The Zhitong Finance App learned that Guolian Securities released a research report saying that the 2024Q3 fundamentals of alcohol are still being refined, short-term repayments are still under pressure, business demand is still under pressure, and public demand is steady. As macroeconomic policies are introduced one after another, pessimistic expectations for the liquor sector in the medium term can be improved one after another, and the impact on short-term performance is expected to fade. From a long-term perspective, the liquor industry is gradually being driven from the demand side to the supply side, and there is still plenty of room for improvement in concentration. The beer cost dividend continued and the base declined further. Demand was weak, leading companies were under slight pressure in volume and price, and performance decelerated.

The main views of Guolian Securities are as follows:

Liquor: 2024Q3 Liquor sector reporting pressure is being released at an accelerated pace, and industry growth is slowing down

According to the overall method, the 2024Q3 revenue growth rate of key companies in the liquor industry was 2.41%. Among them, the revenue growth rate of high-end wine/sub-high-end wine/regional wine was +9.59%/-0.38%/-15.64%, respectively, down 4.65 /8.87/23.32 pct from month to month, respectively. The net profit growth rate of the 2024Q3 sector was 1.80%, slightly slower than the revenue growth rate. The net profit growth rate of high-end liquor/sub-high-end wine/regional liquor was +9.19%/-2.04%/-31.64%, respectively. High-end wine grew steadily and was resilient; sub-high-end differentiation intensified; regional wine decelerated significantly. Gujing/Laobaigan met expectations, and Yingjia/Jinshiyuan/Kouzijiao/Yanghe fell short of expectations.

Liquor: In 2024Q3, most wine companies' payback was slower than revenue, and the quality of statements declined

According to the overall method, key companies in the liquor industry decreased by 3.39% year on year in 2024Q3 (operating revenue+delta contract liabilities). Among them, high-end, sub-high-end, regional liquors (operating income + delta contract liabilities) were -0.93%/+5.13%/-14.92%, respectively. According to the overall method, sales revenue of key companies in the liquor industry increased 1.50% year-on-year in 2024Q3. Among them, sales revenue for high-end, sub-high-end, and regional wines increased by +3.82%/+12.34%/-10.93%, respectively. Most wine companies are slower than revenue, and Wuliangye's cash collection performance is good. The bank determined that it was mainly due to the fact that all of the accepted money orders during the Spring Festival peak season expired and were collected in Q3, and the pressure on the actual terminal sales and channels of wine companies was still heavy.

Liquor: The 2024Q3 product structure upgrade has slowed down, and the sector's gross margin has basically remained flat

Affected by the macroeconomic environment and consumption power, gifting and business scenarios were weak during the 2024Q3 peak season, leading to weak consumption of high-priced alcohol, a slowdown in the upgrading of the product structure of wine companies, increased combined alcohol gifts and increased sales discounts, and the gross margin of the liquor sector remained basically the same. According to the overall method, the gross margin of key companies in the liquor industry increased by 0.25pct to 82.39% year-on-year in 2024q3. The increase in the sales expense ratio and operating tax rate lowered the net interest rate to the mother. The overall method calculated the 2024Q3 liquor sector sales expense rate/sales tax and additional ratio was +0.17/ -0.01/ +0.23pct, respectively, driving the net profit margin down 0.23 pct to 38.14% year on year.

Beer: Demand is weak in 2024Q3, and the cost dividend continues

Demand is weak, leading volume and price are under slight pressure, and performance has decelerated. In 2024Q3, the revenue of Tsingtao Brewery, Chongqing Beer and Pearl River Beer decreased by 5.28%/7.11%/0.38%, respectively, while revenue from Yanjing Brewery and Huiquan Brewery increased 0.19%/6.89% year on year, respectively. The product structure performance is weak, but the sales volume of Tsing Beer's high-end products is still resilient. The cost dividend continues, wine companies actively improve quality and efficiency, the overall cost ratio is stable, and the increase in profitability has slowed slightly. Yanjing Brewery's reforms led to a year-on-year increase in net profit of 19.84%, while Tsingtao Brewer/Chongqing Beer/Pearl River Beer/Huiquan Beer 2024Q3 net profit to mother was -9.03%/-10.10%/+15.36%/+10.60%, respectively.

Investment advice: The investment value of liquor is highlighted, and beer focuses on undervalued leaders

Liquor: Looking at the increase in sector investment value from a dividend rate perspective. Preferred valuations are cost-effective targets with steady performance growth in 2025, starting with Wuliangye (000858.SZ), Kweichow Moutai (600519.SH), Shanxi Fenjiu (600809.SH), Gujing Gongjiu (000596.SZ), and Yingjia Gongjiu (603198.SH); secondly, recommending Luzhou Laojiao (000568.SZ), Laobaijiao (), and Jinshiyuan (US); it is recommended to focus on Yanghe Co., Ltd. (002304.SZ) and Shede Liquor (600702. 600559.SH 603369.SH SH), alcoholic liquor (000799.SZ), golden seed liquor (600199.SH).

Beer: We recommend undervalued leading Tsingtao Brewery (600600.SH), China Resources Brewery (00291), and Yanjing Brewery (000729.SZ), which is expected to be reformed. It is recommended to focus on Chongqing Beer (600132.SH).

Risk warning: food safety risk, increased risk of competition, risk of cost fluctuation