Guoxin Securities: Liquor's bottom signal consolidates emphasis on allocation opportunities for high-quality wine companies

The Zhitong Finance App learned that Guoxin Securities released a research report saying that in 2025, the conflict between supply and demand was highlighted, and wine companies lowered their growth requirements and gradually released channel pressure. The liquor sector has entered a configurable range. The volume-price relationship with leading Kweichow Moutai (600519.SH) has improved, and dividend asset attributes are reflected, with a dividend rate of 4% to support valuation in 2026; the market fully expects a decline in the sector's performance, and any improvement on both sides of supply and demand is expected to act as a catalyst.

Guoxin Securities's main views are as follows:

Looking back at 2025: Contradictions between supply and demand are highlighted, wine companies lower growth requirements and gradually release channel pressure

Since the beginning of 2025, the Liquor Index (Shenwan) has fallen 12% (outperforming the Shanghai and Shenzhen 300 Index by 33%). Among them, Wind unanimously predicted a 17% drop in net profit from the sector and a 6% increase in PE (FY25). Performance was the main reason for the decline in stock prices. Since 2023, the market is worried about the long-term growth of the liquor industry, and valuations and holdings have continued to decline. Currently, they have all reached historic lows, reflecting pessimistic market expectations. On the sales side of the market, sales reached a freezing point in June-August due to the influence of the drinking policy in the second quarter. Currently, liquor consumption has recovered slightly from month to month, but actual demand is still weak, and supply rigidity is strong. Price for volume is common, and prices for mainstream products are bottoming out; this has also forced liquor companies to reduce supply and improve the supply-demand relationship. For example, companies represented by Wuliangye and Gujing Gongjiu have lowered their growth requirements, and their performance in the three quarterly reports has declined sharply, gradually releasing channel pressure.

Looking ahead to 2026: supply-side optimization, clear channels, and focus on high-quality company allocation opportunities

1) Looking at the industry as a whole, there is still a gap between supply and demand, but policies are increasing (consumption suppression weakens marginally, and domestic demand continues to be boosted), and the scenario and demand are expected to gradually recover. The liquor industry's Spring Festival sales are expected to show resilience. After 2026Q2, it may be more stable under a low base. Wine companies are expected to be more rational in setting goals for 2026, but they will still pursue share growth; leading Kweichow Moutai's product structure and channel model are optimized, and industry supply and demand concerns are expected to gradually improve under rational development goals.

2) Looking at the channel status, inventory declined month-on-month after reaching a high point in the 25Q3 cycle. Channel profits contracted rapidly from the second quarter, wine companies strengthened the maintenance of dynamic profits of dealers, leading Maotai Wuliangye gradually relaxed channel policies, and prices of leading regional products showed a steady trend after the double season. In the 2013-15 cycle of retrading, the channel status entered a dynamic bottom stage in 13Q3. Valuation & stock prices bottomed out in 14Q1. As Maotai's price bottomed out year-on-year during this cycle, the signals of bottoming out and rising valuation will also strengthen.

3) From a competitive perspective, the current cycle has been accompanied by structural changes in demand, from the differentiation of price and prosperity to the intensification of competition between wine companies' capabilities (brand, organization, channel, marketing), and has become the main factor in subsequent share competition. The bank believes that wine companies that hold pricing power at a certain price level or region, or wine companies that take the lead in cultivating new peoples/channels/scenarios on the left side of the fundamentals, are expected to take the lead in the adjustment cycle.

Main line of individual stock investment

1) With strong brands, Kweichow Moutai and Shanxi Fenjiu, which have been operating for a long period of time, are expected to increase as market liquidity improves; 2) Luzhou Laojiao, which has gradually grasped the price band and regional share advantages, actively strengthened channels and consumer reach during the adjustment phase, and paid attention to Gujing Gongjiu and Jinhui Liquor; 3) The bottom reverses the target with sufficient adjustments and correct short-term actions, and focuses on Yanghe shares; 4) High comprehensive shareholder returns and safe cash flow margins Food liquid.

Risk warning: Macroeconomic development has exceeded or fallen short of expectations, and demand recovery has further slowed; rolling competition within the industry, additional investment costs affect profit margins; market capital fluctuations have intensified.