Summary of the Conference Call on Chinese Liquor Industry - 2Q25 Results Industry Overview - **Industry**: Chinese Liquor - **Companies Covered**: Lao Jiao (Luzhou Lao Jiao Co. Ltd) and Gujing (Anhui Gujing Distillery Company Limited) Key Financial Results Lao Jiao - **Sales**: Decreased by 8% year-over-year (YoY) in 2Q25, which was in line with expectations [6] - **Net Profit**: Decreased by 11% YoY in 2Q25, also in line with expectations [6] - **Operating Profit Margin (OPM)**: Decreased by 3.3 percentage points (ppts) [6] - **Gross Profit Margin (GPM)**: Decreased by 4.7 ppts due to a higher business tax [6] - **Operating Expenses Ratio**: Decreased by 1.3 ppts [6] Gujing - **Sales**: Decreased by 14% YoY in 2Q25, which was below expectations [6] - **Net Profit**: Decreased by 12% YoY in 2Q25, also below expectations [6] - **Operating Profit Margin (OPM)**: Increased by 1.0 ppt [6] - **GPM**: Remained flat, with a decrease in operating expenses ratio by 1.0 ppt [6] Product and Sales Mix - **Midrange to High-End Liquor Sales**: Accounted for 92% of core sales, with a decrease of 1% YoY (volume increased by 13%, average selling price (ASP) decreased by 13%) [6] - **Low-End Liquor Sales**: Decreased by 17% YoY (volume decreased by 7%, ASP decreased by 11%) [6] - **Sales Channels**: - Traditional wholesale offline channel (94% of liquor sales) saw a decrease of 4% YoY, with a GPM of 87.4% [6] - New online channel experienced an increase of 28% YoY, with a GPM of 83.5% [6] Customer Advances and Cash Position - **Customer Advances**: Increased to RMB 3.5 billion in 2Q25 from RMB 2.3 billion in 2Q24 [6] - **Cash from Selling Products**: Decreased by 15% YoY in 2Q25 to RMB 9.5 billion [6] - **Net Cash Position**: Increased to RMB 34.3 billion in 2Q25 from RMB 31.4 billion in 1Q25 and RMB 25.1 billion in 2Q24 [6] Regional Performance - **Northern China**: Sales decreased by 27% YoY [6] - **Central China**: Sales increased by 4% YoY [6] - **Southern China**: Sales decreased by 6% YoY [6] Analyst Reactions - **Anhui Gujing Distillery Company Limited**: Unchanged outlook with a modest shortfall and a modest revision lower [8] - **Luzhou Lao Jiao Co. Ltd**: Outlook remains unchanged and largely in line with expectations [8] Additional Insights - **Product Mix in 1H25**: Mid-market to high-end Vintage increased by 2% YoY to RMB 11.0 billion; mass market Gujing series decreased by 4% YoY to RMB 1.2 billion; low-end segment including Huanghelou increased by 7% YoY to RMB 1.5 billion [6] - **Cash Position for Gujing**: Cash from selling products increased by 19% YoY in 2Q25 to RMB 7.0 billion [6] - **Net Cash for Gujing**: RMB 15.3 billion in 2Q25 compared to RMB 16.2 billion in 1Q25 and RMB 16.0 billion in 2Q24 [6] This summary encapsulates the key financial metrics, product performance, and regional insights for the Chinese liquor industry, specifically focusing on Lao Jiao and Gujing for the second quarter of 2025.

记者丨肖夏 编辑丨骆一帆 | | | 白酒股2025年半年报增长表现 | | | | --- | --- | --- | --- | --- | | | H1营收(亿元) | 同比增长 | H1归母净利润(亿元) | 同比增长 | | | | 第一梯队 领跑行业 | | | | 贵州茅台 | 893.89 | 9.16% | 454.03 | 8.89% | | 山西汾酒 | 239.64 | 5.35% | 85.05 | 1.13% | | 五粮液 | 527.71 | 4.19% | 194.92 | 2.28% | | | | 第二梯队 保持增长 | | | | | H1营收(亿元) | 同比增长 | H1归母净利润(亿元) | 同比增长 | | 古井贡酒 | 138.80 | 0.54% | 36.62 | 2.49% | | 老白干 | 24.81 | 0.48% | 3.21 | 5.42% | | 金徽酒 | 17.59 | 0.31% | 2.98 | 1.12% | | | | 第三梯队 出现回落 | | | | 泸州老窖 | 164.54 | -2.67% | 76.63 | -4.54 ...

Company Strategy & Performance - Spar Group initially expanded overseas due to South African investment restrictions, seeking to be proxies in other markets for investment managers [2][3] - Spar Group divested its Swiss and UK businesses due to subscale operations and high capital requirements to meet strategic ambitions [5] - Spar is refocusing on its home market in South Africa, expanding its DIY, pharmacy, and liquor operations [6] - Spar's African revenue has significantly outpaced its European revenue in recent years [4] - Spar aims to compete with Shoprite, currently being the second biggest supermarket brand in South Africa [8] Market Dynamics & Opportunities - South Africa has a high density of retail space with over 1400 shopping malls [1] - Liquor shops in South Africa are expanding rapidly, growing almost twice as quickly as conventional supermarkets [7] - Spar's liquor brand, Tops, has become the single biggest retail liquor brand in South Africa through independent retailers [7] - Groceries in Switzerland are often 50% more expensive than in neighboring European countries due to strong trade protection measures [4]

Summary of Wuliangye Yibin (000858.SZ) 2Q25 Conference Call Company Overview - **Company**: Wuliangye Yibin (000858.SZ) - **Industry**: Spirits and Alcoholic Beverages Key Financial Results - **1H25 Performance**: - Total revenue increased by **4.2%** year-over-year (yoy) to **Rmb52.8 billion** - Net profit rose by **2.3%** yoy to **Rmb14.6 billion** [1][4] - **2Q25 Results**: - Total revenue of **Rmb15.8 billion**, a slight increase of **0.1%** yoy - Net profit of **Rmb4.6 billion**, a decrease of **7.6%** yoy [1] - **Operating Margins**: - Operating profit margin (OPM) at **35.4%**, net profit margin (NPM) at **29.3%**, both below estimates [1] Sales Performance - **Spirits Sales**: - Wuliangye Spirits sales grew by **4.6%** to **Rmb41.0 billion** - Series spirits sales increased by **2.7%** to **Rmb8.1 billion** [1][11] - **Volume and Average Selling Price (ASP)**: - Wuliangye Spirits volume up **12.7%**, ASP down **7.2%** - Series spirits volume up **58.8%**, ASP down **35.3%** [1][11] Customer Advances and Distribution - **Customer Advances**: Increased to **Rmb10.1 billion**, up **24%** yoy [1][10] - **Distributor Contribution**: Top 5 distributors contributed **Rmb30.1 billion**, representing **57%** of overall sales in 1H25, up from **21%** in 1H24 [1] Market Dynamics - **Channel and Brand Strength**: Resilience attributed to strong channel and brand power, market share gains in banquet scenarios, and channel reforms initiated in early 2025 [2] - **Wholesale Pricing**: Current wholesale price of the 8th Common Wuliangye is **Rmb860** per bottle, down **Rmb10** in the past two weeks [1] Margins and Expenses - **Gross Profit Margin (GPM)**: - Wuliangye Spirits GPM at **87.0%**, Series spirits GPM at **60.8%** [9] - **Selling Expenses**: Increased by **9%** yoy in 2Q25, impacting NPM [1] Valuation and Investment Outlook - **Current Valuation**: Stock trading at **15x** 2025 P/E with a **5%** dividend yield [2] - **Price Target**: 12-month target price set at **Rmb139**, indicating an upside of **9.8%** from current levels [17] - **Risks**: Potential consumption tax hikes, competition from Moutai-flavor brands, and intensifying competition in high-end spirits [15] Additional Insights - **Sales by Region**: East, South, and North regions reported sales of **Rmb20.1 billion**, **Rmb21.9 billion**, and **Rmb7.1 billion** respectively, with growth rates of **7.9%**, **1.9%**, and **1.8%** [11] - **Distributor Changes**: Number of distributors decreased to **3,587** from **3,711** at the end of 2024, while series distributors increased to **1,077** [11] This summary encapsulates the key points from the conference call, highlighting Wuliangye's financial performance, market dynamics, and investment outlook.

25 August 2025 | 3:47PM HKT China Spirits Tracker: Market sentiment recovering from low, demand still improving gradually; Moutai/Wuliangye wholesale price weakens We have recently observed market sentiment rotation to laggards as investors take a "worst is over" stance on the spirits space (ie. sequential normalization of anti-graft policy impact), with the spirits P/E gap vs. A-share P/E approaching a decade low at c.2-3x (18% premium vs. last decade average at 103%, see Exhibit 1) and Northbound fund flo ...

Core Viewpoint - The Chinese liquor industry is experiencing a trend towards low-alcohol products as companies seek to capture the younger consumer market and address declining sales in traditional high-alcohol offerings [8][9][11]. Group 1: Industry Trends - Major liquor companies, including Gujing Gongjiu, Shede Liquor, Wuliangye, and Luzhou Laojiao, are launching low-alcohol products to tap into the growing demand for lighter drinking options [8][9][10][11]. - The low-alcohol segment is seen as a potential growth area amid high inventory levels and declining sales in traditional high-end liquor [9][12][14]. - The shift towards low-alcohol products is part of a broader strategy to engage younger consumers, who prefer personalized and lower-alcohol options for social drinking [15][18][20]. Group 2: Company-Specific Developments - Gujing Gongjiu launched a new low-alcohol product, "Gujing Gongjiu·Nianfen Yuanjiang Qingdu Gu20," with an alcohol content of 26 degrees, targeting urban youth aged 25-35 [1][27]. - Shede Liquor is set to introduce its first low-alcohol, high-flavor aged liquor, "Shede Zizai," with an alcohol content of 29 degrees [2]. - Luzhou Laojiao has successfully developed a 28-degree version of its flagship product, Guojiao 1573, and is testing even lower alcohol variants [5][21]. Group 3: Market Challenges - The liquor industry is facing significant challenges, including high inventory levels and a lack of consumer demand, particularly for mid-range and high-end products [9][11][12]. - Companies are struggling to maintain pricing power as high-end liquors frequently experience price cuts, leading to concerns about brand value erosion [11][23]. - The acceptance of low-alcohol products at premium prices remains uncertain, as evidenced by Gujing Gongjiu's pricing strategy, which positions its new product at a high price point compared to traditional low-alcohol options [26][35].

Core Viewpoint - The low-alcohol liquor segment is gaining momentum in the Chinese liquor industry, with major companies launching new products to capture market share amid declining sales and high inventory levels [1][3]. Group 1: Industry Trends - Since June, the low-alcohol liquor market has become increasingly competitive, with companies like Shede Liquor, Gujing Gongjiu, Wuliangye, and Luzhou Laojiao introducing new low-alcohol products [1]. - The introduction of low-alcohol products is seen as a strategic move to tap into the younger consumer demographic, which is crucial for expanding market demand [9]. Group 2: Company Performance - Shede Liquor reported a revenue of 5.357 billion yuan in 2024, a year-on-year decline of 24.41%, with net profit dropping by 80.46% to 346 million yuan [4]. - The overall performance of Shede Liquor continues to decline, with Q1 2024 revenues and net profits down by 25.14% and 37.10%, respectively [4]. - Inventory levels among 20 A-share listed liquor companies reached 168.389 billion yuan, an increase of 19.29 billion yuan year-on-year, indicating ongoing inventory pressure [5]. Group 3: Consumer Behavior - The younger generation, particularly those born between 1985 and 1994, is becoming a key target for liquor companies, as their consumption preferences shift towards lower-alcohol and more personalized products [9]. - Young consumers prefer lighter social drinking experiences and are attracted to aesthetically pleasing and convenient product designs [9]. Group 4: Product Performance - Luzhou Laojiao's 38-degree product is expected to generate significant sales, potentially accounting for nearly half of the sales of its flagship brand, translating to around 10 billion yuan in tax-inclusive sales [10]. - There is a debate among investors regarding the impact of low-alcohol products on overall revenue, as they are generally priced lower than traditional high-alcohol products [10].

Market Performance - The Shanghai Composite Index surpassed 3,740 points, reaching an intraday high of 3,745, marking a ten-year record since August 20, 2015 [1] - The benchmark index has risen by 22.72 percent since hitting a low of 3,040 points on April 7, 2025, while the Shenzhen Component Index gained nearly 30 percent and the ChiNext Index soared by 47 percent during the same period [1] - As of Monday, China's total A-share market capitalization exceeded CNY100 trillion, setting a new record [2] Individual Company Highlights - Agricultural Bank of China (ABC) leads the A-share market capitalization rankings with CNY2.19 trillion, followed by Industrial and Commercial Bank of China (ICBC) with CNY2.02 trillion [4] - Other companies with A-share market capitalizations exceeding CNY1 trillion include Kweichow Moutai, PetroChina, Bank of China, and CATL [4] Capital Inflows and Market Dynamics - Hong Kong stocks opened higher as southbound capital flows into the city's stock market accelerated, with a record single-day net inflow of HK$35.876 billion from mainland investors [3] - The recent market rally reflects China's concentrated efforts in advancing technological innovation, as noted by Pan Helin from the Ministry of Industry and Information Technology [5] - Breakthroughs in artificial intelligence, large models, and digital transformation have enhanced the global appeal of Chinese assets, attracting overseas capital inflows and contributing to the stock market's prosperity [6]

Core Insights - Primega Group has signed a memorandum of understanding to acquire China Wangmao Liquor Industry Group, marking a strategic move into the premium Baijiu market [1][2][8] - The acquisition aims to leverage China Wangmao's brand strength and digital innovation to enhance Primega's business portfolio and drive growth [3][4][5] Group 1: Acquisition Details - The acquisition will be executed through an equity purchase, showcasing Primega's commitment to diversified business development [1][2] - China Wangmao is recognized for its sauce-flavor Baijiu and has a strong membership-based business model, which will be integrated with Primega's resources [3][11] Group 2: Strategic Goals - Post-acquisition, Primega plans to maintain China Wangmao's independent brand while enhancing its operations through digital technology and capital expertise [4][5] - The partnership aims to reduce production and logistics costs, improve profit margins, and create stable returns for shareholders [5] Group 3: Market Expansion - Primega Group intends to launch new premium product lines and expand into Southeast Asian and North American markets, promoting the global presence of Chinese sauce-flavor Baijiu [4][7] - The acquisition is expected to enhance Primega's competitiveness in the premium consumer goods sector and inject new growth momentum into its capital market performance [6][8] Group 4: Innovation and Technology - Primega Group is focused on transforming traditional industries through intelligent technologies, including AI, IoT, and cloud computing [6][9] - The partnership aims to create a "Baijiu digital ecosystem matrix," combining traditional brewing with biotechnology and AI, redefining value standards in the premium Baijiu industry [12][13] Group 5: Future Outlook - The transaction is subject to due diligence and formal agreements, with both companies aiming to build a leading domestic premium sauce-flavor Baijiu brand [7] - Primega Group will continue to drive development through innovation, striving to become a leading integrated enterprise in the industry [8]

Summary of Kweichow Moutai Conference Call Company Overview - **Company**: Kweichow Moutai - **Industry**: Food Products (specifically Baijiu manufacturing) - **Market Cap**: Rmb1,805 billion / US$251 billion [6] Financial Performance - **H125 Results**: - Revenue: Rmb89.4 billion, up 9% YoY - Net Profit: Rmb45.4 billion, up 9% YoY - Q225 Revenue: Rmb38.8 billion, up 7% YoY, missing consensus by 2% - Q225 Net Profit: Rmb18.6 billion, up 5% YoY, missing consensus by 4% [2][10] - **Gross Profit Margin (GPM)**: Declined by 0.3 percentage points in Q225 due to a negative product mix [2] - **Operating Profit Margin (OPM)**: Down by 0.4 percentage points, influenced by a 0.5 percentage point increase in Selling & Distribution (S&D) ratio [2] - **Unearned Revenue**: Decreased to Rmb5.5 billion, down Rmb4.5 billion (-45% YoY) [2] - **Receivables and Inventories**: Increased by Rmb2.5 billion and Rmb7.2 billion YoY, indicating a longer working capital cycle and weak demand outlook [2] Segment Performance - **Moutai Liquor Revenue**: Grew by 11% YoY to Rmb32 billion, accounting for 82.6% of total revenue [3] - **Series Liquor Revenue**: Dropped by 7% YoY to Rmb6.7 billion, accounting for 17.4% of total revenue [3] - **Sales Channels**: - Direct Sales: Grew by 17% YoY to Rmb16.8 billion (43.3% of total revenue) - Distributor Sales: Grew by 2% YoY to Rmb22 billion (56.7% of total revenue) - iMoutai Sales: Largely flat at Rmb4.9 billion [3] Guidance and Outlook - **2025 Revenue Growth Target**: Approximately 9% YoY, unchanged from previous guidance [4] - **Investor Sentiment**: Expected to be negative due to the significant drop in unearned revenue and lackluster demand outlook [5] Valuation Metrics - **12-Month Price Target**: Rmb1,531.66 - **Current Price (as of 12 Aug 2025)**: Rmb1,437.04 - **P/BV (12/25E)**: 6.9x - **EPS Estimates**: - 12/25E: Rmb74.36 - 12/26E: Rmb79.45 - 12/27E: Rmb84.53 [7][9] Risks and Challenges - **Economic Downturn**: Potential impact on demand for premium Baijiu [13] - **Capacity Constraints**: Could hinder sales growth despite healthy demand [13] - **Government Regulations**: Possible negative effects on profitability [13] - **Food Safety Issues**: Risks to brand image [13] Additional Insights - **Market Performance**: 52-week range for stock price was Rmb1,748.00 - Rmb1,261.00 [6] - **Analyst Ratings**: Current rating is Neutral, with a forecast stock return of 11.2% [11][19] This summary encapsulates the key points from the conference call regarding Kweichow Moutai's financial performance, market outlook, and associated risks, providing a comprehensive overview for potential investors.