SINOLINK SECURITIES(SH:600109) Zhi Tong Cai Jing·2025-09-01 02:33Core Viewpoint - The liquor sector's semi-annual report aligns with market expectations, showing accelerated performance in Q2 2025, but market sentiment remains marginally positive. The recent decline in mainstream product prices is consistent with expectations, indicating that sales trends precede price trends, which in turn precede financial reporting trends. The company remains optimistic about the liquor sector's investment value due to the anticipated recovery in domestic demand, positioning it as a preferred investment choice with both defensive and offensive characteristics. The recommendation is to increase allocation to growth-oriented national liquor companies with higher potential returns [1]. Revenue Analysis - The liquor sector experienced a decline in quarterly revenue, with cautious channel repayments increasing. In H1 2025, the sector achieved revenue of 239.7 billion yuan, a year-on-year decrease of 0.9%. Q2 2025 revenue was 87.2 billion yuan, down 5.0% year-on-year, marking the first quarterly revenue decline in this cycle. The concentration of top liquor companies continues to rise, with the CR2 revenue share reaching 62.6%, up 6.0 percentage points year-on-year. Excluding CR2, the sector's Q2 2025 revenue fell by 18.2%, with a more significant decline compared to the previous quarter. The pre-receivable balance at the end of Q2 2025 was 37.5 billion yuan, down 2.4% year-on-year [2]. Profit Analysis - Profitability is under pressure, with companies focusing on cost reduction and efficiency improvements. In H1 2025, the sector's net profit attributable to shareholders was 94.6 billion yuan, a year-on-year decrease of 1.2%. Q2 2025 net profit was 31.2 billion yuan, down 7.5% year-on-year, underperforming revenue trends. The CR2 net profit share reached 74.3%, up 7.2 percentage points year-on-year. Excluding CR2, the sector's Q2 2025 net profit fell by 27.7%. The decline in profit is primarily due to fixed expenses amid insufficient revenue support, leading companies to reduce advertising expenses and enhance internal cost efficiency. The gross sales margin for Q2 2025 was 69.4%, up 0.3 percentage points year-on-year [3]. Institutional Holdings - Index fund holdings increased, while active equity funds and northbound holdings saw significant reductions. By the end of Q2 2025, the proportion of fund heavy holdings was 2.90%, down 0.81 percentage points, similar to levels seen in Q2 2017. The active equity fund heavy holdings proportion was 2.21%, down 1.12 percentage points. The over-allocation ratio was 1.32%, down 1.76 percentage points. Excluding top consumer sector funds, the active equity fund heavy holdings proportion was 1.01%, down 0.75 percentage points. Major holdings include Kweichow Moutai, Wuliangye, Shanxi Fenjiu, and Luzhou Laojiao. The northbound holdings saw a noticeable reduction, with significant decreases in holdings of Kweichow Moutai (down 0.6 percentage points to 5.8%) and Wuliangye (down 0.9 percentage points to 3.1%) [4].