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].