Industry Background - The liquor industry is facing dual pressures from economic and policy factors, leading to an accelerated bottoming out of the sector [2] - Revenue growth for the sector is expected to significantly decline to around 1% starting from the second half of 2024, with most companies failing to meet their 2024 operational targets, except for leading firms like Kweichow Moutai and Shui Jing Fang [2] Supply Side - Major liquor companies such as Wuliangye, Luzhou Laojiao, Shanxi Fenjiu, and Yanghe have initiated inventory control policies, marking the beginning of a "control inventory wave" [3] - This proactive supply-side adjustment is anticipated to alleviate channel inventory pressure and help rebalance supply and demand, potentially stabilizing prices in the short term [3] Demand Side - Companies are innovating to tap into new demand and optimize demand structure by launching products that align with changing consumer preferences [4] - There is a noticeable shift from "cost-performance ratio" to "quality-price ratio" in consumer preferences, prompting leading brands to introduce new products that emphasize quality [4] - The trend towards lower alcohol content products is gaining traction, especially among younger consumers, with significant interest in low-alcohol offerings [4] - Companies are also focusing on mid-range products to cater to evolving consumer needs and market dynamics [4] Channel Strategy - Liquor companies are building platforms to strengthen partnerships with distributors and embrace new channels to balance online and offline sales [5] - The establishment of cooperative platforms among manufacturers is aimed at resolving conflicts and creating a healthier ecosystem [5] - Companies are increasingly focusing on online channel management, with initiatives to recruit operators for online platforms and activate new retail channels [5] Marketing Strategy - Companies are adjusting their marketing strategies by reducing the reliance on "red envelope" promotions and focusing on cultivating new consumption scenarios and demographics [6] - There is a shift towards targeted marketing efforts to optimize customer structures and create new consumption experiences [6] - The current low valuation, low expectations, and low holdings in the sector make strong brand leaders attractive for dividend returns [6]

Group 1 - The Yarlung Tsangpo River downstream hydropower project has officially commenced with a total investment of approximately 1.2 trillion yuan, aiming to build five tiered power stations primarily for electricity transmission and local consumption in Tibet [1] - The Ministry of Industry and Information Technology (MIIT) plans to accelerate the development of biomanufacturing and low-altitude industries, while promoting innovation in future industries such as humanoid robots and brain-computer interfaces [2][3] - The MIIT and the National Development and Reform Commission (NDRC) are set to issue work plans to stabilize growth in key industries including steel, non-ferrous metals, petrochemicals, and building materials [2][3] Group 2 - The U.S. Department of Commerce has imposed a preliminary anti-dumping duty of 93.5% on Chinese imported anode-grade graphite, citing unfair subsidies [5] - The State Administration for Market Regulation has urged major platform companies like Ele.me, Meituan, and JD.com to standardize promotional activities and foster a healthy competitive environment in the food service industry [6] - A meeting was held to discuss the regulation of the new energy vehicle industry, focusing on enhancing supervision and monitoring product prices and quality [8] Group 3 - The China Iron and Steel Association has proposed a new mechanism for capacity governance to prevent overcapacity risks in the steel industry and to eliminate irrational competition [10] - Yu Shu Technology has initiated its listing guidance, with its controlling shareholder holding approximately 34.76% of the company's shares [11] - Multiple provinces are planning to establish companies to develop local cultural creative Moutai liquor, with participation from distributors based on their allocation of Moutai products [12] Group 4 - As of July 18, 1551 A-share listed companies have released performance forecasts for the first half of 2025, with 26 companies expecting a net profit increase of over 1000% year-on-year [14] - Longhua Automobile reported a net profit of 6.337 billion yuan for the first half of the year, reflecting a year-on-year decline of 10.22% [19] - The major shareholder of Hongbaoli plans to reduce its stake by up to 2% [20]

Investment Rating - The report maintains a recommendation for the industry, indicating a positive outlook for the sector as a whole [5]. Core Insights - The actual demand in the liquor industry has significantly decreased in Q2 2025, with companies like Water Well and Jiu Gui Jiu showing early indicators of industry performance through their earnings forecasts [1][18]. - Moutai's establishment of a joint venture and Jiu Gui Jiu's collaboration with Pang Dong Lai for product launches reflect the multi-faceted strategies employed by major liquor companies to mitigate industry pressures and enhance annual performance [1][18]. - The beverage sector is expected to see leading water companies continue to capture market share, with Farmer Spring's market share rapidly recovering, leading to potential upward revisions in profit forecasts [1][18]. - The snack sector is facing short-term challenges due to rising costs and increased expenses, with a focus on new product launches and net profit margin improvements in the second half of the year [1][18]. - The pet sector presents a buying opportunity following recent corrections, with a focus on valuation shifts in the second half of the year [1][18]. Summary by Sections Core Company Tracking - Moutai is forming platform companies with provincial distributors to develop local cultural Moutai products, which is expected to stabilize pricing and support annual targets while alleviating pressure on the main product's volume growth [12]. - Water Well reported a 13% decline in revenue and a 57% drop in net profit for H1 2025, with significant Q2 revenue declines attributed to inventory reduction pressures and policy impacts [13]. - Jiu Gui Jiu's net profit for H1 2025 is expected to drop by 90%-93%, with a 43% revenue decline, as the company increases sales expenses and new product promotion efforts [14]. - Hai Tian Wei Ye anticipates rapid overseas growth and is enhancing its market share through localized strategies and channel expansion [15]. - Qia Qia Food's net profit is projected to decrease by 71%-76% in H1 2025, with expectations for improvement in H2 as costs normalize [16]. - Gan Yuan Food's net profit is expected to decline by 55%-56% in H1 2025, with plans to strengthen sales of new and core products in H2 [17]. Investment Recommendations - The report suggests focusing on liquor companies that are adjusting their strategies in response to market pressures, particularly those with a safety margin in valuations [18][19]. - In the beverage sector, companies like Farmer Spring and Uni-President China are expected to perform well, while traditional consumer stocks like Moutai and Lu Zhou Lao Jiao are recommended for their recovery potential [19]. - The report highlights opportunities in the snack sector with companies like Qia Qia and Gan Yuan, emphasizing the importance of new product launches and margin improvements [19].

Group 1 - The Ministry of Commerce emphasizes that cooperation between China and the US is essential, urging the US to abandon zero-sum thinking and lift unreasonable trade restrictions [1] - The State Administration for Market Regulation has urged major platforms like Ele.me, Meituan, and JD.com to standardize promotional activities and foster a healthy competitive ecosystem in the food service industry [1] - A meeting was held by the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the State Administration for Market Regulation to regulate competition in the new energy vehicle industry, focusing on product safety and quality [1] Group 2 - The Ministry of Industry and Information Technology plans to implement a new round of growth stabilization work for key industries, including steel and non-ferrous metals, to optimize supply and eliminate outdated capacity [2] - The Ministry of Commerce reports that China's consumer market remains the second largest globally, with retail sales expected to exceed 50 trillion yuan this year, growing at an average annual rate of 5.5% over the past four years [2] - The National Development and Reform Commission has announced measures to encourage foreign investment in domestic reinvestment, including tax support policies [2] Group 3 - The China Securities Regulatory Commission is addressing accounting practices in the market by drafting guidelines to ensure consistent application of accounting standards [3] - The Shenzhen Stock Exchange has issued notifications regarding the continuation of corporate bond issuance and asset-backed securities, allowing issuers to apply for issuance based on existing registration documents [3] - The Shanghai Stock Exchange has taken regulatory measures against 158 cases of abnormal trading behavior, including market manipulation and false declarations [4] Group 4 - The Ministry of Commerce's meeting with Nvidia's CEO highlighted China's commitment to attracting foreign investment and fostering cooperation in artificial intelligence [7] - The European Union has approved a new round of sanctions against Russia, which includes banning the use of the Nord Stream pipeline and setting price caps on oil imports [8] Group 5 - A new company is being established by provincial distributors of Moutai liquor to develop local cultural Moutai products, which is expected to help meet annual performance targets and stabilize market prices [5]

Group 1 - The core viewpoint is that provincial distributors of Moutai liquor are planning to establish a company to develop local cultural creative Moutai products [1] - Distributors can voluntarily invest in the new company, with investment amounts based on their allocation of 53-degree 500ml Flying Moutai, calculated at 300,000 yuan per ton [1] - The preliminary preparations for the investment are expected to be completed soon [1] Group 2 - Market analysis suggests that this initiative will help Moutai achieve its performance targets for the year [2] - The move is also expected to alleviate pressure on the market for regular Moutai and stabilize market prices [2]

Core Viewpoint - Provincial distributors of Moutai liquor are planning to establish a platform company to develop local cultural Moutai liquor, which is expected to help achieve this year's performance targets and alleviate market pressure on the regular Moutai product line [1] Group 1 - Distributors will have the option to voluntarily invest in the new company, with investment amounts based on their allocation of 53-degree 500ml Flying Moutai, calculated at 300,000 yuan per ton [1] - The preparatory work for the investment is expected to be completed soon, indicating a swift move towards the establishment of the new platform [1] - Market analysis suggests that this initiative will stabilize prices and reduce pressure on the regular Moutai market [1]