Investment Rating - The investment rating for the consumer staples sector in China is "Outperform" for multiple companies including Moutai, Wuliangye, and others [1]. Core Insights - Premium baijiu wholesale prices have rebounded month-on-month, while discounts on liquid milk and condiments have narrowed [1][11]. - The report highlights the resilience of consumer stocks amidst a volatile market, emphasizing their value [3]. Summary by Relevant Sections Baijiu Pricing - Moutai's wholesale prices for Feitian (case and single bottle) are 1700 and 1650 yuan respectively, with month-on-month increases of +100 and +70 yuan. Year-to-date changes are +100 and +60 yuan, but year-on-year changes are -530 and -560 yuan [10][40]. - Wuliangye's eighth-generation price remains stable at 830 yuan, with a year-to-date increase of +10 yuan and a year-on-year decrease of -105 yuan [4][40]. - Luzhou Laojiao's Guojiao 1573 price is 870 yuan, up by +20 yuan month-on-month and +20 yuan year-to-date, with a year-on-year increase of +10 yuan [4][40]. - Other notable prices include Shanxi Fenjiu and various products from Yanghe and Gujing Gongjiu, showing mixed trends in pricing [10][40]. Discounts on Consumer Products - Discounts on liquid milk products have decreased from an average of 62.8% to 61.4% and from 63.4% to 61.7% for median values [19][37]. - Discounts on condiments have also narrowed from 87.1% to 85.0% (average) and from 88.2% to 84.9% (median) [19][37]. - Conversely, discounts on convenience foods have slightly increased, with average discounts moving from 94.8% to 94.6% [20][37]. - Beer, soft drinks, and infant formula discounts have remained stable, with slight variations in average and median rates [21][38].

Core Insights - The Chinese liquor market is experiencing a "moderate recovery under structural differentiation" during the 2026 Spring Festival, with strong demand for high-end brands and stable growth for mass-market products, while mid-range products face pressure [2] Group 1: High-End Market Performance - Moutai is facing a supply-demand imbalance, with many distributors reporting sold-out quotas for January and February 2026, leading to price increases [3] - As of February 21, 2026, the wholesale price of Moutai reached 1,700 RMB per bottle, up 10 RMB from the previous day, indicating a significant recovery from a low of 1,500 RMB earlier in the year [3] - Moutai's sales performance is strong, with distributors achieving 35%-40% of their annual payment plans by February 11, 2026, and sales growth of 10%-20% year-on-year [3] Group 2: Other High-End Brands - Wuliangye is also performing well, with distributors achieving around 40% of their annual payment plans by February 11, 2026, although sales growth varies by region [4] - The price of Wuliangye's mainstream product has increased from 760 RMB to a range of 780-800 RMB per bottle since the beginning of the year [4] Group 3: Mid-Range and Mass Market Trends - Mid-range brands are experiencing sales slowdowns and market share pressures, with some products seeing declines of over 20% due to reduced business banquets [5][6] - Mass-market products are showing resilience, supported by banquet and everyday consumption, with brands like Gujinggong and Shanxi Fenjiu performing well [6][7] Group 4: Consumer Behavior and Market Dynamics - There is a noticeable shift in consumer behavior, with younger consumers favoring brands in the 100-300 RMB price range, leading to increased sales in larger supermarkets compared to smaller stores [7] - The demand for Guojian series liquor from Jinshiyuan has increased significantly during the Spring Festival, replacing traditional gift items [7] Group 5: Post-Festival Market Outlook - Despite strong sales during the Spring Festival, the liquor industry may face demand decline post-holiday, with potential inventory buildup and price corrections anticipated [8] - The long-term outlook suggests that many liquor businesses may exit the market, leading to a supply of discounted products [9] Group 6: Broader Consumption Trends - Moutai is expanding its consumer base beyond traditional customers, with a significant portion of participants in a survey indicating they included Moutai in their New Year's Eve dinners this year [10]

Core Insights - The Chinese liquor market is experiencing a "moderate recovery under structural differentiation" during the 2026 Spring Festival, with strong demand for high-end brands, stable growth for mass-market products, and pressure on mid-range categories [1][10]. High-End Brands - Moutai is facing a supply-demand imbalance, with many distributors reporting sold-out quotas for January-February 2026, leading to price increases. The wholesale price for Moutai has risen to 1,700 RMB per bottle, up from a low of 1,500 RMB earlier in the year [2][12]. - As of February 11, 2026, Moutai's sales growth is significantly outperforming the industry, with a year-on-year increase of 10%-20% in multiple regions [2][12]. - Wuliangye is also performing well, with distributors achieving around 40% of their annual sales targets by February 11, although regional sales performance varies [3][12]. Mid-Range and Low-End Products - Mid-range brands are under pressure, with many experiencing slower sales and market share erosion. For example, Gujing Gongjiu's high-end products have seen a decline of over 20% due to reduced business banquets [4][5]. - In contrast, low-end products are maintaining resilience, supported by banquet and everyday consumption. Sales in the 100-300 RMB price range have shown significant improvement compared to the previous year [5][6]. Market Dynamics - The overall economic environment remains challenging, and the current surge in liquor sales is largely attributed to pre-holiday demand, which may lead to inventory buildup and price corrections post-holiday [7][16]. - The liquor industry is expected to see more operators exit the market in the next 3-5 years, driven by survival and payment crises, which may lead to a continuous supply of low-priced liquor [8][17]. Consumer Trends - Moutai is expanding its consumer base beyond traditional high-end customers, with a notable increase in family consumption during the Spring Festival. A survey indicated that 43.85% of participants included Moutai in their New Year's Eve dinners this year [9][17].

Core Viewpoint - The report from China Merchants Securities indicates that the sales performance of key brands is expected to accelerate in the week before the Spring Festival, with tight supply and rising prices supporting market sentiment. Despite a potential decline in financial reports for 2026, leading brands like Moutai and Wuliangye have safe margins in valuation and dividends, suggesting a potential dual upgrade in performance and valuation as negative factors gradually dissipate [1] Industry Overview - Sales performance before the Spring Festival is expected to decline but aligns with forecasts, with Moutai showing leading market conditions. The overall industry is experiencing a double-digit decline in sales, but confidence is gradually recovering as companies ease pressure on sales targets [2] - The overall collection and delivery progress in the industry is slower than the same period last year, with Moutai and Wuliangye showing faster delivery rates. The inventory levels of distributors are lower than last year, but the days of inventory have not decreased significantly due to slower sales [2] Product Analysis - Moutai's sales volume and price have exceeded expectations, with a projected net increase of over 2,000 tons in January. Wuliangye's sales are expected to remain stable, while other brands like Laojiao and Fenjiu are experiencing varying degrees of decline [3] - The demand for low-end products remains, but brands like Jiannanchun and Yanghe are seeing significant declines in sales, with some brands experiencing double-digit drops [3] Consumption Scenarios - Business dining consumption remains suppressed, with mid-to-high-end dining showing poor performance. However, there is a rebound in gift-giving consumption, and the demand for affordable genuine products is increasing, with the proportion of mass consumption rising to 20% [4] Future Outlook - There is potential for further sales growth during the Spring Festival, with Moutai's supply-demand imbalance expected to continue into Q1, supporting prices. The overall industry volume and price have not yet bottomed out, and close attention is needed on the recovery of Wuliangye and Fenjiu's sales and distributor confidence [5] Institutional Holdings - Institutional holdings in the liquor sector are at historical lows, with the proportion of actively managed funds in the liquor sector dropping to 3.5% in Q4 2025. The overweight ratio has also decreased, indicating a stabilization in holdings among major liquor companies [6]

Investment Rating - The report recommends a positive investment outlook for the liquor sector, particularly for Kweichow Moutai, Wuliangye, and Shanxi Fenjiu, while suggesting a cautious approach towards Yingjia and Luzhou Laojiao [9][18]. Core Insights - The report indicates that Kweichow Moutai's sales volume and price have exceeded expectations, with a traditional channel delivery progress of 25%, maintaining zero inventory in channels. The demand side shows a double-digit growth year-on-year, supporting the price stability at 1499 RMB [1][18]. - The liquor industry is experiencing a bifurcation in brand performance, with Kweichow Moutai and Wuliangye showing positive sales trends, while other brands like Gujing and Yingjia are facing declines [9][18]. - The report highlights the importance of the upcoming Spring Festival for sales, with a tight supply-demand relationship expected to support prices, although a slight decline post-festival is anticipated [1][18]. Summary by Sections Core Company Tracking - Kweichow Moutai's payment progress is at 36%, with a delivery rate of approximately 20%, expected to increase to over 25%. The sales performance is strong, with a growth rate exceeding 10% year-on-year [2][11]. - Wuliangye's payment progress is at 60%, with a sales growth of 30% year-on-year, indicating a stable market condition similar to the previous year [3][14]. - Other brands like Fenjiu and Gujing are experiencing varied performance, with Fenjiu showing a slowdown in growth while Gujing's sales of certain products have declined significantly [2][3][14]. Investment Recommendations - The report suggests a bottom-fishing strategy for Kweichow Moutai, Wuliangye, and Shanxi Fenjiu, while also recommending attention to Yingjia and Luzhou Laojiao for potential rebounds [9][18]. - It identifies four main lines for consumer goods: recovery in the restaurant chain, raw milk cycle turning point, high valuation and performance alignment, and bottom-fishing for companies like China Resources Beverage and Qiaqia Food [9][18]. Industry Valuation - The report provides a valuation table for key companies, indicating Kweichow Moutai's market cap at 17544 million RMB with a PE ratio of 20, while Wuliangye has a market cap of 4076 million RMB with a PE ratio of 17 [20].

Summary of Key Points from the Conference Call Records Industry Overview: Baijiu Industry Core Insights and Arguments - **Zhenjiu Li Du**: - The company has initiated a 26-year repayment plan with inventory levels around 3+ months [1] - Recent batch prices for Zhen30, Zhen15, Zhen10, and Zhen5 are 720, 305, 260, and 110 yuan respectively [1] - Over 4,000 contracts signed with major Zhen Alliance merchants, achieving over 700 million yuan in repayments [1] - The second phase of Zhenjiu's expansion has halted recruitment in 15 counties, with a strategy of replacing existing merchants [1] - The "Zhen 2021 Real Vintage" is set to launch, while the 2020 vintage will cease production by year-end, with a price increase of 10 yuan per bottle starting January 10 [1] - Zhenjiu's classic version has been officially launched at a suggested retail price of 208 yuan per bottle, now available in Guizhou [1] - **Yanghe Co.**: - The company has achieved a 20% repayment progress for 2026, with average inventory levels of 2.5-3 months [2] - Batch prices for M6+, M3 Crystal Edition, Tianzhilan, and Haizhilan are 560, 360, 240, and 115 yuan respectively [2] - Yanghe has been selected as an official sponsor for "Su Super" [2] - No mandatory repayment requirements during the Spring Festival, with current inventory below 2 months [2] - **Jinshi Yuan**: - The company reports a 25% repayment progress for 2026, with average inventory around 3.5 months [2] - Batch prices for Dikai, Si Kai, and V3 are approximately 240, 405, and 500 yuan [2] - Jinshi Yuan has sponsored "Su Super" for two consecutive years [2] - The company is adapting to changes in consumer behavior, with a notable increase in the sales of its light and elegant products [2] - The company aims to maintain a stable market presence and pricing strategy while expanding its product matrix [2] - **Gu Jing Gong Jiu**: - The company has a 25% repayment progress for 2026, with inventory levels around 5+ months [3] - Batch prices for Gu20, Gu16, Gu8, Gu5, and Xianli are 510, 310, 190, 103, and 76 yuan respectively [3] - Gu Jing Gong Jiu announced a cash dividend distribution plan totaling 529 million yuan [3] - **Kouzi Jiao**: - The company has initiated a 26-year repayment plan with average inventory levels of 4+ months [3] - Batch prices for Kouzi 30, 20, 10, and 6 years are 700, 300, 200, and 120 yuan respectively [3] - The company reported significant declines in high-end and mid-range product revenues, with a notable increase in low-end product sales [3] - **Yingjia Gong Jiu**: - The company has a repayment progress of 20-30% for 2026, with average inventory around 5+ months [4] - Promotional prices for Dong6, 9, and 16 are 110, 185, and 285 yuan, with stable batch prices [4] - The company aims for a 30% repayment target in Q1, with expectations for continued growth in Dong6 and 9 [4] - **Jinhui Jiu**: - The company has initiated a repayment plan for 2026 [5] - Plans to distribute nearly 100 million yuan in cash dividends [5] - Positive feedback from the Northwest region indicates potential market share growth due to a lack of strong competitors [5] - The company has seen revenue growth in products priced below 100 yuan, with a rising share in the 300 yuan and above segment [5] Other Important Insights - The overall sentiment in the Baijiu industry reflects cautious optimism, with companies focusing on maintaining stable pricing and adapting to changing consumer preferences [2][3][4][5] - The impact of the Spring Festival on sales and repayment expectations is a common theme, with companies expressing a mix of caution and strategic planning for the upcoming period [2][3][4]

Investment Rating - The report assigns an "Outperform" rating to multiple companies in the consumer staples sector, including Guizhou Moutai, Wuliangye, Luzhou Laojiao, and others, indicating a positive outlook for these stocks [1]. Core Insights - There is an intensified divergence among mid-to-high-end baijiu products, with no discount contraction observed in food and beverage categories [1]. - The report highlights that the wholesale prices of various baijiu brands have shown stability or slight changes, with some brands experiencing price increases while others remain flat or decrease [3][4][35]. - Discounts on representative products in condiments, liquid milk, and soft drinks have widened compared to the end of December, indicating a shift in pricing strategies [19][32]. Summary by Relevant Sections Baijiu Pricing - Guizhou Moutai's wholesale prices for Feitian (case and single bottle) and Moutai 1935 are reported at 1600, 1580, and 630 yuan respectively, with changes of 0, -10, and -10 yuan compared to last month [35]. - Wuliangye's eighth-generation price is 830 yuan, reflecting a +10 yuan increase from the previous month [35]. - Luzhou Laojiao's Guojiao 1573 remains at 850 yuan, unchanged from last month [35]. Discount Trends - The average discount rate for condiments decreased from 87.1% to 85.0%, while liquid milk discounts fell from 62.8% to 61.4% [19][22]. - In contrast, discounts for beer, infant formula, and convenience foods remained stable, with beer discounts slightly increasing from 80.3% to 80.7% [20][22][32]. Company Ratings - The report lists several companies with an "Outperform" rating, including: - Guizhou Moutai - Wuliangye - Luzhou Laojiao - Qingdao Beer - China Feihe - Others [1].

Investment Rating - The report assigns an "Outperform" rating to multiple companies in the essential consumer goods sector, including Guizhou Moutai, Wuliangye, Luzhou Laojiao, and others, indicating a positive outlook for these stocks [1]. Core Insights - Wholesale prices of Baijiu have mostly stabilized, with specific brands showing varied price changes. For instance, the price of Feitian Moutai (case) is 1600 yuan, down by 50 yuan from last month, while the price of Wuliangye has increased by 20 yuan to 820 yuan [3][38]. - Discounts on liquid milk have significantly increased, while discounts on seasoning and soft drink products have narrowed compared to the end of November. The average discount rate for seasonings rose from 85.9% to 87.1%, and for soft drinks from 85.6% to 86.7% [5][17][35]. Summary by Sections Baijiu Pricing - The report details the wholesale prices of key Baijiu brands, noting that Feitian Moutai's prices have decreased by 640 yuan year-to-date compared to the previous year. Other brands like Wuliangye and Luzhou Laojiao have also shown price stability or slight increases [9][38]. Discount Trends - Discounts on liquid milk products have widened, with the average discount rate dropping from 66.0% to 62.8%. In contrast, discounts on convenience foods have decreased from 95.8% to 94.8% [19][21][36]. - The report highlights that infant formula and beer products have maintained stable discount rates, with slight changes observed [18][35]. Company Ratings - The report lists several companies rated as "Outperform," including Guizhou Moutai, Wuliangye, and others, indicating strong expected performance relative to the market [1].

Core Viewpoint - The liquor industry is currently facing a challenging period, with many companies' stock prices entering a bottom range, as indicated by a 1.7% decline in the Wind liquor index this week and a cumulative drop of over 5% since December [2][4]. Company Summary - Gujing Gongjiu, known as the "King of Huijiu," experienced a significant stock price drop of 6.74% this week, following a previous decline of 6.2%, raising concerns about its ability to recover first in the market [2][4]. - The stock price of Gujing Gongjiu has fallen over 12% in December alone, ranking it second to last among all liquor companies, only ahead of *ST Yanshi, which faces delisting risks [6][7]. - The company is facing challenges such as long-term price inversion of its core product, slow national expansion, and a strategic adjustment that has led to a slowdown in revenue growth [7]. Industry Summary - The liquor industry is under pressure from fundamental, pricing, and market expectation factors, leading to a continued search for a bottom [4]. - The recent central economic work conference emphasized the importance of domestic demand, which may improve the return on equity (ROE) for companies in the medium term, potentially leading to increased spending and improved income expectations for residents [6]. - The beer sector remains stable, with some companies like Hong Kong Shengli Beer and *ST Lanhua seeing stock price increases, while the yellow wine sector shows mixed performance [6].

Core Viewpoint - The 600 yuan price segment in the high-end liquor market is experiencing complex dynamics due to both proactive expansion and passive competition, leading to increased uncertainty and variability in market conditions [1]. Group 1: Market Dynamics - The high-end market is under pressure, but the next high-end price range has not contracted as expected, instead forming a solid support at the 600 yuan level [1]. - Moutai 1935 has seen significant sales growth in September and October after increasing distribution, while lower-alcohol products like Guojiao 1573 and Wuliangye have capitalized on the trend towards lower alcohol consumption [1]. - The competition is intensifying among high-end liquor brands, with new entrants like Dazhen Zhenjiu leveraging innovative strategies to capture market share [1]. Group 2: Historical Context - The 600 yuan price segment began to take shape around 2019, when high-end liquor prices surged, breaking previous price ceilings and leading to significant market growth [2][3]. - The traditional next high-end price range of 300-400 yuan has been pushed upwards due to pricing strategies, reflecting a broader trend of market expansion [3]. Group 3: Competitive Landscape - Major liquor companies have targeted the 600 yuan segment, with brands like Shede and Gujing Gongjiu launching products aimed at this price point, achieving significant sales [4][5]. - By 2020, the 600 yuan price segment had attracted various strong brands, including low-alcohol versions of established products and new offerings from regional leaders, creating a market with over 100 billion yuan in scale [5]. Group 4: Current Market Position - The 600 yuan price segment is now seen as a critical battleground, with brands like Moutai 1935 and Guojiao 1573 demonstrating resilience against market pressures [11][14]. - The segment has shown remarkable stability and potential for growth, with a market size estimated at 500 billion yuan, making it a focal point for both offensive and defensive strategies in the industry [11][14]. Group 5: Future Outlook - The 600 yuan price segment is expected to remain a key area of focus for brands looking to navigate the current market challenges, with opportunities for both expansion and defense against high-end market pressures [15].