23 February 2026 | 1:39AM HKT Equity Research China Spirits Tracker: 2026 LNY retail sales slightly better than expected; Resilient super premium with Moutai/Wuliangye LNY consumption sentiments: Pax mobility: The pax mobility for LNY holiday (Feb 15 - 21), up by c.9% yoy and the whole Chunyun window recorded 5.3bn (Feb 2-20). Strong homecoming flows translated into robust on-premise activity: daily average sales of key retail and catering enterprises rose +10.6% yoy over the first two holiday days (MOFCOM) ...

February 23, 2026 01:41 PM GMT China/Hong Kong Consumer | Asia Pacific Post-CNY F&B and Gold & Jewelry Channel Check Takeaways The call with a multi-categories distributor reflects improvement in demand in this CNY holiday season, which is in line with market expectation and our previous pre-CNY channel checks. Key Takeaways Liquor - Moutai and WLY saw growth YTD in the distributor's regions as lower pricing drove good volume. They have completed their Feitian Moutai orders for 1Q (40% of annual budget). La ...

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: China/Hong Kong Consumer sector, specifically Food & Beverage (F&B) and Dairy industries [1] - **Current Market Sentiment**: The overall industry view is rated as "In-Line" by Morgan Stanley, indicating expectations of performance in line with the broader market [5] Key Insights on Liquor Market - **Moutai Sales Performance**: - Strong demand for Feitian Moutai ahead of the Chinese New Year (CNY), particularly due to the launch of a new 500ml variant on iMoutai [2] - Vintage and Zodiac Moutai sales are reported as weak, but overall Moutai sales have exceeded expectations [2][7] - **Regional Disparities**: - Eastern region shows a positive trend with low channel inventory and improved pricing, attributed to early destocking efforts since 2024 [3] - Southern region experiences a double-digit decline in overall liquor demand year-to-date (YTD), with Moutai being the only brand showing growth [4] Insights on Dairy Market - **UHT Milk Demand**: - Demand for UHT milk has improved due to seasonal discounts, with YTD sales growth reported as flat or slightly positive [4] - Inventory levels are described as healthy, indicating a stable supply situation [4] Additional Observations - **Market Dynamics**: - Demand trends remain uneven across regions, with the eastern region outperforming others [7] - Anticipation of a post-CNY price correction due to low season effects and continued destocking expected in the second quarter of 2026 [4] Analyst Contact Information - **Analysts**: Lillian Lou and Wilkins Tong from Morgan Stanley Asia Limited are responsible for the report [5] Important Disclosures - **Conflict of Interest**: Morgan Stanley may have conflicts of interest due to its business relationships with companies covered in the research [5] This summary encapsulates the critical insights and data points from the conference call, focusing on the liquor and dairy sectors within the China/Hong Kong consumer market.

2 February 2026 | 10:48PM HKT Equity Research Kweichow Moutai (600519.SS): Feitian Moutai's order reaching 1.4mn on i-Moutai in Jan 2026, indicating broadening demand reach; Buy Feitian Moutai's accelerating roll-out on i-Moutai in the first month of 2026: Following the official launch of Feitian Moutai series across 53% vol 500ml, 100ml/1,000ml Feitian, and multiple series on its own DTC platform i-Moutai on 1 Jan 2026, i-Moutai continues to broaden demand reach, reaching 6.3mn new users, over 15.3mn activ ...

Summary of the Conference Call on Chinese Liquor Sector Industry Overview - The conference call focused on the **Chinese liquor sector**, particularly the performance of **Kweichow Moutai Company Ltd.** and its market dynamics [1][7]. Key Insights - The liquor sector experienced a **share price rally of approximately 10%** on January 29, 2026, compared to a flat performance for the SSE, driven by sentiment related to the property sector and a rebound in wholesale prices due to the Chinese New Year (CNY) peak season [1]. - The rally is viewed as **tactical**, with short-term support from fund flows and sentiment improvement, while fundamental demand is expected to take time to recover [1]. - **Moutai** is highlighted as the most solid investment opportunity within the sector [1]. Demand Insights - Recent channel checks indicate that overall demand for CNY is likely experiencing a **year-over-year decline** [10]. - Moutai's pre-CNY sales showed **positive growth**, with distributor prepayments at **33%**, up from **26-27%** the previous year [10]. - Other brands are facing **double-digit declines** in sales, with prepayment pace lower than last year [10]. Pricing Trends - Moutai's wholesale prices are currently between **RMB 780-800 per bottle**, which is better than expected [10]. - The impact of the "unboxing sales" policy and the termination of wholesale pricing in 2021 has raised concerns about future pricing trends [3]. Institutional Ownership - Institutional ownership as a percentage of free float has shown an increasing trend, reaching **58%** by December 2025, indicating growing confidence among institutional investors [5]. Risks and Valuation - The valuation methodology for Moutai is based on a **discounted cash flow** approach, with key assumptions including an **11% WACC** and a **2% long-term growth rate** [11]. - Upside risks include a quicker recovery in high-end liquor consumption and a faster rebound in Moutai's wholesale prices [13]. - Downside risks involve lower-than-expected volume growth for high-end spirits and continued declines in wholesale and retail prices of Moutai [13]. Conclusion - The Chinese liquor sector, particularly Moutai, is currently experiencing a sentiment-driven rally, but fundamental demand recovery is still pending. Investors should be cautious of the potential risks while considering the growing institutional interest in the sector [1][10][11].

Kweichow Moutai (600519.SS) Conference Call Summary Company Overview - **Company**: Kweichow Moutai - **Stock Code**: 600519.SS - **Industry**: Spirits Key Points Market-Oriented Operation Plan - Kweichow Moutai announced a shift to a more market-driven pricing framework to optimize channel investments and safeguard profitability, focusing on demand dynamics [1] - The new strategy includes: 1. Adjusting product portfolio to a pyramid structure by pricing tier 2. Transitioning from a traditional sales model to a multi-dimensional model including direct sales, distribution, agency, and consignment 3. Expanding sales channels to include online, offline retail, restaurants, and private VIP clients 4. Implementing a market-oriented pricing system for various sales models [1] Pricing Adjustments - Suggested retail prices (RSP) for key SKUs: - Feitian Moutai vintage (2019-2024): Rmb1,909 to Rmb2,659 per bottle - Feitian Moutai 2026: Rmb1,499 per bottle - Non-standard Moutai SKUs: RSP cut by approximately 20-30% [1] - Ex-factory prices for distributors of key non-standard Moutai products reduced by 7-37% [1] Impact on Channel Profitability - Price adjustments are expected to stabilize the wholesale price system, boost distributor confidence, and improve market supply/demand dynamics [2] - Estimated channel margins for Jingpin Moutai and Moutai 15-Year now approach 20% following the adjustments [2] - The adjustments are anticipated to expand market share and consumer base for strategic SKUs, solidifying flagship products' market status [2] Sales Volume and Earnings Revisions - Sales estimates revised down by 5-9% for 2025-2027, primarily due to lower Moutai spirits volume and softer ASP trends [7] - Expected sales/NP decline of -1%/-2% in 2025 and -1%/-1% in 2026 [7] - The 12-month price target is revised down to Rmb1,553 from Rmb1,691, maintaining a "Buy" rating [7] Theoretical Sales Impact Analysis - The pricing and volume quota adjustments could imply up to Rmb30 billion sales reduction in 2026 [6][12] - Improved supply/demand dynamics and better product affordability are expected to create favorable conditions for wholesale price recovery and retail sales rebound in the second half of 2026 [6] Product Matrix Strategy - Moutai is restructuring its product offerings into a pyramid structure: 1. Base tier: Feitian Moutai 500ml 2. Mid tier: Jingpin and Zodiac 3. Apex tier: Vintage spirits with controlled shipments to enhance value [17] Channel Strategy - Moutai is developing five parallel sales channels: wholesale, offline retail, online retail, catering, and private traffic, focusing on an integrated online and offline transformation [21] Risks and Challenges - Key risks include potential regulatory changes, environmental concerns, slower macroeconomic recovery, capacity constraints, and volatility in US interest rates [37] Conclusion - Kweichow Moutai's strategic shift towards a market-oriented pricing model and channel expansion aims to enhance profitability and market share amidst changing consumer dynamics and industry cycles [2][20]

Summary of Kweichow Moutai Conference Call Company Overview - **Company**: Kweichow Moutai (600519.SS) - **Industry**: China Consumer Staples Key Points and Arguments 1. Market Adaptation and Pricing Strategy - Kweichow Moutai aims to implement a more commercialized pricing system by adapting to market conditions and prioritizing market-oriented transformation, including pricing adjustments for 2026 [1] - The company plans to maintain stable overall supply to match demand, avoiding high price fluctuations, and will reduce allocation of higher-priced non-standard SKUs [1] 2. Product Supply and Quota Adjustments - Overall supply will remain stable in 2026, with dynamic adjustments to the product mix based on market conditions [1] - Specific strategies include: - Reducing non-standard Feitian SKUs (100ml/200ml/1000ml) to increase market share of standard Feitian - Upgrading Jingpin Moutai quality to strengthen its position as the second major SKU - Decreasing quotas for Zodiac and Vintage Moutai, and discontinuing Caiyou Zhenpin supply [1] 3. Pricing Expectations - Management emphasized the need for reasonable and stable price expectations to avoid high fluctuations in wholesale prices of Feitian and other Moutai products [1] - The company will promote "price marketization reform" focusing on market conditions and volume-price balance [1] 4. Channel Development - Moutai will enhance channel diversity and expand its customer base by monitoring market and channel capacity to reduce inventory pressure [1] - The company plans to build integrated online-offline and traditional-modern complementary channel networks, leveraging the i-Moutai platform [1] 5. Consumer Experience and Service Enhancement - Focus on enhancing consumer experience and strengthening the channel ecosystem resilience [1] - Plans to deploy "three stores and one center" (flagship stores, image stores, specialty stores, and cultural experience centers) and build a comprehensive anti-counterfeiting system [1] 6. Financial Performance and Price Target - Recent improvements in wholesale prices for various Moutai products, with Original case Feitian Moutai's price rising to Rmb1,560 per bottle from Rmb1,495 [6] - The company maintains a Buy rating with expected sales and net profit growth of 4% and 3% for 2025 and 2026, respectively, with a target price of Rmb1,691 based on a 23.4x 2026E P/E [6][10] 7. Risks and Challenges - Key downside risks include potential regulatory changes, environmental pollution, slower macroeconomic recovery, capacity constraints, and volatility in US rate hikes [9] Additional Important Information - The company is focusing on long-term value creation through reasonable profit distribution and healthy channel development [5] - Moutai is establishing professional teams to enhance service quality, including training specialists in various roles [5] This summary encapsulates the essential insights from Kweichow Moutai's conference call, highlighting the company's strategic direction, market adaptation, and financial outlook.

Summary of Kweichow Moutai Conference Call Company Overview - **Company**: Kweichow Moutai (600519.SS) - **Industry**: Chinese Spirits Industry Key Points from the Conference Call Distribution Strategy Changes - **Suspension of Shipments**: December shipments to distributors will be suspended until January 1, 2026, to bolster distributor confidence and prevent aggressive sell-downs for cash turnover [1][2] - **Quota Cuts for Non-standard SKUs**: Significant cuts in distribution quotas for non-standard Moutai SKUs are expected in 2026, with reductions of 30% for Moutai 15 years and 1L Moutai, 50% for Zodiac, and 100% for Zhenpin Moutai compared to 2025 [1] - **Re-evaluation of Pricing**: Pricing levels for these non-standard SKUs will be re-evaluated based on market conditions [1] - **Exploration of New Distribution Models**: The company is considering shifting from a wholesaler model to an agent model to better control supply and channel profitability [1] Promotion of Jingpin Moutai - **Price Reduction**: The ex-factory price for Jingpin Moutai will be lowered to approximately Rmb2,000 per bottle from Rmb2,699, with an increase in volume quota for 2026 [1] - **Marketing Actions**: Effective marketing strategies will be implemented to promote Jingpin Moutai [1] Financial Implications - **Sales Reduction Estimate**: The volume quota cuts for non-standard SKUs could lead to an estimated sales reduction of up to Rmb20 billion, which represents about 10% of 2025 sales [2] - **Offsetting Factors**: This reduction is expected to be offset by increased sales from Jingpin Moutai, new distributor recruitment, and other channel reforms [2] Distributor Confidence and Financial Stress - **Strengthening Distributor Confidence**: The meeting aimed to alleviate financial stress among distributors by pacing shipments and cutting loss-making non-standard SKUs, which constituted about 30-40% of prepayments in 2025 [2] - **Optimization of Distribution Channels**: The company plans to optimize direct-sales channels and explore online sales models to enhance overall channel profitability [1] Market Outlook - **Sales and Net Profit Growth**: Goldman Sachs maintains a Buy rating, expecting 4% sales growth and 3% net profit growth in 2025 and 2026, respectively [2] - **Valuation Metrics**: The stock is trading at 19x 2026 estimated earnings with a dividend yield of approximately 4% [2] Additional Insights - **Channel Profitability**: Non-standard SKUs have been recording losses due to consistently dropping wholesale prices, with Feitian Moutai's wholesale prices weakening to below Rmb1,600 [1][2] - **Market Positioning**: The company is strategically positioning itself to stabilize the wholesale pricing system for Feitian Moutai through various reforms and optimizations [2] This summary encapsulates the critical insights and strategic directions discussed during the Kweichow Moutai conference call, highlighting the company's proactive measures to enhance distributor confidence and optimize its product offerings in a challenging market environment.

Summary of the Investor Call on China Consumer Staples: Spirits & Beverage Industry Overview - The call focused on the Spirits & Beverage industry, particularly in the Hunan region, discussing growth targets and pricing pressures for major brands including Moutai, Wuliangye, Laojiao, and Fen Wine [1][2]. Key Points 1. Wholesale Price Pressure - The wholesale price for premium spirits is under pressure, with Feitian's price expected to approach Rmb1,499 or lower during the non-peak season. This may decline further during the Chinese New Year (CNY) period, potentially stimulating demand and reducing channel inventory pressure [1]. - Non-standard Moutai faces significant inventory and profitability challenges, with inventory levels exceeding two months, contributing approximately 30% of volume and 50% of value share for Moutai Spirits in 2025 year-to-date [1]. 2. Prepayment Policies and Growth Targets - Moutai and Fen Wine are targeting a 5% growth for 2026, while Wuliangye and Fen Wine have set prepayment requirements of 50% and 40% respectively for the first quarter of 2026 [2]. - Effective prepayment prices are expected to decrease, particularly for Wuliangye, with prices projected to be Rmb940, Rmb870-880, and Rmb800 in sequential quarters of 2025 [2]. 3. Retail Sales Expectations - Retail sales expectations for spirits are weak heading into the 2026 CNY, with an anticipated overall decline of approximately 15% in spirits retail demand. Specific declines of 5-10% are expected for Feitian Moutai and Common Wuliangye [3]. - Local brands such as King's Luck and Gujing may perform relatively better compared to pan-national upper mid-end brands [3]. 4. Beverage Growth Targets - Nongfu Spring is targeting a 13% growth in 2026, expecting water volume to return to 2023 levels. Eastroc aims for over 25% growth in both Hunan and nationwide [8]. - Wahaha has not set specific contract targets for 2026, while Tingyi is still aiming for positive sales growth despite low single-digit growth or decline in noodle and beverage segments for the third quarter to November [8]. Additional Insights - The expert highlighted that channel inventory pressure is accumulating for Fen Wine due to prepayment requirements, with inventory levels at approximately three months and wholesale prices decreasing from Rmb360-380 to Rmb350 [2]. - The overall sentiment indicates a cautious outlook for the spirits market, with significant challenges in maintaining pricing power and managing inventory levels across major brands [1][3].

Summary of Kweichow Moutai AGM Takeaways Company Overview - **Company**: Kweichow Moutai (600519.SS) - **Industry**: Consumer Staples, specifically alcoholic beverages Key Points from the AGM 1. **Sales Momentum Recovery**: - Month-on-month sales momentum for Moutai spirits improved since August, with positive year-on-year growth from September to November [1][6] - Shipments were moderately reduced from June to August to align with market demand, preventing excessive inventory buildup [1][6] 2. **Long-term Strategic Focus**: - Management emphasized strategic patience and long-term value creation to navigate the current cyclical adjustment in the industry [1][6] - The next five-year plan will focus on scientifically managing shipments to maintain channel health rather than irrational growth [1][6] 3. **Targeting New Consumer Demographics**: - The company aims to explore new consumer groups in emerging economies and younger generations [1][6] - Retail demand for high-end Moutai spirits has expanded, particularly during previous anti-graft cycles [1][6] 4. **Multi-faceted Growth Strategy**: - **Channel and Consumer Strategy**: Actively exploring new demographics and enhancing distributor capabilities to serve group-buy and end consumers [1][9] - **Production Management**: Plans to manage production capacity scientifically to increase high-quality base spirits output, building a reserve of aged spirits during downturns [1][9] - **Global Expansion**: Commitment to global expansion with a focus on Southeast Asia and Japan, aiming to introduce mid-range spirits for better affordability [1][9] - **New Product Exploration**: Actively trialing new products and enhancing direct consumer engagement through flagship stores [1][6] 5. **Financial Performance**: - Approved an interim dividend payout of RMB 30 billion and a share buyback plan of RMB 1.5 to 3 billion [1][6] - Current stock trading at 20x 2025/2026E P/E with a 3.6% dividend yield for 2025 [1][6] 6. **Risks Identified**: - Potential regulatory changes, environmental pollution, slower macroeconomic recovery, capacity constraints, and volatility in US interest rates [1][10] 7. **Valuation and Price Target**: - 12-month price target set at RMB 1,691 based on a 23.4x 2026E P/E, indicating a potential upside of 16.6% from the current price of RMB 1,450.50 [1][11] Additional Insights - The company is focusing on enhancing service experiences and emotional connections with consumers through tailored offerings and professional talent systems [1][9] - Moutai is integrating its products into various business and lifestyle scenarios to broaden consumption occasions [1][9] This summary encapsulates the key takeaways from Kweichow Moutai's AGM, highlighting the company's strategic direction, financial outlook, and market positioning.