Summary of the White Liquor Industry Conference Call Industry Overview - The white liquor industry has been declining annually since 2022, with expectations to reach a phase bottom by 2025, where stock prices typically bottom out before fundamentals do [1][2][3] - Key indicators to monitor include inventory clearance and demand stimulation, which can provide positive feedback signals [1] Core Insights and Arguments - Stock selection should focus on leading companies' strategies, cash flow status, and price trends, with Moutai's old liquor prices being a sensitive indicator for professional consumers [1][4][5] - The last cycle's bottoming out was marked by supply-side pressure reduction, inventory clearance, reforms in leading companies, and a rebound in Moutai's old liquor prices, which drove demand from 2015 to 2016 [1][6] - The cash flow indicators in the white liquor industry often lead the profit statements, with a negative cash flow forecast for Q2 2024 indicating pressure on profit statements in 2025 [1][9] - Moutai's growth target for 2025 has been reduced from 15% to 9%, with potential for further deceleration, necessitating supply-demand adaptation and product innovation to mitigate impacts [1][15] Important but Overlooked Content - Only Moutai, Wuliangye, and Fenjiu maintained positive growth in Q2, while regional leaders are accelerating inventory clearance but at a slow pace [1][16] - The current valuation of the white liquor industry is at a ten-year low, but caution is advised against value traps; using PB-like thinking and dividend yield as references is suggested [1][20] - The industry is expected to see a significant influx of medium to long-term funds, particularly from insurance capital, which may help elevate the bottom [1][21] - The performance of other liquor companies, such as Gujing, Yingjia, and Yanghe, is crucial as they need to adapt to channel changes and capture market share to achieve new highs [1][17] - The relationship between old and new liquor prices is critical, with old liquor prices often leading new liquor prices by a year, serving as a precursor to market bottoms [1][8] Future Trends and Challenges - The white liquor industry is currently facing challenges due to the pandemic's impact on consumption and recent policy shocks, but signs indicate that the worst demand phase may have passed [1][14] - The upcoming quarters will be crucial for observing old liquor prices and cash flow indicators as the industry approaches a potential recovery phase [1][18] - The selection of quality stocks should prioritize companies with stable performance and minimal risk of value traps, such as Moutai and Fenjiu, while also considering those undergoing significant transformations [1][22][23]