Huachuang Securities: Focus on the bottom catalyst of liquor and select industry trends for consumer goods

According to Zhitong Finance APP, Huachuang Securities released a research report stating that the financial statements of liquor companies are accelerating clearance, and leading liquor brands and other traditional consumer goods are entering a bottom accumulation period. The upcoming peak season is expected to drive a rebound in valuations. Selected consumer goods are showing positive industry trends, with snacks, beverages, and yellow wine performing well, while traditional sectors like beer and dairy are seeing improvements in ROE. The restaurant supply chain remains at the bottom due to demand impacts.

In terms of liquor, attention should be paid to catalysts around the third quarterly report, prioritizing the clearance of high-performing and deeply transformative companies. The mid-year reports of liquor companies are accelerating clearance, speeding up the bottoming cycle. The three stages of the liquor cycle bottoming are: supply clearance, supply-demand rebalancing, and demand improvement. At the bottom of the cycle, it is crucial to continuously perceive forward-looking signals and gradually confirm the positive cycle to capture the investment context of the liquor cycle, with a focus on catalysts around the third quarterly report: first, prioritize the relatively resilient Moutai and Fenjiu; second, select companies expected to confirm performance bottoms this year and potentially achieve record highs through market share-driven innovations, recommending Gujing and paying attention to King’s Luck; third, focus on deeply transformative companies, with Yanghe's new chairman expected to bring about significant changes, although operational reversals may not happen overnight, the pace of transformation and extent of reversal are worth monitoring, and also pay attention to the model innovation of Zhenjiu Lidu. Additionally, it is recommended to layout WLY from a dividend yield perspective, closely monitor the clearance progress of Laojiao, and position for reversal elasticity.

Regarding consumer goods, overseas high growth in yeast drives improvements in beer and dairy ROE, with strategic recommendations for yellow wine. From a perspective of switching to certainty, prioritize Angel Yeast, as overseas high growth drives income depreciation cycles + cost cycles, amplifying profit elasticity, entering a performance improvement period over the next two years, and with long-term microbial protein driving positive strategic goals; the adjustments in inventory for leading dairy and beer companies have been completed, and ROE is on the rise, prioritizing CHINA RES BEER and Yili, while continuously recommending Yanjing, Qingdao Beer, and Mengniu. In terms of growth sectors, strategically recommend the upgrading opportunities for yellow wine, with products like Kuaijishan 1743 showing strong sales performance, and pay attention to Lanting's volume increase; in the beverage sector, Dongpeng's flagship product continues to drive single production increases, while the second curve products like Shui La and new products like Guozhi Tea are rapidly increasing volume, opening up growth limits; Farmer's low base in the second half of the year is expected to show better growth; in the snack sector, channel and category resonance is seen, with layouts in Yanjin, and attention to Weilong. Additionally, for bottom layouts in the restaurant supply chain, focus on Haitian, Lihigh, and Zhongju, and pay attention to Babi and Xianle