According to the Zhitong Finance APP, Guosen Securities released a research report stating that from the current perspective, there are still divergences in investment opportunities in the liquor sector: on one hand, the year-on-year performance expectations of liquor companies for Q3 2025 have significantly declined. On the other hand, both valuation and holdings are at low levels, with marginal increases in positive factors on both the supply and demand sides. 1) Combining the sales during the two festivals, the industry demand is showing a month-on-month recovery, and the market has relatively sufficient expectations for performance and prices. Valuation will recover with the improvement in demand and is more sensitive to policy expectations and liquidity improvements, belonging to the first phase, priced by dividend yield. 2) Looking ahead to the second phase of valuation recovery, when the supply-demand relationship in the industry improves, and indicators such as prices and performance are realized, the market's &#34;long-term belief&#34; in liquor assets will return. The firm believes that signals for bottoming out in the industry are increasing, and the sector is entering a layout phase.
<h2>Guosen Securities' main viewpoints are as follows:</h2>
Stock Price and Performance Rhythm
Most companies confirmed their stock price bottoms in Q4 2013 to Q1 2014, with performance declines expanding since Q3 2013 and continued bottoming out of prosperity, but stock prices reflected this moderately, rising overall with the bull market. The firm found that the apparent decline further expanded in Q3 2013, while stock prices remained relatively stable after the Q3 report, with most companies generating absolute returns within one month after the disclosure. The main reasons are: 1) Stock prices have sufficiently digested the expectations of performance decline; from early 2013 to the Q3 report, liquor companies' declines were between 30-55%; 2) From Q4 2013, expectations for economic reform strengthened, and the short-term prosperity of liquor did not change the long-term industry logic, with sector valuations gradually recovering following liquidity improvement; 3) The year-on-year decline in high-end batch prices narrowing further strengthened bottom signals, such as the batch price of Feitian narrowing in Q4 2013, with stock prices bottoming out and rebounding in Q1 2014. Furthermore, individual stock price performance remains linked to fundamentals, including: 1) Regional leaders Gujing, Lao Bai Gan, and Yanghe experienced smaller declines than the overall market, showing relative excess in the sector; 2) Wuliangye saw a rebound within one month after strengthening clearance efforts in Q3 2013, reflecting market confidence in the long-term operation of high-end liquor.
Liquor Company Operating Strategies
Leveraging channels to amplify brand and product advantages is an unchanging proposition during the adjustment cycle. During the adjustment phase, the operating strategies of liquor companies convey signals of changes on the supply side. In the 2013-2015 cycle: 1) High-end liquor emphasizes maintaining brand strength, with Moutai focusing on &#34;customer expansion,&#34; and the batch price of Guojiao exceeding that of Wuliangye; after the supply-demand issues became more prominent, companies began to leverage channels and product tools, such as Moutai allowing invoices, relaxing distribution rights, and supplementing income through customized liquor. Wuliangye actively subsidized distributors and established a platform operator system in response to channel pressures, while Lao Jiao strengthened control over profit distribution to ensure channel profits. 2) Regional leading liquor companies retreated to base markets, focusing on single points outside the province, with Yanghe and Gujing strengthening cultivation of lower-tier markets and corporate group purchasing channels, and Fenjiu enhancing recruitment and distribution within the province, also adopting a customized liquor development model. 3) Expansion-oriented mid-to-high-end adjustments occurred earlier and with greater amplitude, with strategic changes consistent with industry trends, such as Shede, JGJC, and Shui Jing Fang increasing the volume of mid-to-low-end products and mass consumption scenarios. Shede gradually began recruiting small merchants/group buyers/other industry distributors, while JGJC temporarily focused on Hunan Province. Since the beginning of this year, the growth tools for liquor companies have weakened, and mainstream companies have begun to relieve pressure through channels and products, similar to the last cycle, which can be seen as a supply-side adjustment accelerating to find the bottom
Risk Warning: Economic and demand recovery is below expectations; slow inventory destocking, continuous decline in major product prices; worsening competitive landscape leading to excessive investment costs, impacting the net profit margin of liquor companies; food safety issues, etc

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Guosen Securities released a research report indicating that the liquor industry is showing signs of bottoming out, with market opinions on investment opportunities being divided. Although the performance expectations for liquor companies in the third quarter of 2025 have significantly declined, valuations and positions are at low levels, and positive factors on both the supply and demand sides are gradually increasing. It is expected that industry demand will gradually recover, and market confidence in liquor assets will return. Overall, the liquor sector has entered a layout phase

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Guotai Junan Securities: Increasing signs of bottoming in the liquor industry, the sector enters the layout stage