Summary of Key Points Core Viewpoint - The Xi'an Weiyang District Market Supervision Administration conducted a food safety inspection, testing 139 samples across 14 categories of food products, with 138 passing and 1 failing the safety standards [2][3]. Group 1: Inspection Results - A total of 139 food samples were tested, with 138 samples meeting the national food safety standards, resulting in a compliance rate of approximately 99.29% [2][3]. - The categories of food inspected included edible agricultural products, catering food, grain processing products, condiments, pastries, edible oils, beverages, vegetable products, starch and starch products, bean products, dairy products, fruit products, biscuits, and sugar [2][3]. Group 2: Non-compliance Details - One sample failed the inspection, specifically a pepper product from a convenience store in Xi'an, which contained a pesticide residue (Thiamethoxam) at 0.23 mg/kg, exceeding the standard limit of 0.05 mg/kg [3][4]. - The inspection was carried out by Shaanxi Keyi Sunshine Testing Technology Co., Ltd., which is responsible for the testing and verification of food safety compliance [3][4]. Group 3: Compliance Highlights - The majority of the tested products were compliant, including various food items from well-known companies such as China Resources and local suppliers, indicating a generally high standard of food safety in the region [4][5]. - The report includes detailed information on compliant products, including their production dates and testing institutions, showcasing transparency in the inspection process [4][5].

Overall Situation - The food safety supervision and sampling inspection conducted by the Liuhe District Market Supervision Administration involved 257 batches of food products, all of which were found to be compliant [2]. Product Categories - The inspected food categories included edible agricultural products, meat products, catering foods, and grain processing products [2]. Compliance Results - All 257 batches of food products tested were found to be qualified, indicating a 100% compliance rate in this inspection round [2].

Investment Focus - The report emphasizes the strategy of investing in stocks with high dividends and improved fundamentals, particularly in the essential consumer sector [1][6] - Key stocks recommended for investment include Kweichow Moutai, Wuliangye, and Yili, all rated as "Outperform" [1] Industry Overview - In May 2025, six out of eight tracked industries maintained positive growth, with the restaurant sector growing by 3.7%, beer by 3.3%, and soft drinks by 3.1% [3][8] - The industries experiencing negative growth include mass-market and above mid-range liquor, with declines of 13.0% and 2.5% respectively [3][8] Price Trends - In May, the price of Moutai continued to decline, while high-end products like Wuliangye stabilized [4] - The overall price trend in the liquor market showed more declines than increases, particularly in the mid-range segment [4][10] Cost Analysis - The cost index for soft drinks, seasonings, and other categories showed slight increases, while beer and instant noodles experienced declines [4] - Packaging material prices have decreased significantly compared to last year, with aluminum can prices up by 12.01% [4] Fund Flows - As of the end of May, net inflows into Hong Kong Stock Connect amounted to 41.99 billion yuan, with the essential consumer sector's market capitalization share at 5.65% [5] - The food additives sector saw an increase in market share, while the dairy sector experienced a slight decrease [5] Valuation Metrics - The PE historical percentile for A-share food and beverage stocks was 19% (21.5x), a decrease from the previous month [5] - H-share essential consumer sector PE historical percentile increased to 34% (18.8x), reflecting a rise in valuation [5] Recommendations - The report suggests waiting for opportunities or buying high-dividend stocks, as the current fundamentals lack catalysts for growth [6] - Key stocks with high dividend yields include Master Kong, Uni-President, and China Feihe, among others [6]