Huachuang Securities: The direction of valuation repair in the liquor sector is clear, and the industry is clear or has reached the second half

The Zhitong Finance App learned that Huachuang Food released a research report stating that the direction of valuation repair in the liquor sector is clear, the short-term quarterly report verification period is selected and determined, and flexible opportunities for the second-tier liquor and restaurant chain are laid out on a one-year basis. As the macro-interest rate cut cycle and fiscal policy expectations heat up, there is still room for leading food and beverage valuations. This will be the key to the sector's short-term pricing for 1-2 quarters; while fundamental expectations, from stabilization to improvement, will determine the core of the sector's market range over the next 1 year. The short-term recommendation is to prioritize high-quality targets with better business certainty or take the lead in steady improvement. The one-year dimensional layout reverses the elasticity of second-tier liquor and restaurant chains.

Liquor sector: The pressure was reduced pragmatically in Q3, and the growth rate declined sequentially. External demand weakened month-on-month in the third quarter. The Mid-Autumn Festival National Day atmosphere was lackluster, and sales declined by about double digits year over year. The National Day was slightly better than the Mid-Autumn Festival. Most leading wine companies on the repayment side are more rational. The main products are price stability, and repayment and delivery requirements are moderately relaxed to help ease the pressure. Most of the policies revolve around side products, and the repayment progress is mostly around 70%-90%, which is flat or slightly slower than previous years. It is expected that industry pressure will further spread from the cash flow statement to the profit statement, and slow down further month-on-month or further, indicating that the industry has cleared up in the latter half. Here's a look at the price:

High-end wine: Maowu's payment and delivery pace are well controlled, the price market is strong, and the target is progressing normally throughout the year. Maotai's repayment schedule is about 90%, and Feitian's batch price is strong. It is expected that Q3 revenue/profit will increase by 15%/14%; Wuliangye 1618 and low will continue to contribute the main increase. Under high base, Q3 revenue/profit is expected to increase by 5%/6%; Laojiao's operating pressure is heavy, and repayment is slightly slow. It is expected that Q3 revenue/profit will also increase by 5%/5%.

High-end base type: The growth rate is expected to decline month-on-month, with feedback from Fenjiu's high-end blue and white, and Lao Baifen. Considering investment factors, Q3 revenue/profit is expected to increase by 10%/6%; Q3 revenue/profit is expected to drop 10%/15%; Q3 revenue/profit is expected to decrease by 10%/15%; Q3 revenue/profit is expected to increase 15%/14%; the Q3 revenue/profit is expected to increase by 13%/13%; the Q3 revenue/profit is expected to increase 17%/17%; the Q3 revenue/profit is expected to increase 17%/17%; the Q3 revenue/profit is expected to increase 17%/17%; Cellar and 8 The feedback is excellent. It is expected that Q3 revenue/profit will also increase by 10%/5%; the pressure to show results from the Golden Seed reform will increase. Considering the impact of Golden Sun Pharmaceutical's divestment of the company's main business, Q3 revenue is expected to drop 40%, and profit loss is expected.

Expansionary sub-high-end: There is a lot of pressure on the sales side. Shuijingfang's repayment for the new fiscal year is relatively high, and the turnover is better. Q3 revenue/profit is expected to increase by about 5%; Q3 did not clearly press goods and took the initiative to slow down inventory. It is expected that Q3 revenue/profit will drop 30%/50% year on year.

Popular products: Demand for Q3 continues to be lackluster, business operations are pragmatic, and some reports have improved month-on-month. The overall demand for 24Q3 continues to be lackluster, and the business attitude is generally pragmatic. By adjusting sales strategies, digesting inventory, controlling investment, and improving efficiency, it actively adapts to the environment and consolidating internal performance. It is expected that some leading Q3 reports have improved month-on-month. For example, the dairy industry and some snacks went light after being stored in Q2, and operations have picked up; condiments are relatively in demand; Longtou Haitian and Zhongju are expected to improve through their own adjustments; Shuanghui has increased its layout in the field of cost performance, and the decline in Q3 meat products is expected to narrow sequentially. Furthermore, cost dividends continue in most sub-sectors, and profits can still be boosted.

Beer: Demand is lackluster and cost dividends continue, leading sales are divided, and management is pragmatic and rational. Q3 Tsing Beer's revenue/profit is expected to be -4%/+7%, Yanjing +4%/+25%, Heavy Beer -5%/-10%, and Budweiser's endogenous revenue -8%/-12% year over year.

Dairy products: Although demand for terminals was weak in Q3, business picked up somewhat. In Q3, Yili's revenue/profit is expected to be -6%/-17%, the new dairy industry -1%/+14%, Tianrun +4%/-40%, and Shuanghui unchanged at +7%/YoY.

Casual and functional food: Soft drinks have an excellent market, cost support, and a stronger leader. Dongpeng is expected to perform well. Q3 revenue/profit ratio is +50%/+80% year-on-year. The snack channel boom is still fragmented, and business operations are improving month-on-month. The Q3 negotiation ratio is expected to be +3%/+11%, Yanjin +22%/+15%, and Ganyuan +15%/+10%. Baking is expected to be +18%/+8% YoY for Angel and -8%/-2% YoY for peaches and plums. The health supplement Xianle is expected to be +13%/+3% year over year, and Tomson expects -20%/-50% year over year.

Condiments: Demand is resilient, corporate performance is divided, and leading operations are expected to reverse. Expected Q3 Haitian revenue/profit +8%/+10%, Zhongju Q3 revenue/profit +10%/+15%, mustard +7%/+15%, Hengshun -5%/-15%, Qianhe -2%/-5%, Tianwei +3%/+8%, and Polar +10%/-30% YoY.

Quick freeze: The restaurant boom has declined, and fundamental pressure continues. Q3 is expected to be +2%/-10% YoY and +5%/+10% YoY.

Chain: Store adjustments and single-store pressure continue, revenue is still under pressure, and profit benefits and costs have improved. It is expected that Q3 revenue and profit will be -8%/flat year over year, Babi flat/+30% year over year, and Ziyan -3%/+8% year over year.

Investment suggestions: The direction of valuation repair is clear, short-term quarterly report verification period is selected and determined, and flexible opportunities for second-tier liquor and restaurant chains are arranged in a one-year dimension. As the macro-interest rate cut cycle and fiscal policy expectations heat up, there is still room for leading food and beverage valuations. This will be the key to the sector's short-term pricing for 1-2 quarters; and fundamental expectations, from stabilization to improvement, will determine the core of the sector's market range over the next 1 year. The short-term recommendation is to prioritize high-quality targets with better business certainty or take the lead in steady improvement. The one-year dimensional layout reverses the elasticity of second-tier liquor and restaurant chains. In terms of selecting specific targets:

Liquor sector: Continue to be optimistic about valuation restoration. Maowugu is preferred during the quarterly reporting period. Currently, market risk appetite is rising. The bank believes that there is still room for sector valuation correction. In the short term, the three-quarter report and the wine companies' target setting for the coming year will be the key to the fourth quarter. In the medium term, the inflection point signal for next year will look at the price price of old Maotai wine, and the second is that the report is expected to stabilize. In terms of selecting specific targets, we start with certainty in the short term, strategically allocate both offense and defense, and then recommend Furui and the like. Second, from the perspective of excessive flexibility, Laojiao and Fenjiu are preferred, and regional leaders recommend Jinshiyuan.

Popular product sector: Focus on steady improvement and potential flexibility in layout. Considering that current consumer demand is still weak, the first is to select targets for steady improvement in the second half of the year, and continue to recommend Dongpeng's high growth sustainability; second, to continue to recommend Dongpeng's high growth sustainability; second, to recommend Yili and Mengniu, and focus on the new dairy industry; and third, to focus on flexible opportunities after policy results have been shown and fundamentals have improved, including low-alcohol brands such as Tsing Beer, China Resources, and Bairun, and the restaurant supply chain is high and delicious.

Risk warning: Consumer demand is falling, inventory digestion falls short of expectations, competition intensifies, etc.