Minsheng Securities: The 25H1 liquor industry report relieves pressure and accelerates bottoming out

According to the Zhitong Finance APP, Minsheng Securities released a research report stating that in the first half of 2025, the 17 major listed liquor companies had revenues and net profits attributable to shareholders of 236.83 billion yuan and 94.46 billion yuan, respectively, with year-on-year changes of -0.4% and -0.9%. In Q2 alone, revenues and net profits attributable to shareholders were 86.72 billion yuan and 31.34 billion yuan, respectively, with year-on-year changes of -4.7% and -7.3%. This marks the first negative growth in revenue during this cycle, with the decline in profits being greater than that in revenues. The unfavorable policies in Q2 have led to increased pressure on channels, which has accelerated the transmission of this pressure to the financial statements, and the acceleration of interim report clearances has become an industry consensus. Since August, with the release of scenarios and concentrated demand for graduation banquets, there have been positive signals such as channel feedback indicating a recovery in sales driven by banquets. The peak season of the Mid-Autumn Festival and National Day will accelerate the bottoming process of the fundamentals, and it is expected that the repair of financial statements will begin in 2026.

The main viewpoints of Minsheng Securities are as follows:

Normalization of scenario suppression, financial statement pressure relief, and accelerated bottoming

From "passive clearance" to "active adjustment," the industry is in an accelerated bottoming phase: The characteristics of the industry determine that most brands, under the background of "actual demand scenarios being continuously damaged," prioritize completing "the requirements for established performance growth targets" with the "resilience" of their brand and channel momentum. The long-term "oversupply" has led to continuous accumulation of pressure on channel inventory, prices, and cash flow, triggering ongoing market concerns and deviations in pricing anchors. The deceleration adjustment of financial statements in H1 2025 is conducive to correcting these deviations.

Structural opportunities during the volume reduction adjustment period, with the market's long-term pricing leaning more towards "dividend yield" and "market share," such as price leaders, market share, and brand status. In the short term, there is a relatively consistent expectation regarding the timing of pressure transmission related to the adjustment rhythm of fundamentals and brand inventory performance. The market is shifting from focusing on "marginal changes in scenario recovery and sales" to paying more attention to year-on-year trends to verify the demand bottom. We expect:

In terms of trends, the recovery and month-on-month improvement in the transition between peak and off-peak sales is certain. The demand resilience for "deep scenarios" such as banquets and gatherings with friends is rooted in culture, and the discipline of prohibitions and traditional festivals is emphasized as normal. The elasticity of recovery in political and business scenarios can be preliminarily referenced against macro indicators.

The financial statements in the third quarter may still show strong differentiation, with the apparent growth rate decline gradually narrowing after the Spring Festival, entering a "weak recovery" phase. The recovery phase of liquor in 2025 is similar to that of 2014, and the environmental challenges faced by the industry may be greater, while brands may not necessarily be affected.

"Exchanging price for volume," intensifying competition, and consumer promotional expenses driving prices down: The liquidity-rich environment during the peak season, under high inventory and stable growth pressures, will inevitably manifest as price declines. E-commerce platforms and instant retail platforms like "Wai Ma Song Jiu" will also promote price reductions, which will be accompanied by inventory reduction (as terminal stores pursue cash flow and inventory turnover, channel adjustments are relatively convenient, and current stocking is relatively low, with most inventory accumulating with distributors; the consumption pulse during the peak season may help offset downward price pressures).

Deep scenario support, the sector has entered multiple bottom configuration ranges

In the first half of 2025, the liquor industry experienced slow macroeconomic recovery, high inventory cycle de-stocking, and the strictest alcohol prohibition policy in history on May 18, leading to damaged consumption scenarios and continued pressure on industry demand. Liquor companies have slowed down their collection pace to relieve channel pressure and accelerate inventory de-stocking, resulting in year-on-year negative financial statements in Q2, and the industry is accelerating clearance and bottoming The current industry is at multiple bottoms in terms of valuation, institutional positions, and fundamentals. The negative impact of Q2 policies has accelerated the pressure on channels, which is being transmitted to the financial statements. The consensus in the industry is that the mid-year reports will accelerate the clearing process, with common characteristics among liquor companies including slowing growth, structural decline, shrinking reserves, and a decrease in cash collection ratios.

Slowing down to relieve pressure has become the industry consensus, with channel pressure accelerating transmission to financial statements. In the first half of 2025, the 17 major liquor listed companies had revenues and net profits attributable to shareholders of 236.83 billion and 94.46 billion yuan, respectively, with year-on-year changes of -0.4% and -0.9%. In Q2 alone, revenues and net profits attributable to shareholders were 86.72 billion and 31.34 billion yuan, respectively, with year-on-year changes of -4.7%/-7.3%. This marks the first negative growth in revenue during this cycle, with the decline in profits being greater than that in revenues. Excluding Moutai, revenues and net profits attributable to shareholders in the first half of 2025 were 145.74 billion and 49.06 billion yuan, respectively, with year-on-year changes of -5.5% and -8.6%. In Q2 alone, revenues and net profits attributable to shareholders were 47.07 billion and 12.78 billion yuan, respectively, with year-on-year changes of -12.9% and -20.9%, indicating an accelerated decline in both revenue and profit.

Liquor companies are relaxing cash collection policies to relieve channel pressure, while profitability is affected by product structure and discounts, with shrinking economies of scale and rigid expense outlays. In the first half of the year, the cash collection progress of liquor listed companies was generally slower than the same period last year, with overall contract liabilities declining by 2.5% year-on-year and cash sales down by 3.2%. The gross profit margin and net profit margin attributable to shareholders for the liquor sector in H1 2025 were 82.5% and 39.9%, respectively, with year-on-year changes of +0.10/-0.23 percentage points; excluding Moutai, these figures were 76.9% and 33.7%, with year-on-year changes of -0.36 percentage points and -1.13 percentage points. In terms of volume and price, the ban on alcohol has suppressed the demand for high-end liquor in political and business scenarios, leading to an overall trend of increasing volume but decreasing prices in the mid-year reports for 2025. Major brands have entered the banquet market in Q2, strengthening sales through measures such as lowering policy thresholds and increasing policy intensity, resulting in increased discounts and a decrease in price per ton, leading to a decline in gross profit margin.

The sector has entered a bottom configuration range, emphasizing the marginal catalysts of seasonal consumption pulse events. Since August, under the backdrop of the release of scenarios and concentrated demand for graduation banquets, there have been positive signals from channels regarding the recovery of sales driven by banquets. The Mid-Autumn Festival and National Day peak seasons will accelerate the bottoming process of the fundamentals, with expectations for a recovery in financial statements starting in 2026.

Investment Recommendations

Recommend strong brands such as Moutai (600519.SH), Wuliangye (000858.SZ), and Luzhou Laojiao (000568.SZ), as well as Shanxi Fenjiu (600809.SH), which has a clear growth path in a counter-cyclical environment; regional leaders with good growth potential include Gujing Gongjiu (000596.SZ), JINHUI (603919.SH), Yingjia Gongjiu (603198.SH), Jinshiyuan (603369.SH), and Laobai Ganjiu (600559.SH); explore incremental opportunities with the "Big Treasure Model" of Zhenjiu Lidu (06979); pay attention to Yanghe (002304.SZ) and Jiu Gui Jiu (000799.SZ), which have clear clearing paths and new product reserves; and Shede Spirits (600702.SH), which effectively reduces channel inventory and will see the end of tax and fee disturbances in 2024 Risk Warning

The pace of recovery in consumer scenarios and the effectiveness of related stimulus policies may not meet expectations; risks of industrial policy adjustments; food safety risks