The Zhitong Finance App learned that Guotai Junan released a research report saying that the factors of concern under the “double low” characteristics of the liquor industry will shift from the economy to Maotai. Previously, prices and micro-trading structures of mainstream companies in the industry were cleared one after another, with the exception of Maotai. After Maotai's prices declined, it would move towards a new balance, and industry value was highlighted. The current trend of concentration in the liquor industry has been further strengthened. The leading players in the price segment are the focus of allocation. At the same time, as mainstream companies' dividend rates rise, the absolute profit value will become more prominent under the dominant business model.

Guotai Junan's main views are as follows:

Maotai's influence on the industry intensified marginally under the “double low” characteristic

Guotai Junan announced earlier that after nearly a year of adjustments to expectations, liquor now presents a combination of low reality and low expectations. Under the “double low” characteristic, it is unlikely that economic recovery will change significantly in the short term. Therefore, it is expected that the core focus of the liquor industry will shift from the economy to Maotai. Maotai will become the most prominent marginal variable affecting the liquor industry, and the industry's valuation anchor may also shift in the future.

Mainstream companies' expectations have been revised, and transaction structures have been clarified one after another

Expectations for 2023 have changed from high to low, and the microtransaction structure of mainstream companies in the liquor industry has been clarified and optimized one after another, such as previous personnel changes in Fenjiu in Shanxi, price revisions for Wuliangye and Luzhou Laojiao, and market concerns about the compatibility of some company statements with actual marketing, etc., which catalyzed changes in previous expectations and the clarification of the transaction structure of these companies. Combined with liquidity shock tests in January-January 2024, the bottom of the liquor industry has already been revealed. Guotai Junan believes that previously anticipated changes have released risks in the liquor industry. Even if there is a situation that falls short of expectations in the future, there is little chance that the liquor industry will be drastically adjusted.

After Maotai's price adjustment, a new equilibrium will be formed, and industry value will be highlighted

Compared to the “double low” characteristics of the liquor industry and the situation where the overall price was cleared one after another, Maotai's pricing was relatively strong until now, and the micro-transaction structure was not clear. However, in this round of Maotai's price adjustments and revisions, Cathay Pacific Junan believes that it will move towards a new balance, and the transaction structure will begin to be optimized. It is expected that in the future, Maotai's price will be more in line with the economy and will return to a relatively stable state. Considering the marginal strengthening of Maotai's influence on the industry, it is believed that after Maotai's pricing forms a new balance, it is conducive to the medium- to long-term development of the industry, and the value of the industry will be further highlighted. The current trend of concentration in the liquor industry has been further strengthened. The leading players in the price segment are the focus of allocation. At the same time, as mainstream companies' dividend rates rise, the absolute profit value will become more prominent under the dominant business model.

Investment advice:

1) Liquor: Expected restoration, focusing on subsequent performance and price changes. Recommended increase in shares: ① Steady sales targets: Shanxi Fenjiu (600809.SH), Yingjia Gongjiu (603198.SH), Gujing Gongjiu (000596.SZ), Kweichow Moutai (600519.SH); ② Over-falling undervalued targets: Wuliangye (000858.SZ), Luzhou Laojiao (000568.SZ), Zhenjiu Li Du (06979), Jinshiyuan (). 603369.SH

2) Beer: At the bottom of the valuation history, it is growing steadily. It is recommended to increase holdings: Tsingtao Brewery (600600.SH), Yanjing Brewery (000729.SZ), and Hong Kong stock China Resources Brewery (00291).

3) Popular products: Lay out growth targets, recommended to increase stocks: ① Growth Track Snacks: Three Squirrels (300783.SZ), Jinzai Food (003000.SZ), Yanjin Shop (002847.SZ); ② Catering Supply Chain: Qianweyang Chef (001215.SZ), Qianhe Flavor (603027.SH), Baoli Foods (603170.SH), Yasui Foods (603345.SH), Ziyan Foods (). 603057.SH

Risk warning: increased macroeconomic fluctuations, increased industry competition, food safety risks, etc.