Core Viewpoint - International gold prices have surged significantly, with a year-to-date increase of over 47%, outperforming most mainstream investment assets globally [2][3] Group 1: Gold Price Performance - Gold prices recently broke through $3,900, approaching the $4,000 mark, with a notable rise from $3,400 to $3,927 in about a month, reflecting a 15% increase [2] - The year-to-date increase in gold prices is 47%, surpassing the performance of major stock indices such as the S&P 500, A-shares, and Hong Kong stocks, with only a few indices like ChiNext and STAR Market showing comparable gains [2] - The rise in gold prices is attributed to several factors, including central banks increasing gold reserves, a decline in the US dollar index, rising inflation expectations, and complex geopolitical situations [2] Group 2: Central Bank Actions and Global Trends - The weakening of the US credit system and the declining dominance of the US dollar have led to increased global investment in gold, which is now recognized as a core asset [3] - China has increased its gold reserves for ten consecutive months, reaching 74 million ounces, up from 56 million ounces in 2015 and 33.89 million ounces in 2010 [3] - The global trend shows a continuous increase in gold reserves, with the US leading, followed by Germany, Italy, and France, indicating a potential rise for China into the top five global gold reserves [3] Group 3: Market Outlook and Investment Considerations - The current bullish trend in gold is expected to continue without immediate deep corrections, as market trends tend to remain stable once established [4] - A technical bear market for gold would be indicated by a drop of over 20% from the recent high of $3,927, which would place the critical support level around $3,141 [4] - The performance of A-shares in the remaining months of the year will depend on policy and funding environment changes, with historical data suggesting a high probability of a positive market opening after the National Day holiday [4] Group 4: Long-term Investment Dynamics - Despite the strong performance of gold, it is subject to cyclical bear markets, with historical examples showing prolonged periods of adjustment [5][6] - Investors who buy gold at high prices may face long periods without income, contrasting with high-dividend core assets that provide regular income, allowing for cost recovery over time [6] - Historical patterns indicate that gold bull markets typically last around ten years, suggesting that 2026 could be a pivotal year for the current gold market cycle [7]

Investment Rating - The report maintains an "OUTPERFORM" rating for Wuliangye Yibin with a target price of RMB 172.00, down from a previous target of RMB 194.00 [2][5]. Core Views - The report highlights that the core assets of Wuliangye remain strong despite the industry adjustment period, with a focus on enhancing marketing execution and implementing three major reforms: controlling volume and price, brand upgrading, and channel reconstruction [3][11]. - The company has experienced five consecutive years of double-digit revenue growth, with a projected revenue of RMB 93.8 billion for 2025, reflecting a CAGR of 12.2% from 2019 to 2024 [4][12]. - The gross profit margin has improved for six consecutive years, reaching 87.0% for Wuliangye products, indicating a strong product structure optimization [13]. Summary by Sections Financial Performance - For the fiscal year 2025, the company is expected to generate revenue of RMB 93.8 billion and net profit of RMB 33.5 billion, with diluted EPS projected at RMB 8.6 [5][14]. - The company reported a revenue of RMB 36.94 billion and a net profit of RMB 14.86 billion for Q1 2025, representing year-on-year growth of 6.1% and 5.8%, respectively [4][12]. Market Context - The Chinese stock market is experiencing an uptrend, with high dividend core assets being favored. The SSE/Hang Seng Index has performed well, supported by government policies and foreign capital inflows [3][10]. - The Baijiu industry is facing intensified differentiation, with Wuliangye expected to solidify its leading position during the current industry adjustment [11][12]. Valuation Metrics - The report provides a valuation of 20x 2025e PE for Wuliangye, which is lower than the previous valuation of 22x for 2024, reflecting adjustments in growth expectations [5][14]. - The company's dividend payout ratio is set to increase from 60% in FY23 to 70% in FY24, which is significantly higher than the A-share average [5][14].