The Zhitong Finance App learned that Tianfeng Securities released a research report saying that in the short term, liquor focuses on medium- and long-term opportunities for wine companies with good fundamentals, cash flow, and valuation performance, it is still recommended to focus on: ① companies with a core product of 100-300 yuan and good performance: Shanxi Fenjiu (600809.SH), etc.; ② High-end wines with resilient demand: Kweichow Moutai (600519.SH), etc.; ③ beta: Shede Liquor (600702.SH), etc.

Tianfeng Securities's main views are as follows:

[Revenue/Net Profit Returned to Mother]

24H1 liquor sector revenue/net profit to mother was 241.816/95.763 billion yuan (YoY +13.47%/+14.48%); 24Q2 revenue/net profit to mother was 91.805/33.758 billion yuan, respectively (+11.16%/12.05% YoY). 24Q2 revenue year-on-year growth rate: high-end wine (+14.41%) > sub-high-end wine (+8.50%) > regional leader (+8.39%) > third-tier four-tier wine (-8.62%); 24Q2 net profit year-on-year growth rate: third- and fourth-tier wine (227.34%) > high-end wine (+13.17%) > regional leader (+7.87%) > sub-high-end wine (-6.97%).

[Gross Margin and Net Profit Ratio]

The gross sales margin/net sales margin of the 24H1 liquor sector was 81.19%/40.59% (+0.73/+0.29pct), respectively; the 24Q2 gross sales margin/net sales margin was 81.15%/37.78% (+1.17/+0.23pct), respectively. The increase in gross sales margin improved month-on-month and declined year-on-year, while the increase in net sales margin decreased month-on-month due to the overall increase in expense rates. ① The increase in gross margin of 24Q2 sales is as follows: three and four lines (+8.48pct) > regional leading wine (+0.75pct) > high-end wine (+0.61pct) > sub-high-end wine (-3.13pct)); ② Looking at the increase in net sales margin in 24Q2: third and fourth tier (+8.24pct) > regional leader (-0.10pct) > high-end wine (-3.88pct).

[Fee rate]

The cost rate/sales expense ratio for the 24h1 liquor sector was -0.20/+0.32 pct year on year, respectively, and +0.38/0.81 pct year on year for 24q2, respectively; the cost ratio for the period increased slightly year-on-year/month-on-month. ① Fee rate for the 24Q2 period: Third and fourth line wine (+2.63pct) > sub-high-end wine (+1.24pct) > high-end wine (+0.28pct); ② 24Q2 sales cost rate: third and fourth line wine (+2.78pct) > sub-high-end wine (+1.06pct) > high-end wine (+0.90pct) > regional lead (+0.85pct).

[Operating cash flow]

Operating cash flow in the 24H1 & 24Q2 liquor sector was +25.85%/+29.55%, respectively. The operating cash flow performance of high-end wine in 24Q2 was strong (mainly due to the outstanding year-on-year increase in net operating cash flow of Wuliangye/Kweichow Moutai), and the net operating cash flow of leading regional companies declined significantly (mainly due to the significant decline in operating net cash flow of Yanghe Co., Ltd.). 24Q2 operating cash flow: high-end wine (+42.28%) > third- and fourth-tier wine (-68.40%) > sub-high-end wine (-70.76%) > regional leader (-296.22%).

[Contract Liabilities]

Liquor sector contract liabilities at the end of 24Q2 changed -5.72%/+7.01% to 38.395 billion, respectively, ① Year-over-year change: high-end wine (+58.65%) > sub-high-end wine (-7.35%) > regional leader (-29.38%) > third- and fourth-tier wine (-30.07%); ② month-on-month change: high-end wine (+19.80%) > sub-high-end wine (+0.17%) > third- and fourth-tier wine (-24.19%) > regional leader (-38.50%).

Risk warning:

Oversupply; food safety risks; weak demand; increased competition.