leading to a decrease in demand during holiday periods [63][70]

Group 1 - The 2025 Sichuan International Wine Expo, hosted by various associations, features a dual venue format and emphasizes the cultural heritage of Chinese liquor, particularly the "Six Golden Flowers" of Sichuan [1][2][4] - The event runs from June 18 to June 22, 2023, in Mianzhu, a key production area for Chinese liquor, offering a blend of tasting experiences, cultural activities, and consumer engagement [1][2] - Over 100 renowned liquor companies from more than 10 countries are participating, including major brands like Wuliangye, Luzhou Laojiao, and Moutai, highlighting the significance of Sichuan liquor on the global stage [2][4] Group 2 - The event aligns with the "Ten Cities Sharing Gourmet Drinks" initiative by the Ministry of Commerce and other departments, promoting local consumption through the distribution of food and beverage vouchers [2] - The expo features a focus on intangible cultural heritage, with master brewers from the "Six Golden Flowers" declaring a commitment to craftsmanship and innovation in liquor production [4][6] - The 2025 International Spirits Judges Annual Meeting is also taking place, aiming to establish international sensory standards for spirits and enhance the global competitiveness of Chinese liquor [8] Group 3 - The global spirits market is projected to reach approximately $525.3 billion in 2023, with an expected annual growth rate of 4.56% from 2023 to 2027, indicating significant potential for Chinese liquor in international markets [8] - The event includes the announcement of the "Top Ten Innovative Marketing Cases for Sichuan Liquor Brands" for 2024-2025, recognizing excellence among local producers [6] - The expo aims to integrate traditional brewing techniques with modern marketing strategies, enhancing the visibility and appeal of Chinese liquor on the world stage [4][8]

Core Viewpoint - Yanghe Co., Ltd. is experiencing significant declines in revenue and profit, reflecting broader challenges in the Chinese liquor industry, which is undergoing a period of intense competition and adjustment [1][2][7]. Company Performance - In 2024, Yanghe reported revenue of 28.876 billion yuan, a decrease of 12.83% year-on-year, and a net profit of 6.673 billion yuan, down 33.37% year-on-year, marking the highest decline in both metrics in its history [1]. - The company's performance continued to decline into 2025, with Q1 revenue dropping by 31.92% and net profit falling nearly 40% [2]. - Since the beginning of 2025, Yanghe's stock price has fallen over 18%, reflecting investor concerns and a lack of confidence in the industry [2]. Industry Context - The liquor industry is entering a phase of "stock competition," with increasing pressure on mid-range and high-end products, leading to a general slowdown in growth among major players [1][2]. - The China Alcoholic Drinks Association reported that the loss-making rate in the beverage alcohol manufacturing industry increased from 17% in 2020 to 33% in the first three quarters of 2024 [2]. Strategic Responses - Yanghe is implementing a "big single product" strategy, aiming to develop its flagship product, "Hai Zhi Lan," into a 20 billion yuan annual revenue product by 2025, with plans for product upgrades [3][5]. - The company is focusing on the "daily consumption" market, particularly in the competitive 100 yuan price range, starting with its home market in Jiangsu Province, which has significant growth potential [6]. - Yanghe is also expanding into international markets, having established a presence in 80 countries and emphasizing the importance of overseas growth [6]. - The company is targeting younger consumers through social e-commerce and live streaming, recognizing a shift in consumer demographics towards higher education and younger age groups [6]. Industry Outlook - Yanghe's chairman, Zhang Liandong, expressed confidence in the enduring value of liquor products, suggesting that the cultural significance of Chinese liquor will help the industry navigate current challenges [7]. - The future success of Yanghe's strategies, particularly the "Hai Zhi Lan" product, remains to be seen, as the company and the industry as a whole work to overcome current obstacles [7].

Group 1: Market Performance - The consumption ETF managed by Jiashi recorded a trading volume of 982,300 yuan on the trading day, with an average daily trading volume of 10.1366 million yuan over the past year [2] - The consumption ETF's scale increased by 12.4 million yuan over the past year, with a recent weekly share increase of 3.9 million shares [2] - The latest price-to-earnings ratio (PE-TTM) of the index tracked by the consumption ETF is 18.76, which is in the 0.4% percentile over the past year, indicating a valuation lower than 99.6% of the time in the past year, suggesting historical low valuations [2] Group 2: Economic Indicators - In May, the total retail sales of consumer goods reached 41,326 billion yuan, showing a year-on-year growth of 6.4%, marking the highest growth rate in 2024 [2] - The retail sales of goods in May amounted to 36,748 billion yuan, with a year-on-year increase of 6.5%, also the highest growth rate in 2024 [2] - The catering revenue in May was 4,578 billion yuan, growing by 5.9%, the highest growth rate since April 2024 [2] Group 3: Industry Composition - The consumption ETF tracks the CSI Major Consumption Index, which includes leading consumer stocks in A-shares, covering various sectors from liquor, pork, dairy, condiments to food processing [3] - The liquor industry is the largest sector within the index, accounting for 45% of the total weight, indicating a significant focus on alcoholic beverages [3] Group 4: Investment Opportunities - Investors can also access the consumption recovery trend through the Jiashi Consumption ETF linked fund (009180) [5]

Group 1: Market Performance - As of June 18, 2025, the CSI Major Consumer Index (000932) increased by 0.82%, with notable gains from Yanjing Beer (000729) at 3.58%, Jinshiyuan (603369) at 2.96%, and Gujing Gongjiu (000596) at 1.87% [1] - The Major Consumer ETF (159672) rose by 0.93%, with the latest price reported at 0.76 yuan [1] Group 2: Beer Consumption Trends - With rising temperatures, beer consumption is entering a peak season, supported by consumption policies that are expected to boost beer sales [1] - Yanjing Beer reported strong growth in its U8 product line from January to May, indicating a positive sales trend [1] Group 3: ETF Performance Metrics - The Major Consumer ETF has achieved a maximum monthly return of 24.35% since its inception, with an average monthly return of 4.87% [2] - The ETF's maximum drawdown this year is 6.05%, with a relative benchmark drawdown of 0.34% [2] - The management fee for the ETF is 0.50%, and the custody fee is 0.10%, making it one of the lowest in its category [2] Group 4: Valuation Insights - The latest price-to-earnings ratio (PE-TTM) for the CSI Major Consumer Index is 18.76, indicating it is at a historical low, below 99.6% of the time over the past year [2] Group 5: Top Holdings - As of May 30, 2025, the top ten weighted stocks in the CSI Major Consumer Index account for 67.15% of the index, with notable companies including Yili (600887), Kweichow Moutai (600519), and Wuliangye (000858) [3]

Group 1: Industry Performance - In May, the retail sales of tobacco and alcohol reached 48.2 billion yuan, showing a year-on-year growth of 11.2%, significantly higher than the overall retail sales growth of 6.4% [1] - The strong performance in the tobacco and alcohol sector is attributed to the Labor Day holiday, which led to increased demand for social gatherings and gifts [1] Group 2: Consumer Protection and Brand Integrity - Wuliangye has issued a consumer notice addressing the issue of counterfeit products being sold on e-commerce platforms, specifically denying the existence of a product called "Light Bottle Eighth Generation Wuliangye" [2] - The statement highlights the challenges of combating counterfeit products in the alcohol industry, especially in the e-commerce era, and emphasizes the need for collaboration between brands, platforms, and regulatory bodies [2] Group 3: Company Strategy and Market Position - Yanghe Co. stated that the long-term value of the liquor industry remains unchanged despite environmental fluctuations, emphasizing the industry's resilience and essential role in Chinese life [3] - The company is implementing strategies to support distributors, manage inventory, and focus on core products and markets, reflecting a strategic approach to navigate current market pressures [3] - Yanghe's long-term growth potential is supported by its high-end product positioning and national expansion plans, with expectations of improved competitive positioning as consumer confidence recovers [3]

Investment Rating - The report maintains an "OUTPERFORM" rating for Jiangsu Yanghe Brewery [2] Core Views - The company is responding to the down cycle in the baijiu industry with a long-term strategy, focusing on brand strength and product matrix to navigate challenges [3][4] - The recent ban on alcohol in official receptions is expected to accelerate the industry's transformation towards market-oriented and diversified operations [12] - The company has a strong multi-brand matrix with a significant proportion of medium- and high-end products, which positions it well against competitors [13] Financial Performance and Projections - The company is projected to have revenues of Rmb 25.5 billion, Rmb 26 billion, and Rmb 27 billion for 2025, 2026, and 2027 respectively, with net profits of Rmb 5.6 billion, Rmb 5.9 billion, and Rmb 6.4 billion [5][16] - The diluted EPS is expected to be Rmb 3.70, Rmb 3.92, and Rmb 4.22 for the years 2025, 2026, and 2027 [5][16] - The company has committed to a cash dividend ratio of not less than 70% of net profit for the years 2024-2026, with a total dividend payout of Rmb 7 billion in 2024 [5][16] Strategic Initiatives - The company is focusing on its core products, particularly the Hai Zhi Lan and Meng Zhi Lan M6+, and plans to launch new products to strengthen its market position [4][14] - There is a strategic emphasis on regional market penetration, particularly in Jiangsu Province and the Yangtze River Delta, with a focus on maintaining price stability [15]

Core Viewpoint - The article discusses the fluctuations in the China Securities Major Consumer Index and highlights the impact of recent "alcohol bans" on the liquor industry, suggesting a potential transformation and upgrade in the sector due to new regulations [1]. Group 1: Market Performance - As of June 17, 2025, the China Securities Major Consumer Index experienced mixed performance among its constituent stocks, with Shanxi Fenjiu leading with a 1.79% increase, while XinNuoWei saw a decline of 3.06% [1]. - The Major Consumer ETF (159672) rose by 0.13%, with a latest price of 0.75 yuan [1]. Group 2: Regulatory Impact - Since May 2025, multiple regions have actively implemented "alcohol bans," leading to increased market concerns regarding the liquor sector [1]. - The new regulations are expected to drive the liquor industry towards transformation and upgrade, focusing on quality innovation to meet diverse consumer demands [1]. Group 3: Industry Valuation - The liquor sector is currently experiencing a downturn, with valuations at the bottom range and low fundamental expectations, making it more attractive for investment after a rapid decline [1]. - The competition within the liquor industry is intensifying, with a trend towards concentration, where leading companies are expanding their market share through brand barriers and strategic upgrades [1]. Group 4: ETF Performance Metrics - As of June 16, 2025, the Major Consumer ETF has recorded a maximum monthly return of 24.35% since its inception, with an average monthly return of 4.87% [2]. - The ETF's management fee is 0.50%, and the custody fee is 0.10%, which are among the lowest in comparable funds [2]. - The latest price-to-earnings ratio (PE-TTM) for the index tracked by the ETF is 18.78, indicating a valuation lower than 99.6% of the time over the past year, suggesting historical low valuations [2]. Group 5: Top Holdings - As of May 30, 2025, the top ten weighted stocks in the China Securities Major Consumer Index account for 67.15% of the index, with notable companies including Yili Group, Kweichow Moutai, and Wuliangye [3].

Industry Outlook and Development Strategy - The liquor industry is characterized by strong cultural attributes and resilience, with long-term value remaining stable despite cyclical adjustments [2][3] - Current consumer trends show a shift towards rational consumption and segmentation, emphasizing the need for the industry to return to its core values [2] - The company aims to adapt to changing market dynamics, particularly focusing on younger consumers and leveraging AI technology for brand marketing [2] Brand and Product Development - The company has a solid foundation in brewing technology, marketing strategies, and product structure, but needs to address issues in brand building and channel development [3] - Key strategies include producing high-quality liquor, enhancing brand value through cultural heritage, and focusing on core products like "Hai Zhi Lan" and "Meng Zhi Lan M6+" [3][4] - The launch of the seventh generation "Hai Zhi Lan" aims to refresh the brand and improve consumer perception, with a focus on product quality and stylish packaging [6] Financial Management and Cost Control - The company is actively managing costs and optimizing budget allocations to enhance efficiency and effectiveness in marketing expenditures [4][7] - There is a focus on precise control of expenses, particularly in advertising and promotional activities, to ensure better returns on investment [7] Market Competition and Strategic Positioning - The company is addressing intense competition in the Jiangsu market by strengthening its regional network and enhancing consumer engagement [10] - Strategies include optimizing product offerings, improving brand reputation, and utilizing digital tools for market penetration [10] - The company plans to maintain a national strategy while focusing on key markets like the Yangtze River Delta for deeper engagement [10] Recommendations and Future Directions - Suggestions include increasing shareholder engagement through loans and aligning executive compensation with company performance [11] - Emphasis on continuous quality improvement to ensure consumer trust and satisfaction, particularly in mass-market products [11] - The company should focus on maintaining advantages in established markets while strategically addressing challenges in less competitive areas [11]