Group 1 - The food and beverage sector experienced a decline on December 4, with the Food ETF (515710) dropping 1.16% and marking three consecutive days of losses [1][8] - Major stocks in the sector, particularly in the liquor category, saw significant declines, with Luzhou Laojiao, Shanxi Fenjiu, and Shede Liquor each falling over 3% [1][8] - The overall market sentiment indicates a challenging environment for consumer staples, as several mass-market products also performed poorly [1][8] Group 2 - Guizhou Moutai held a temporary shareholders' meeting where several key resolutions were passed, including the election of directors and share buyback plans [1][10] - The new chairman, Chen Hua, emphasized the commitment to high-quality development and sustainable value creation during discussions with investors [1][10] - Moutai remains a dominant player in the Food ETF, accounting for 14.89% of the fund's holdings as of the third quarter of 2025 [3][10] Group 3 - The valuation of the food and beverage sector is currently at historical lows, with the Food ETF's underlying index PE ratio at 20.45, placing it in the 7.05% percentile over the past decade [4][11] - Analysts suggest that this may present a favorable opportunity for left-side positioning in the sector [4][11] - Institutions are optimistic about the food and beverage sector for 2026, highlighting potential growth driven by consumer demand and innovative health products [5][12] Group 4 - The Food ETF (515710) tracks the China Securities Index for the food and beverage sector, with approximately 60% of its holdings in high-end and mid-range liquor stocks [5][13] - The top ten weighted stocks in the ETF include major brands such as Moutai, Wuliangye, and Yili [5][13] - Investors can also consider connecting funds to gain exposure to core assets in the food and beverage sector [5][13]

Core Viewpoint - Food stocks are rising, with companies like Anji Food, Huifa Food, and Haixin Food leading the gains. The outlook for the food and beverage sector is optimistic for 2026, driven by several key factors [1]. Group 1: Market Trends - As the end of the year approaches, institutions are positioning for the new fiscal year, with a bullish outlook for the food and beverage sector in 2026 [1]. - The sector is expected to exhibit dividend characteristics, indicating that there is still room for valuation growth [1]. - Consumer (C-end) spending remains the fundamental basis of the industry, but business (B-end) and commercial scenarios may recover more quickly [1]. Group 2: Sector Analysis - There is a structural differentiation in consumer goods, with the leisure snack segment continuing to thrive, while soft drinks are entering a low season [1]. - Leading companies are maintaining stability and actively developing new growth avenues [1]. - The dairy industry is approaching a supply-demand improvement inflection point, with deep processing production gradually coming online, which is expected to enhance the performance and profit elasticity of upstream dairy farming and midstream dairy companies [1]. Group 3: Competitive Landscape - The post-pandemic restaurant industry is experiencing demand pressure, shifting from incremental competition to stock competition, leading to a price-driven volume strategy among companies [1]. - It is anticipated that supply will clear before demand starting in 2024, with corporate performance stabilizing by the third quarter of 2025 [1]. - Companies are leveraging product innovation, channel expansion, and strategic adjustments to capitalize on their advantages, initiating effective differentiation competition supported by brand and customer strengths [1].

Investment Rating - The report maintains an "Outperform the Market" rating for the food and beverage sector [4][5][15]. Core Views - The food and beverage sector is expected to perform well in 2026, driven by low valuations, low institutional holdings, and a low base effect. The sector has underperformed the CSI 300 index for three consecutive years, and any changes in supply and demand dynamics could catalyze stock price increases [15][17]. - The report identifies three key judgments for 2026: 1) The sector's dividend attributes are becoming evident, with room for valuation expansion; 2) C-end consumption remains the industry’s foundation, but B-end and business scenarios may recover faster; 3) Health-focused innovative products and digital supply chains will be core growth drivers [15][16]. Summary by Sections 1. Sector Overview - The food and beverage sector saw a slight decline of 0.38% this week, with A-shares down 0.54% and H-shares up 1.88%. The top gainers included Anji Food (+13.87%) and Huifa Food (+13.07%) [1][3]. 2. Sub-sector Analysis - **Alcohol**: The sector is in a left-side layout phase, with recommendations for companies like Luzhou Laojiao and Shanxi Fenjiu, which are expected to benefit from national expansion [2][10]. - **Beverages**: The beverage sector is experiencing continued growth, with strong performance from leading companies like Nongfu Spring and Dongpeng Beverage. The report recommends focusing on dairy products, particularly Yili, due to stable demand recovery [2][14]. - **Food**: The snack segment shows strong growth potential, particularly in konjac snacks, with leading companies like Weidong and Yanjin Puhui demonstrating competitive advantages [2][12]. 3. Investment Recommendations - The report recommends maintaining the investment portfolio, which includes Guizhou Moutai, Baba Food, Dongpeng Beverage, Weidong, and Luzhou Laojiao, as these companies are expected to outperform the market [3][18]. 4. Earnings Forecasts - Guizhou Moutai is projected to have a revenue of CNY 183.52 billion in 2025, with a net profit of CNY 90.59 billion, reflecting a growth of 5.4% year-on-year [19][20]. - Luzhou Laojiao is expected to see revenue growth of 3.1% in 2026, with a net profit forecasted to increase by 4.3% [20]. 5. Market Trends and Catalysts - Recent industry catalysts include the Central Economic Work Conference and various alcohol distributor conferences, which are expected to influence market dynamics positively [3][10].