Dongguan Securities·2025-03-27 08:59Investment Rating - The report maintains an "Overweight" rating for the food and beverage industry, particularly for the liquor sector, indicating a positive outlook based on policy support and expected recovery in demand [1]. Core Insights - China's consumption policies are positively oriented, leading to an uplift in expectations for the liquor industry. The government has emphasized the need to boost consumption and expand domestic demand through various initiatives [7][32]. - The liquor industry's performance is expected to show differentiation, with a forecast of a "front low and back high" trend for the year, as demand gradually recovers and the previous year's low base effects come into play [7][32]. - Liquor valuations are currently below historical averages, suggesting potential for recovery as market sentiment improves amid easing external uncertainties [7][32]. Summary by Sections 1. Positive Policy Orientation and Liquor Recovery Expectations - The report highlights that recent government meetings have focused on boosting consumption and investment efficiency, which is expected to positively impact the liquor market [7][32]. - The liquor market has experienced a three-year adjustment period, and the current economic recovery is anticipated to drive the liquor cycle upward [15][32]. 2. Liquor Sales Stability and Confidence Boosting Measures - Liquor sales during the Spring Festival saw a decline of approximately 10% year-on-year, but there are signs of improvement in demand post-holiday [36]. - Companies are implementing inventory control measures to stabilize prices during the off-season, which is expected to improve supply-demand dynamics [33][38]. - High-end liquor prices are expected to remain stable, with key brands maintaining their pricing strategies amid positive consumption policies [39]. 3. Market Dynamics and Company Strategies - The report notes that leading liquor companies are adopting pragmatic strategies focused on stability and quality, with many emphasizing consumer-centric approaches in their business models [44][46]. - Several companies, including Guizhou Moutai and Wuliangye, are actively engaging in share buybacks and increasing their holdings to bolster market confidence [48]. 4. Investment Strategy - The report suggests focusing on high-end liquor brands such as Guizhou Moutai, Wuliangye, and Luzhou Laojiao, as well as regional brands showing strong sales performance [7][32]. - It also recommends monitoring companies that have experienced significant declines and may be poised for recovery, such as Shede Liquor and Shui Jing Fang [7][32].