30 October 2025 | 12:50AM HKT Equity Research Kweichow Moutai (600519.SS): 3Q25 Earnings Review: Sales/NP in line; Direct sales slowed on policy impact with resilient wholesale channels Moutai reported 3Q25 results on Oct 29 with sales/NP up 0.3%/0.5% yoy to Rmb39.8bn/Rmb19.2bn, both right in line with GSe. By product in 3Q25, Moutai Spirits revenue was up 7% yoy mainly supported by wholesales channels, while Series spirits revenue declined sharply by 34% yoy, seeing a much deeper decline vs. -7% in 2Q25 am ...

Key TakeawaysRussia's air defense reportedly intercepted a substantial 193 Ukrainian drones overnight, as reported by the RIA Agency, signaling continued intense conflict in the region.Indonesia's benchmark IDX Composite Index (JKSE) experienced a notable decline of 3.7%, closing at 7,965.14, reflecting potential volatility in emerging markets.Analyst firms issued several significant price target adjustments, with D.A. Davidson raising Comfort Systems USA (FIX) to $1,200 from $810, while TD Cowen lowered Di ...

US spirits producer Heritage Distilling Company is to close its tasting rooms and shift to contract production. In a statement yesterday (23 October), the company said its decision stems from a review addressing “shifting market dynamics” and “financial realities” in the beverage-alcohol industry. The closures, effective 31 December, are driven by a “challenging” tax and regulatory environment in Washington and Oregon, it added. Five retail tasting rooms in the states are set to be shuttered. Heritage ...

Core Viewpoint - Pernod Ricard anticipates sales improvement in fiscal year 2026 despite a reported 7.6% decline in first quarter sales due to weak consumer demand and destocking in China and the United States [1] Sales Performance - The company reported a 7.6% decrease in first quarter sales [1] - The decline is attributed to weak consumer demand and destocking activities in key markets such as China and the United States [1] Future Outlook - Despite the current decline, the company maintains a positive outlook for sales improvement in fiscal year 2026 [1]

Summary of China Consumer Staples 3Q25 Preview Industry Overview - The Consumer Staples sector in China is experiencing weak consumption trends in 3Q25, with easing policy headwinds but ongoing constraints on on-trade recovery [1][2] - Companies are prioritizing channel health and maintaining rational marketing investments due to weak demand, leading to volume weakness across sub-sectors [1][2] Key Insights - **Sales Growth Expectations**: An aggregated topline growth of +3%/+4% is anticipated for the Staples coverage (excluding Spirits), with beverages, pet foods, and snacks leading sales growth at 10-30% [2] - **Comparison to Previous Quarters**: This growth represents a deceleration from +5%/+7% in 2Q25, reflecting broader consumption weakness [2] - **Spirits Sector Outlook**: The spirits sector is expected to see a decline of -7%/-10% in sales/net profit, likely marking 3Q as the trough level due to stringent shipment controls [2] Company Performance - **Leaders Outperforming**: Companies like Eastroc, Nongfu, Haitian, CR Beer, Yankershop, and Weilong are expected to deliver resilient sales growth in 2H25 with higher margin visibility [2] - **Downgrade of Jonjee**: Jonjee has been downgraded to Sell from Neutral due to an 8-10% downward revision in earnings amid competitive pressure from Haitian [2] Market Trends - **September Sales Trends**: Beer and dairy sales trends improved sequentially ahead of Golden Week, while beverage and snacks showed wide divergence [2] - **Focus on Channel Health**: Companies are expected to focus on channel health and shipment control in preparation for a fresh start in 2026 [2] Future Outlook - **Investment Strategy for 2026**: Companies are expected to face diminishing cost benefits, necessitating a focus on competition and promotion strategies [8] - **Growth Drivers**: Selective snacks and beverage players are anticipated to drive topline growth through core SKU focus and POS expansion [8] - **Potential Recovery in Challenged Sectors**: Spirits valuations suggest a potential bottoming out, with recovery tied to gradual policy normalization expected in 2Q26 [8] Valuation and Shareholder Returns - **Valuation Outlook**: Investors are beginning to look into 2026/27E earnings, with pet food trading at an average of 28x/21x P/E compared to 38x for 2025 [8] - **Shareholder Return Support**: Companies like Tingyi and WH Group are noted for their attractive yields of 7-8% for 2025E/2026E [1] Conclusion - The Consumer Staples sector in China is navigating a challenging environment with weak demand and competitive pressures, but certain leaders are positioned to outperform. The focus on channel health and strategic investments will be crucial as the sector prepares for 2026.

Brown-Forman, the maker of Jack Daniel’s whiskey, is tempering its growth expectations as the global spirits industry faces hurdles https://t.co/ZAvgglkFm1 ...

Core Viewpoint - Radico Khaitan has received interim relief from the Punjab and Haryana High Court in a trademark dispute regarding its Kashmyr vodka, which is being challenged by Piccadily Agro Industries over alleged trademark infringement [1][2]. Trademark Dispute - The dispute involves Piccadily Agro Industries, which filed a commercial suit against Radico Khaitan in July, claiming that the use of "Kashmyr" for vodka products is similar to its registered trademarks "Cashmere" and "Cashmir" [1][2]. - Radico Khaitan was initially restricted from selling products under the Kashmyr name, but this order has been suspended pending a hearing scheduled for 13 November [2]. Allegations and Arguments - Piccadily Agro alleges that Radico Khaitan's use of "Kashmyr" creates "deceptive similarity" with its "Cashmere" trademark, which could confuse consumers due to phonetic similarities and similar pricing [3]. - Radico Khaitan contends that the lawsuit is not maintainable in Karnal, as it does not manufacture or sell products in Haryana and lacks an excise license there [3][4]. Business Performance - In August, Radico Khaitan reported a significant increase in quarterly sales, with a 32% rise in net revenue from operations to ₹15.06 billion ($171.8 million) for the quarter ending June [5].

Financial Data and Key Metrics Changes - The company reported record first-quarter net revenue of $210 million, a 5% increase year over year, driven by increased cannabis sales in Canada and international markets [31][36] - Net income for the quarter was $1.5 million, compared to a net loss of $34.7 million in the prior year period, indicating a significant turnaround in profitability [35][36] - Adjusted EBITDA for the quarter improved to $10.2 million from $9.3 million last year, reflecting operational efficiency [36] Business Line Data and Key Metrics Changes - Cannabis revenue increased by 5% year over year to $64.5 million, supported by a 12% growth in adult use gross revenue and a 10% growth in international cannabis [31][36] - Beverage revenue reached $55.7 million, impacted by SKU rationalization but supported by new product contributions [32][36] - Wellness revenue grew by 3% year over year to CAD 15.2 million, driven by innovations in health-focused products [32][36] Market Data and Key Metrics Changes - The Canadian cannabis business reported revenue up 4% year over year to $51 million, reinforcing its position as the largest legal cannabis company in Canada by revenue [12][36] - International cannabis revenue grew by 10% year over year to $13.4 million, despite permit challenges in Portugal [14][36] - The distribution segment's revenue increased by 9% year over year to CAD 74 million, primarily due to a stronger euro [32][36] Company Strategy and Development Direction - The company aims to leverage its global platform to drive innovation in cannabis, beverage, and wellness sectors, focusing on sustainable growth and operational efficiency [5][7] - The strategic focus includes optimizing the craft beer SKU portfolio under Project Four Twenty, which has already realized $25 million in annual savings [20][21] - The company is well-positioned to capture growth opportunities in the U.S. medical cannabis market, anticipating a potential market share of 3% to 5% in a $10 billion market [11][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the evolving regulatory landscape for cannabis, particularly in the U.S. and Europe, which could enhance patient access and market opportunities [10][11] - The company is confident in its ability to adapt to regulatory changes and is committed to continuous innovation and portfolio expansion [28][36] - Management acknowledged the challenges faced in the beverage segment but emphasized the long-term potential for growth and profitability [20][36] Other Important Information - The company reduced its outstanding debt by $7.7 million during the quarter, bringing its net debt to $3.9 million, which enhances financial flexibility for strategic opportunities [36][37] - The company has built a diversified global platform with over 40 unique brands in more than 20 countries, positioning itself as a leader in the cannabis, beverage, and wellness markets [8][9] Q&A Session Summary Question: International growth opportunities and permit delays - Management noted progress in obtaining permits in Portugal and expressed optimism about increasing production capacity in both Portugal and Germany [41][43][44] Question: Rescheduling opportunities in the U.S. - Management indicated readiness to leverage existing infrastructure and explore partnerships or acquisitions to capture opportunities in the U.S. medical cannabis market [48][51] Question: Canadian adult use market dynamics - Management highlighted a 1.3% decline in overall market pricing, with their pricing up 2% and volume growth of 6.5%, indicating strong performance relative to the market [67][70] Question: Beverage segment profitability improvement plans - Management discussed ongoing efforts in SKU rationalization and integration of acquired brands to improve margins in the beverage segment [75][78] Question: Managing risks in Portugal and Germany - Management emphasized commitment to the Portuguese market while also having contingency plans in Germany, including the ability to ship from Canada [81][84][90]

Market Overview - U.S. equities are set to rise, with Nasdaq futures up 0.64% and Russell 2000 futures up 0.57% ahead of market opening [2] - The U.S. stock market opened with Russell 2000 leading at +0.72%, followed by Nasdaq at +0.56%, S&P 500 at +0.33%, and Dow at +0.12% [1] Company Developments - Advanced Micro Devices (AMD) shares surged over 25% in premarket trading following a significant deal with OpenAI [3] - OpenAI is expected to spend billions on AMD's compute products and may acquire up to a 10% stake in the company [4] Economic Indicators - The 10Y Treasury yield increased by 3.5 basis points to 4.154% [3] - Gold prices rose by 1.38% to $3,962.70, approaching the $4,000 milestone [3] - WTI Crude oil prices increased by 1.3% to $61.68, while Silver rose by 0.67% [3] International Market Developments - Japan's Nikkei 225 index reached an all-time high, jumping nearly 5% following the appointment of ultra-conservative lawmaker Sanae Takaichi, who is expected to implement market-friendly policies [5] Earnings Reports - Constellation Brands (STZ) is set to report earnings after market close, with its stock down 41.5% over the past year, making the report critical for assessing the alcohol market's performance [6] Economic Data & Events - No significant economic data points or events are scheduled for today due to the ongoing government shutdown [7]

Core Insights - Sazerac has acquired Western Son Vodka and Distillery, enhancing its vodka portfolio following the previous acquisition of Svedka Vodka [1][2] - The flavored spirits market is projected to grow at a rate of 17.89% from 2025 to 2035, making Western Son an attractive addition for Sazerac [2] - Sazerac has been focusing on Texas for recent acquisitions, including partnerships and purchases of ready-to-drink brands [3] Company Strategy - The acquisition of Western Son allows Sazerac to augment its portfolio and increase production capacity [2] - Sazerac's recent strategy includes expanding its presence in Texas, evidenced by partnerships with Andrews Distributing and the acquisition of BuzzBallz [3] Market Context - The flavored spirits market is expected to see significant growth, which aligns with Sazerac's strategic acquisitions [2] - Other companies, such as Splash Beverage, have shown interest in acquiring Western Son, indicating competitive interest in the flavored spirits segment [4]