Core Viewpoint - The Chinese beer industry faces significant challenges in 2024, with a notable decline in sales and a shift in consumer behavior impacting revenue and profit margins [1][4][5]. Revenue and Profit Summary - In 2024, seven listed beer companies achieved a total revenue of approximately 152.13 billion yuan and a net profit of about 17.44 billion yuan [1]. - The revenue distribution among these companies shows three main tiers: over 30 billion yuan, between 10 billion and 30 billion yuan, and below 10 billion yuan [1]. - Budweiser APAC leads with a revenue of 62.46 billion yuan, followed by China Resources Beer and Tsingtao Brewery with revenues of 38.64 billion yuan and 32.14 billion yuan, respectively [1]. Performance Disparity - 57% of the beer companies experienced a decline in sales volume, attributed to a decrease in on-the-go consumption and high-end product sales [1][4]. - Among the seven companies, four reported a decrease in revenue, with Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Chongqing Beer showing declines of 8.9%, 0.76%, 5.3%, and 1.15%, respectively [2][3]. - Conversely, Yanjing Beer, Zhujiang Beer, and Huichuan Beer saw revenue increases of 3.2%, 6.56%, and 5.44%, respectively [2]. Market Challenges - The decline in on-the-go consumption channels, such as restaurants and bars, has significantly impacted beer sales [4][5]. - The average per capita consumption in the restaurant sector dropped to 39.8 yuan, a decrease of 6.6% year-on-year, with the beverage segment experiencing the most significant decline [4]. - High-end product sales are also under pressure, with Budweiser APAC's market share in the high-end segment falling from approximately 50% to 42% [5]. Strategic Shifts - Beer companies are shifting focus from traditional on-premise sales to new consumption scenarios, particularly instant retail, which is gaining traction [6][7]. - Instant retail for beer has seen significant growth, with a reported 83% increase in market size from 2020 to 2022 [6]. - Companies like China Resources Snow Beer and Tsingtao Brewery are exploring customized products and services to meet evolving consumer demands [6]. Future Trends - The competition in the beer industry is transitioning from channel acquisition to the exploration of consumer scenarios, especially in the high-end segment [7]. - The future development of the beer market is expected to focus on technology-driven high-end products and the capture of instant consumption scenarios [7].

Investment Rating - The report maintains an "Accumulate" rating for the beer industry, indicating a positive outlook for investment opportunities in this sector [1]. Core Insights - The beer industry experienced a recovery in Q1 2025 after a challenging 2024, with revenue and profit showing signs of growth. Specifically, the beer sector's revenue for 2024 was CNY 68.038 billion, down 1.67% year-on-year, while net profit increased by 6.05% to CNY 7.290 billion. In Q1 2025, revenue reached CNY 20.043 billion, up 3.68% year-on-year, and net profit rose by 10.62% to CNY 2.519 billion [11][22][24]. Summary by Sections 1. Q1 Performance and Cost Elasticity - The beer sector faced pressure in 2024, but Q1 2025 showed recovery with revenue and profit growth. The revenue for 2024 was CNY 68.038 billion, with a net profit of CNY 7.290 billion. In Q1 2025, revenue was CNY 20.043 billion, and net profit was CNY 2.519 billion, indicating a recovery trend [11][22]. - Cost elasticity has been a key factor in maintaining profit margins, with a steady increase in gross profit margins throughout 2024 and into Q1 2025 [19][20][55]. 2. Future Growth Potential - The report anticipates a positive trend in volume and price in the upcoming quarters, particularly as the industry enters a low base period in Q2 and Q3 2025. The recovery in the restaurant sector is expected to support beer sales [48][50]. - The focus on mid-to-high-end beer products continues to drive growth, with brands like Qingdao Beer and Yanjing Beer expected to perform well due to their strong market positions and product upgrades [53][54]. 3. Investment Recommendations - The report suggests increasing exposure to quality leaders such as Qingdao Beer and Yanjing Beer, which are positioned well for growth in the upcoming consumption peak season. The recommendation is based on their strong cash flow and dividend yield potential [6][24]. - The report highlights the importance of monitoring the recovery of the restaurant sector and the impact of consumption stimulus policies on beer sales [50][52].

Investment Rating - The investment rating for the Chinese consumer staples sector is generally positive, with multiple companies rated as "Outperform" [1]. Core Insights - In April 2025, five out of eight tracked industries maintained positive growth, two experienced negative growth, and one remained flat. The sectors with single-digit growth include dairy, food and beverage, soft drinks, condiments, and frozen foods. The declining sectors are mass and below liquor and sub-high-end and above liquor, while the beer industry remained flat. Compared to the previous month, six industries showed improved growth rates, while two saw a deterioration. Overall demand has not significantly increased or decreased [10][34]. Summary by Category Liquor Industry - **Sub-high-end and above liquor**: In April, revenue was 26.4 billion yuan, down 1.5% year-on-year. Cumulative revenue for January to April was 167 billion yuan, up 0.3% year-on-year. Inventory levels increased as demand entered a low season [4][14]. - **Mass and below liquor**: Revenue in April was 15 billion yuan, down 10.7% year-on-year, marking 15 consecutive months of negative growth. Cumulative revenue for January to April was 75.2 billion yuan, down 13.9% year-on-year [16]. Beer Industry - Revenue in April was 14 billion yuan, flat compared to the same period last year. Cumulative revenue for January to April was 60.6 billion yuan, down 0.2% year-on-year. The industry is preparing for the upcoming sales season with low inventory levels [5][19]. Condiments - Revenue in April was 36.3 billion yuan, up 2.3% year-on-year, with cumulative revenue for January to April at 155.4 billion yuan, growing 1.3% year-on-year. The industry is experiencing weak sales due to external consumption pressures [21]. Dairy Products - Revenue in April was 33.6 billion yuan, up 3.4% year-on-year, while cumulative revenue for January to April was 156 billion yuan, down 0.6% year-on-year. The industry showed positive growth due to a low base effect from the previous year [23]. Frozen Foods - Revenue in April was 6.7 billion yuan, up 1.5% year-on-year, with cumulative revenue for January to April at 43.1 billion yuan, up 1.3% year-on-year. The industry faces challenges due to lower consumer spending and increased competition [25]. Soft Drinks - Revenue in April was 50 billion yuan, up 2.7% year-on-year, with cumulative revenue for January to April at 235.6 billion yuan, up 2.3% year-on-year. The industry is entering its peak season with intensified competition [27]. Restaurant Sector - Revenue for listed restaurant companies in April was 13.4 billion yuan, up 3.1% year-on-year, with cumulative revenue for January to April at 57.1 billion yuan, up 2.6% year-on-year. The sector is seeing recovery, particularly in tea and Western fast food segments [29].

Core Insights - The beer market is experiencing intensified competition as it enters a phase of stock competition, with contrasting performance driven by events like the European Cup and the Paris Olympics, alongside adverse weather and weak recovery in dining demand [1][3] - The overall beer industry remains highly fragmented, with major players like Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Yanjing Beer generating over 150 billion yuan in total revenue, while smaller companies struggle with revenues below 1.3 billion yuan [1][3] Industry Performance - In 2024, the beer industry in China saw a 0.6% decline in production among large-scale enterprises, with industry revenue decreasing by 5.7%, marking it as the only category in the food and beverage sector to experience a revenue drop [3][8] - Major companies such as Budweiser APAC, Tsingtao Brewery, and China Resources Beer reported revenue declines of 8.8%, 5.3%, and 2.45% respectively, while Yanjing Beer and Zhujiang Beer managed to achieve revenue growth [3][10] Financial Results - Among the six major beer companies, Budweiser APAC, China Resources Beer, and Chongqing Beer all faced declines in both revenue and net profit, while Tsingtao Brewery saw a slight increase in net profit despite a revenue drop [5][6] - Yanjing Beer and Zhujiang Beer reported significant growth in both revenue and net profit, with Yanjing's net profit increasing by 63% [5][6] Q1 2025 Performance - In Q1 2025, major beer companies showed resilience with revenue and net profit growth, particularly Yanjing Beer, which achieved a net profit increase of over 60% [13][14] - Qingdao Beer led in revenue with approximately 10.446 billion yuan, while Zhujiang Beer had the highest revenue growth rate at 10.69% [14][16] Market Trends - The beer market is shifting towards high-end products, with companies focusing on premium offerings to attract consumers [15][17] - Yanjing Beer has launched new beverage products, indicating a strategic move towards diversification and tapping into the beverage market [17][18] - Qingdao Beer is also exploring beverage integration through its strategic merger with Qingdao Beverage Group, enhancing its product offerings and market reach [19]

Investment Rating - The report maintains an "Overweight" rating for the food and beverage industry [9]. Core Insights - The food and beverage sector is expected to see improvements in 2025 after a challenging 2024, with various sub-sectors showing signs of recovery and growth potential [1][16]. Dairy Products - The dairy sector experienced a revenue decline of 7.2% in 2024, with a significant drop in net profit by 27% and 43.3% for attributable and non-recurring net profit respectively. However, Q1 2025 showed a slight revenue increase of 0.4% and a notable recovery in non-recurring net profit by 24.4% [2][16]. - Major dairy companies are expected to stabilize operations after channel adjustments, with recommendations for Yili and Mengniu [2][24]. Snack Foods - The snack food sector saw a revenue increase of 2.8% in 2024, but faced challenges in Q1 2025 with a revenue decline of 4.8%. The sector is benefiting from channel innovations and the growth of the konjac category [3][29]. - Companies like Yanjinpuzi and Ganyuan Foods are recommended due to their adaptability to market changes [3][33]. Beer - The beer sector faced a revenue decline of 1.5% in 2024, but Q1 2025 showed a recovery with a 3.7% revenue increase. The sector is expected to improve due to low inventory levels and a stabilizing restaurant demand [4][24]. - Recommended stocks include Yanjing Beer and Zhujiang Beer [4][24]. Soft Drinks - The soft drink sector demonstrated resilience with a revenue growth of 15.7% in 2024, and a stable performance in Q1 2025 with a 5.5% increase. The sector is benefiting from strong travel demand and new product launches [5][24]. - Key recommendations include Nongfu Spring and attention to Kangshifu and Uni-President [5][24]. Condiments - The condiment sector saw a revenue increase of 7.7% in 2024, but growth has been modest in 2025. Major players are adjusting to improve market share [6][24]. - Companies like Haitian Flavoring and Zhongju Gaoxin are highlighted for their ongoing transformations [6][24]. Frozen Foods - The frozen food sector has been under pressure with a revenue increase of only 1.6% in 2024 and a decline of 5.1% in Q1 2025. Intense price competition is affecting profitability [7][24]. - The sector is expected to improve as restaurant demand recovers [7][24].

Industry Overview - The beer industry in 2024 is experiencing a significant divergence, with some companies thriving while others struggle, reflecting a structural adjustment within the market [2][3] - The National Bureau of Statistics reported a 0.6% year-on-year decline in beer production and a 5.7% decrease in industry revenue, making beer the only category in the food and beverage sector to see a revenue drop [2] Market Dynamics - The Chinese beer market is characterized by oligopolistic competition, with the top six companies (CR6) holding a market share of 92.6% [3] - Beer production has been declining since its peak in 2013, leading to a contraction in the overall consumption market, which directly impacts the performance of leading companies [3] Financial Performance - Major companies like Budweiser APAC, China Resources Beer, and Tsingtao Brewery reported revenue declines of 8.89%, 0.76%, and 5.3% respectively in 2024 [4][5] - Net profits for Budweiser APAC, China Resources Beer, and Chongqing Beer also fell by 14.8%, 8.03%, and 17.05% respectively, attributed to weak consumer demand and challenges in traditional sales channels [4][5] Growth Segmentation - Yanjing Beer and Zhujiang Beer are exceptions, showing positive growth in both revenue and profit, with Yanjing's revenue increasing by 3.20% and net profit by 54.87% [5] - Yanjing U8 has successfully penetrated the mid-to-high-end market, achieving a 31.40% increase in sales volume [6] Strategic Shifts - Companies are shifting focus towards operational efficiency and market segmentation to find sustainable profit growth in a saturated market [8][9] - Budweiser APAC is reallocating resources from super-premium products to the core price segment of 8-10 yuan, which is performing better in the current consumption environment [7][8] Cost Management - Several companies, including Budweiser APAC and China Resources Beer, have reduced their sales costs by 8.93% and 2.93% respectively, due to lower barley prices and improved cost control measures [9][10] - Qingdao Beer managed to achieve a slight net profit increase despite revenue decline by reducing various operational costs [10][12] Marketing Innovations - Companies are adopting innovative marketing strategies to engage younger consumers, such as emotional and scenario-based marketing [13][14] - Budweiser APAC is focusing on expanding non-drinking channels and targeting new consumption scenarios, while China Resources Beer has seen over 30% growth in online business [15][16]

Investment Rating - The industry rating is "Outperform" (maintained rating) [5] Core Viewpoints - The report highlights a positive outlook for the beverage sector, driven by the upcoming peak season and supportive macroeconomic policies from the central government [2][12] - The report emphasizes the potential for valuation recovery in the liquor sector, particularly in light of the recent political bureau meeting that indicated a more proactive fiscal and monetary policy [2][12] Summary by Sections Market Performance Review - For the week of April 21 to April 25, the food and beverage sector declined by 1.36%, while the Shanghai Composite Index rose by 0.38%. Notable performances included snacks (+4.50%) and soft drinks (+2.21%), while categories like beer (-0.72%) and health products (-1.28%) saw declines [1][19] Weekly Perspective Updates - **Liquor Sector**: The liquor sector saw a decline of 1.75%, attributed to the off-peak consumption period and inventory adjustments. However, the upcoming May Day holiday is expected to boost demand for banquet scenarios, aiding in inventory reduction [2][12] - **Beer and Beverage Sector**: The beer sector decreased by 0.72%, but companies like Zhujiang Brewery saw a 5.7% increase in stock price due to better-than-expected Q1 performance. The report anticipates improved demand as the weather warms and consumption policies are implemented [3][13] - **Consumer Goods Sector**: The report identifies opportunities in the snack sector, with a focus on companies that have shown resilience and potential for growth. The upcoming sales season for soft drinks is also highlighted as a catalyst for growth [3][14] Investment Recommendations - **Liquor Sector**: Recommended stocks include strong alpha leaders like Moutai and Shanxi Fenjiu, as well as cyclical stocks like Luzhou Laojiao and Jiugui Liquor [4][18] - **Consumer Goods**: The report recommends focusing on snacks and dairy products, with specific mentions of companies like Ganyuan Foods and Yuyuan Foods, which are expected to benefit from low base effects in Q2 [4][18] Sector and Individual Stock Performance - The report provides detailed performance metrics for various sectors, indicating that the snack and soft drink sectors are currently outperforming others, while the liquor sector is under pressure [19][22]

Group 1 - The report highlights three main investment directions: 1) Technology AI+ led by Deepseek breakthroughs and open-source initiatives, 2) Valuation recovery and gradual revival of consumer stocks, 3) The rise of undervalued dividends [2] - Overall industry sentiment shows an upward trend in sectors such as machinery, food and beverage, non-bank financials, real estate, environmental protection, and retail, while sectors like oil and petrochemicals, pharmaceuticals, home appliances, banking, and public utilities are trending downward [2][20] - The report predicts strong performance in specific sub-industries over the next four weeks, emphasizing automotive services, general equipment, logistics, components, specialized equipment, paper, semiconductors, wind power equipment, consumer electronics, motors, textiles, optical electronics, photovoltaic equipment, jewelry, and infrastructure [2][20] Group 2 - In the agriculture sector, there is a strong short-term pig price due to a supply gap and inventory demand driven by state storage and increased channel inventory [3] - The report indicates a growing pressure on pig supply due to increasing inventory levels, with a notable rise in the number of small pigs stored [3] - The report recommends leading breeding companies such as Wens Foodstuffs, Muyuan Foods, and New Hope, while suggesting attention to flexible stocks like Shennong Group and Dekang Animal Husbandry [3] Group 3 - The aerospace industry is experiencing growth, with the domestic C919 aircraft entering commercial operation, leading to increased orders and production capacity [4][7] - The report anticipates significant benefits for the company as a key supplier in the aerospace engine industry, particularly with the development of advanced fighter jets and drones [4][7] - Revenue projections for the company are set at 44.84 billion, 54.48 billion, and 68.54 billion for 2025-2027, with a target price of 33.96 per share [7] Group 4 - The home appliance sector is seeing a return to growth, with new business and scenarios contributing to revenue despite short-term profitability pressure [8][29] - The company reported a revenue of 19.1 billion in 2024, with a slight increase in sales from industrial pumps and significant growth in the commercial pump segment [8][29] - The report maintains a "buy" rating for the company, projecting net profits of 2.7 billion, 3.3 billion, and 3.8 billion for 2025-2027 [29] Group 5 - The report on the food and beverage sector indicates a stable performance for Laobai Ganjiu, with revenue and net profit showing slight increases [10][14] - The company is benefiting from market dynamics in Hebei and Hunan, with a positive outlook for future sales growth [10][14] - The report adjusts profit forecasts for 2025-2026, expecting net profits of 8.87 billion and 10.27 billion, reflecting a cautious but optimistic view of the market [14] Group 6 - The cosmetics and personal care sector is experiencing a temporary performance pressure, but the color cosmetics business is showing remarkable growth [14][15] - The company reported a revenue of 57.36 billion in 2024, with a significant increase in color cosmetics sales [14][15] - The report anticipates a revenue growth trajectory for 2025-2027, with adjusted profit expectations reflecting competitive pressures in the market [15]

Group 1 - The overall performance of liquor companies was weak, with stock prices declining, particularly for major liquor brands, as their 2024 annual reports and 2025 Q1 reports were released, which were generally in line with or slightly below market expectations [1] - Public funds have significantly reduced their holdings in Yanghe and Yingjia Gongjiu, indicating concerns about the competitive strength of these companies in their respective regions [1][5] - The liquor sector saw a notable divergence in stock performance, with yellow wine companies like Kuaijishan and Guyue Longshan showing significant weekly gains of 12.39% and 5.39%, respectively, while the white liquor sector continued to decline [2][3] Group 2 - The white liquor index experienced a weekly decline of 1.61%, marking three consecutive weeks of losses, with major brands like Luzhou Laojiao and Shanxi Fenjiu seeing declines exceeding 3% [3] - Companies facing operational difficulties, such as ST Yanshi, saw substantial weekly declines, with ST Yanshi down 14.95% and Mogao Co. and Hainan Yedao down 7.65% and 8.11%, respectively [4] - As of March 31, 2025, public funds held a total market value of 257.1 billion yuan in the white liquor sector, a decrease of 0.23 percentage points from the previous quarter, continuing a downward trend since 2022 [5]

Investment Rating - The report maintains an "Overweight" rating for the food and beverage industry [1] Core Insights - The food and beverage industry is gaining attention due to increased external uncertainties and positive domestic policy signals, with a focus on boosting domestic demand as a key driver for economic growth [12][16] - The liquor sector is expected to show a "front low, back high" performance trend for the year, with a focus on inventory digestion in the first half and gradual demand recovery in the second half [17][32] - The consumer goods sector, particularly those related to the catering supply chain and benefiting from fertility policy catalysts, is highlighted for potential investment opportunities [39] Summary by Sections 1. Policy Expectations and Industry Focus - Increased external uncertainties have led to a heightened focus on domestic demand as a crucial element for economic growth [12] - Recent government policies aimed at boosting consumption have positively influenced market confidence, with a comprehensive action plan to enhance consumer spending [13][16] 2. Liquor Sector - Liquor sales during the Spring Festival saw a year-on-year decline of approximately 10%, with a focus on inventory management during the off-peak season [17] - High-end liquor demand remains stable, while mid-range and regional brands are experiencing varied performance based on market conditions [19] - Major liquor companies are engaging in share buybacks and increasing shareholdings to bolster market confidence [24][30] 3. Consumer Goods Sector - The report emphasizes the importance of sectors related to the catering supply chain, with specific attention to the seasoning, beer, dairy, and snack segments [39] - The seasoning sector is expected to benefit from a recovery in restaurant consumption, while the beer sector is poised for growth due to the resurgence of dining scenarios [40] - Dairy demand is anticipated to rise following the introduction of fertility subsidies in various regions, which could positively impact dairy company performance [39]