Core Viewpoint - The global spirits giant Diageo is facing challenges in the Chinese market, particularly with its baijiu brand Shui Jing Fang, amid a broader industry adjustment cycle [1][6]. Group 1: Diageo's Strategic Moves - Diageo has not explicitly mentioned plans to sell its Shui Jing Fang asset, but it would consider "irresistible offers" for non-core assets [5][6]. - The company is working with Goldman Sachs and UBS to review its operations in China, indicating a potential optimization of its investment portfolio [3][6]. - Diageo's management has clarified that the rumors regarding the sale of Shui Jing Fang are unfounded, emphasizing that any sale would require a compelling offer [5][7]. Group 2: Financial Performance - Diageo's revenue for the fiscal year 2025 was $20.25 billion, a slight decline of 0.12% year-on-year, with net profit dropping by 39.17% to $2.354 billion [7][8]. - In the first half of fiscal 2026, Diageo reported sales of $10.5 billion, down 2.8% year-on-year, primarily due to declines in the U.S. spirits and Chinese baijiu markets [8][10]. - The sales in the Asia-Pacific region fell by 11%, largely attributed to the ongoing decline in Chinese baijiu sales [8][10]. Group 3: Shui Jing Fang's Performance - Shui Jing Fang is projected to achieve a net profit of 390 million yuan in 2025, a significant decrease of 71%, with expected revenue of 3.04 billion yuan, down 42% [10]. - The decline in Shui Jing Fang's performance is attributed to a combination of industry cycles and the company's proactive adjustments, with high inventory levels and slow recovery in traditional consumption scenarios [10].