Core Viewpoint - The report from Dongfang Caifu Securities indicates that the supply-demand mismatch in 2024 will lead to deteriorating industry operations, but as companies gradually lower growth targets to adapt to demand in 2025, this will alleviate supply-demand conflicts and enhance investment value in the sector. The expectation is for positive growth in financial statements by the second or third quarter of next year [1]. Group 1: Industry Overview - In Q1-Q3 2025, under weak demand, industry revenue showed slight growth while profits were under pressure, with the food and beverage sector experiencing a revenue decline of -4.9% and a net profit drop of -14.6% in Q3 2025 [1]. - Traditional consumption is hindered by slow recovery in consumption scenarios, with the liquor sector, particularly baijiu, facing accelerated clearance and weak performance in beer demand [1]. - Sectors like snacks and beverages that have opportunities for new product launches and channel expansion continue to show positive momentum, with products like konjac experiencing rapid growth since 2024 [1]. Group 2: Category Analysis and Outlook - **Baijiu**: The industry is accelerating clearance with clearer turning points. In Q3 2025, overall revenue and net profit declined by -18.4% and -22.2% respectively, but demand is expected to improve, stabilizing prices and leading to better financial performance by Q2 2026 [2]. - **Low-Alcohol Beverages and Beer**: Beer revenue and net profit grew by +2.0% and +11.8% respectively in Q3 2025, with cost advantages continuing. Demand recovery is anticipated in 2026, influenced by changes in retail channels [3]. - **Dairy Products**: The raw milk sector is gradually bottoming out, with demand expected to stabilize and prices recover. The low-temperature fresh milk segment is projected to grow, replacing some ambient milk [4]. - **Snacks**: Categories like konjac and oats are expected to maintain high growth, with a shift towards emerging channels and significant growth in instant retail [4]. Group 3: Investment Recommendations - **Baijiu**: Focus on companies that are clearing inventory early and have strong brand momentum, such as Gujing Gongjiu and Luzhou Laojiao, as well as those with strong product matrices and channel capabilities like Moutai and Wuliangye [5]. - **Low-Alcohol Beverages**: Highlighting head companies like Kweichow Moutai and Qingdao Beer, which are expected to benefit from demand recovery [5]. - **Dairy and Snacks**: Emphasizing the potential for recovery in the raw milk sector and recommending companies like Yili and Mengniu, as well as snack companies that can leverage product and channel adjustments [6].

Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 18.2 CNY [1] Core Insights - The company demonstrated steady performance with revenue growth momentum continuing, achieving a total revenue of 2.133 billion CNY in the first three quarters of 2025, representing a year-on-year increase of 10.5% [6] - The third quarter of 2025 saw a total revenue of 753 million CNY, up 14.6% year-on-year, and a net profit attributable to shareholders of 75 million CNY, reflecting a 15.7% increase [6] - The company benefits from strong performance in the B-end market despite challenges in the restaurant sector, with significant contributions from new product launches and pre-holiday stocking [6] - The C-end market shows continued improvement, with new products contributing positively to sales [6] - The company’s gross margin improved to 32.6% in Q3 2025, up 1.3 percentage points year-on-year, driven by better cost control and product mix optimization [6] Financial Performance Summary - Total revenue projections for 2024A, 2025E, 2026E, and 2027E are 2,651 million CNY, 2,894 million CNY, 3,197 million CNY, and 3,519 million CNY respectively, with year-on-year growth rates of 11.9%, 9.2%, 10.5%, and 10.1% [2] - Net profit attributable to shareholders is forecasted to be 233 million CNY, 267 million CNY, 306 million CNY, and 349 million CNY for the same years, with growth rates of -22.5%, 14.3%, 14.6%, and 14.0% respectively [2] - Earnings per share (EPS) is projected to be 0.58 CNY, 0.67 CNY, 0.76 CNY, and 0.87 CNY for 2024A to 2027E [2] Market Performance - The company’s stock price closed at 14.39 CNY on October 29, 2025, with a market capitalization of 57.56 billion CNY [3] - The company has shown resilience in its market performance compared to the Shanghai and Shenzhen 300 index, with a notable increase in revenue and profit margins [5] Future Outlook - The company is expected to maintain stable growth throughout 2025, with a projected revenue increase of around 10% year-on-year, supported by ongoing improvements in both B-end and C-end markets [6] - The report anticipates that the company will continue to benefit from structural trends in the restaurant industry and retail adjustments, providing ample growth opportunities [6]