Zhejiang Merchants Securities: The sales performance during the Double Festival is flat, and it is expected that most liquor companies' performance in Q3 2025 will still decline year-on-year

According to the Zheshang Securities research report, the overall collection progress of the liquor industry in Q3 2025 is relatively slow, inventory has increased, and wholesale prices are weak. Affected by the "liquor ban," government and business consumption in the third quarter has been significantly pressured, and the sales performance during the Mid-Autumn Festival and National Day holidays has been lackluster. As a result, the collection progress of liquor companies in Q3 has slowed to varying degrees, with only Moutai expected to maintain a collection progress similar to previous years, while other liquor companies may face relative pressure. It is anticipated that the performance of most liquor companies in Q3 2025 will still decline year-on-year, although some companies may see a narrowing of the decline compared to Q2 2025. While sales during the dual holidays are under pressure year-on-year, there may be improvements month-on-month, presenting opportunities for sector allocation, and attention should also be paid to new consumption investment opportunities in liquor represented by "Da Zhen."

The main points of Zheshang Securities are as follows:

Q3 2025 liquor performance under pressure, the sector is still bottoming out under the "liquor ban"

Zheshang Securities believes that the overall collection progress of the liquor industry in Q3 2025 is relatively slow, inventory has increased, and wholesale prices are weak.

In terms of collection progress: Affected by the "liquor ban," government and business consumption in the third quarter has been significantly pressured, and the sales performance during the Mid-Autumn Festival and National Day holidays has been lackluster. Therefore, the collection progress of liquor companies in Q3 has slowed to varying degrees, with only Moutai expected to maintain a collection progress similar to previous years, while other liquor companies may face relative pressure.

In terms of sales performance: The sales performance of liquor in Q3 2025 is under pressure, with the "liquor ban" having a significant impact in June and July, leading to a substantial decline in sales. Although there has been some month-on-month improvement in August and September, it is expected that the overall sales performance of the industry in Q3 2025 will still be under pressure, with some companies like Moutai maintaining strong resilience. According to reports from Moutai's official WeChat account, the terminal sales in August showed a significant month-on-month growth trend, and since September, the terminal sales of Moutai have shown even more significant growth, with a month-on-month increase of about 100% and a year-on-year increase of over 20%.

In terms of inventory: After a slight decrease in inventory levels of liquor companies in Q1 2025, the overall inventory of the liquor industry has accumulated due to a significant slowdown in sales since Q2 2025. It is expected that the terminal inventory during the Mid-Autumn Festival and National Day holidays will decrease, but channel inventory may not decrease significantly. Although leading liquor companies have seen an increase in inventory, they can still maintain a stable level within safe inventory limits due to the maturity of digital monitoring systems.

In terms of wholesale prices: Under the influence of the "liquor ban," combined with liquor companies actively promoting sales during the peak holiday season, most individual product wholesale prices are under pressure. In Q3 2025, the wholesale prices of high-end liquors like Moutai and Wuliangye have declined month-on-month, with the price of Feitian Moutai dropping to 1,750-1,800 yuan, and the price of Wuliangye falling to around 840 yuan. Additionally, the wholesale prices of some mid-range products like Shuijingfang and Zhenniang No. 8 are also under pressure, while only a few products like Qinghua Fen and Shuijingmeng have performed relatively well.

In terms of price segments: ① High-end liquor: It is expected that Moutai will still maintain growth in Q3 2025, while Wuliangye and Luzhou Laojiao may face slight pressure. ② Mid-range liquor: There is significant differentiation in mid-range liquor, with Shanxi Fenjiu expected to perform relatively steadily in terms of collection, sales, and wholesale prices in Q3 2025. Shede Spirits may perform relatively well due to a low base, and JGJC may achieve growth due to a low base and contributions from the new product "JGJC·Freedom Love," while Shui Jing Fang is in a deep adjustment period. ③ Regional leading liquor: Regional leading liquor companies are still actively adjusting, and it is expected that major regional leaders like Gujing Gongjiu, Yingjia Gongjiu, and Jinshiyuan will be significantly impacted by the "liquor ban" in Q3 2025 Currently still in the financial statement clearing stage, Yanghe Brewery's decline in Q3 2025 may narrow on a quarter-on-quarter basis under a low base.

Update on the earnings forecast for liquor companies in Q3 2025

Overall view: Liquor companies are generally under pressure, and it is expected that most liquor companies' performance will still decline year-on-year in Q3 2025, with some companies possibly seeing a narrowing of the decline in performance compared to Q2 2025.

Individual stocks: It is expected that Kweichow Moutai's revenue and profit in Q3 2025 may achieve growth, while Wuliangye/Shanxi Fenjiu/Jinhui Liquor/Laobai Ganjiu's revenue and profit performance in Q3 2025 may be relatively stable. Shede Spirits and JGJC may see growth under last year's low base, while other liquor companies' financial statements are still in the adjustment period.

Investment suggestion: Focus on the bottom range allocation opportunities in the liquor sector

Priority recommendations for fragrance-type leaders include Kweichow Moutai (600519.SH), Shanxi Fenjiu (600809.SH), and Wuliangye (000858.SZ); recommendations for mass-priced brands with share increase logic & relatively low valuation and high elasticity include Zhenjiu Lidu (06979), Luzhou Laojiao (000568.SZ), Gujing Gongjiu (000596.SZ), Jinshiyuan (603369.SH), Yingjia Gongjiu (603198.SH), and Shede Spirits (600702.SH).

Risk warning

Risks of economic performance being below expectations; risks of high-end liquor wholesale price decline; food safety risks, etc