The Zhitong Finance App learned that Guosheng Securities released a research report saying that fiscal policy continued to strengthen market confidence. The importance of domestic demand continued to be highlighted after the US election was settled, fundamentals decelerated in Q3, risk appetite rebounded on the valuation side, food and drink continued to attack, flexibility of liquor was prioritized, and mass products sought recovery and growth. Among them, the liquor sector is expected to fully benefit from active policies, and the industry pattern continues to focus on leading positions, leading advantages are remarkable. Short-term expectations have been repaired, and the beverage sector remains fiercely competitive. In terms of food, preparations for the Q4 Spring Festival peak season are imminent, focusing on the two main lines of strong recovery and high growth.

Guosheng Securities's main views are as follows:

Liquor: Maotai's mid-term dividends strengthen returns, and liquor fully benefits from a positive policy.

1) Macro level: Recently, Trump was re-elected as President of the United States, and the market's expectations of further opening up room for policy easing and improving domestic demand have increased. On November 8, the Ministry of Finance said that an additional 6 trillion yuan local government debt limit will be used for the next three-year debt. In order to maximize debt measures in recent years, and at the same time continue to implement stronger fiscal policies next year, the government's determination to strengthen the economy will not diminish.

2) Industry level: Currently, the supply-side of the industry is improving quality and slowing down, and improvements are underway on the demand side. It is expected that it will continue to boost the flexibility of the liquor sector. Currently, the industry is in a low season, and the actions of wine companies mainly focus on price control, improving terminal atmosphere, and deepening consumption cultivation. For example, according to the space-time news of Weijiu and Guojiu, Maotai and Wuliangye recently phased out goods in some regions to control prices and stabilize prices. On November 8, the wholesale price of the original Maotai Feitian box was 2,335 yuan/bottle, an increase of 65 yuan/bottle over last weekend.

3) Liquor company level: Recently, Kweichow Moutai announced that it plans to distribute a cash dividend of 30.001 billion yuan (tax included, corresponding to 23.88 yuan/share), accounting for 49.32% of net profit to mother in 2024Q1-3.

Previously, the company promised an annual cash dividend ratio of not less than 75%, which would be implemented twice a year and in the medium term. The dividend ratio is approximately 3.2% based on Wind's consistent forecast of the 2024 net profit to mother, the lower limit of the dividend ratio of 75% and the total market value on November 8. The liquor sector is expected to fully benefit from active policies, and the industry pattern continues to focus on the leading edge. Short-term expectations will usher in a recovery. In the future, it is expected that the two steps of valuation first and management improvement will be interpreted.

Beer and beverages: Subsequent improvements in beer can be expected, and Nongfu Spring's packaged water business has stabilized.

1) In the beer sector, Shanghai consumer vouchers have been very effective recently. If a series of policies such as stimulating consumption are introduced, beer demand is expected to gradually recover as the restaurant terminal scenario is repaired; looking ahead to 2025, we believe that if the effects of economic recovery are evident, sales will return to positive growth during the peak season, structural upgrades will accelerate, and performance may welcome better performance.

2) In the beverage sector, the bottom of Nongfu Spring's stock price rebounded this week. This year, the company experienced several public opinion waves. The red bottle water market share fell below 30% in early 2024, but the 24Q2 company listed green bottle water to seize the share, while adjusting product and channel strategies, focusing on the two major categories of water and tea, and investing key marketing resources in red bottles of natural water, green bottles of pure water and sugar-free tea. According to Immediate Win data, as of mid-October, the market share of Nongfu Spring Red Bottle and Green Bottle in the packaged water industry exceeded 30%, and the packaged water business is stabilizing. We believe that as the influence of public opinion diminishes and the focus on resources progresses, the packaged water business is expected to continue to improve month-on-month. Currently, the beverage industry is still fiercely competitive. It is recommended that leading companies with refined channel management capabilities, strategic execution, and large single product growth potential be preferred.

Food: Preparation for the Q4 Spring Festival peak season is imminent, focusing on the two main lines of strong recovery and high growth.

The three squirrels are actively expanding the offline distribution business, reducing the terminal price system and expanding the market together with dealers. It is expected that the company will acquire iSnacks, iDiscounts, and Health Foods to further improve the layout of the entire industry chain and support the expansion of the operating layout and full-link cost advantages. Yanjin Shop's multi-category omni-channel operation model has more diverse overall growth grippers. In addition to maintaining the operational advantages of mass selling snack stores and Douyin, it also focuses on building category brands, enriching product categories such as nuts, and accumulating upstream operating barriers, all of which strongly support the company's long-term operation and development. Tianrun Dairy Q2 took the initiative to dispose of surplus cattle. Q3 has broken out of the bottom of operations and entered the channel for flexible profit release, and the company is actively developing new sales channels, covering snack channels, building Tianrun factory stores, and carrying out cross-border cooperation in brand promotion. The increase in market initiatives also confirms the continuous improvement of the company's management.

Investment advice:

1. Liquor: Moutai's mid-term dividend strengthens shareholder returns. Liquor's policy is fully strengthened, and short-term expectations continue to be repaired. In the future, it is expected that the two steps of valuation first and management improvement will be applied. It is recommended to focus on: 1) Overwhelming leaders: Kweichow Moutai (600519.SH), Wuliangye (000858.SZ), Shanxi Fenjiu (600809.SH), and Luzhou Laojiao (000568.SZ);

2) High-certainty regional liquors: Yingjiagong Liquor (603198.SH), Gujing Gongjiu (000596.SZ), Jinshiyuan (603369.SH), Jinhui Liquor (603919.SH), etc.;

3) Flexible targets: Old White Dry Liquor (600559.SH), Shui Jing Fang (600779.SH), Shide Liquor (600702.SH), Hong Kong Stock Liquor Li Du (06979), etc.

2. Popular products: Packaging water from Nongfu Spring has stabilized, and Volkswagen products are ready for the Spring Festival. It is recommended to look for two main lines of strong recovery and high growth:

1) Policy benefits and recovery improvements: Haitian Flavors (603288.SH), Yasui Foods (603345.SH), Yili Co., Ltd. (600887.SH), New Dairy (002946.SZ), Tianrun Dairy (), Yanjing Beer (000729.SZ), Pearl River Beer (002461.SZ), Tsingtao Brewery (USD), Chongqing Beer (Sichuan), Qiaqia Food (002557.SZ), etc.; 600419.SH 600600.SH 600132.SH

2) High prosperity or growth logic: Three Squirrels (300783.SZ), Dongpeng Drink (605499.SH), Yanjin Shop (002847.SZ), Jinzai Food (003000.SZ), Bairun Co., Ltd. (002568.SZ), Xianle Health (300791.SZ), etc.

Risk warning: Raw material costs have risen above expectations, the recovery in consumption power and consumption scenarios has fallen short of expectations, and industry competition has intensified.