Guosheng Securities: The sales of liquor are improving month by month, and further stabilization is expected for demand recovery

According to Zhitong Finance APP, Guosheng Securities released a research report stating that in Q2 2025, as regulatory policies on public consumption and business banquets tighten further, the sales of liquor are under pressure in both volume and price. Since Q3, with normalized control on the consumption side and correction of negative sentiment, liquor has seen a month-on-month improvement. On one hand, Moutai, as a stabilizing force, has achieved a three-step improvement with stabilization in July, warming in August, and an increase in September. The mass price segment benefits from the rigid demand of wedding banquets and family dinners, gradually recovering in sales. On the other hand, facing industry pressure, major liquor companies are further stabilizing prices and markets, utilizing product and channel innovations to layout new scenarios and new demands. Currently, the peak pressure on liquor sales has passed, and in the future, further stabilization is expected to follow the recovery of demand.

The main points of Guosheng Securities are as follows:

Sales: "The freezing point has passed, improving month by month"

In Q2 2025, as regulatory policies on public consumption and business banquets tighten further, the sales of liquor are under pressure in both volume and price. On one hand, the demand for gatherings has contracted in the short term, with high-end group purchases and business scenarios being the most affected. In June, most liquor sales saw significant declines, and liquor prices fluctuated, with core major products showing a downward trend in wholesale prices. On the other hand, confidence in the channel continues to decline under pressure from turnover and profitability.

Since Q3 2025, with normalized control on the consumption side and correction of negative sentiment, liquor has seen month-on-month improvements. On one hand, Moutai, as a stabilizing force, has achieved a three-step improvement with stabilization in July, warming in August, and an increase in September. The mass price segment benefits from the rigid demand of wedding banquets and family dinners, gradually recovering in sales. On the other hand, facing industry pressure, major liquor companies are further stabilizing prices and markets, utilizing product and channel innovations to layout new scenarios and new demands.

In summary, after experiencing continuous bottoming and stabilization in Q2 and Q3 of 2025, the peak pressure on liquor sales has passed, and further stabilization is expected to follow the recovery of demand.

Financial Statements: V-shaped moment, accelerating clearance

In Q3 2025, the liquor sector reported revenue of 78.69 billion yuan, a year-on-year decrease of 18.4%, and a net profit attributable to the parent company of 28.06 billion yuan, a year-on-year decrease of 22.0%. The declines in revenue and net profit have both expanded quarter-on-quarter, marking the largest/third-largest adjustment in a single quarter since 2013 (with net profit reaching a maximum decline of 30.7% in Q4 2013). Cumulatively, from Q1 to Q3 2025, revenue was 320.11 billion yuan, a year-on-year decrease of 5.8%, and net profit attributable to the parent company was 122.69 billion yuan, a year-on-year decrease of 6.9%. At the end of Q3 2025, contract liabilities were 38.96 billion yuan, an increase of 1.72 billion yuan year-on-year and an increase of 1.84 billion yuan compared to the end of Q2 2025, remaining stable.

In Q3 2025, the liquor sector's gross profit margin was 80.7%, a year-on-year decrease of 0.7 percentage points, mainly affected by the general downward shift in product structure among liquor companies. The sales expense ratio and management expense ratio were 11.0% and 5.9%, a year-on-year decrease of 0.2 percentage points and an increase of 0.6 percentage points, respectively, with the sales expense ratio slightly decreasing due to general cost control and efficiency improvements among liquor companies. As a result, the net profit margin was 37.1%, a year-on-year decrease of 1.7 percentage points, indicating overall pressure on profitability.

On the individual stock level, in Q3 2025, among high-end liquors, Moutai's growth rate has dropped to below 1%, and the annual performance target is expected to rebalance with volume and price. Wuliangye's revenue and net profit declined by 53% and 66%, respectively, marking the largest single-quarter decline since 2013. However, the company is proactive in making adjustments and actively responding to pressure, which is expected to achieve a short-term exchange for long-term benefits Luzhou Laojiao's revenue/net profit declined by 10%/13%, continuing the destocking trend, with stable prices, clear advantages in product structure, and digital systems.

In the mid-to-high-end liquor segment, Fenjiu's revenue grew by 4%, while the sales of Glass Fen and Qinghua 20 maintained relative advantages. JGJC saw a slight increase in revenue due to growth in supermarket channels, while Shede and Shuijingfang continued to decline. The real estate liquor segment collectively saw a significant decline, aligning with previous judgments of accelerated destocking by Q3 2025, with Gujing declining by over 50%.

History: In the last round of liquor adjustment, stock prices recovered ahead of fundamentals

At the end of 2012, the liquor industry entered a deep adjustment period from 2013 to 2015 due to the restrictions on public consumption and negative impacts from plasticizers and other industry issues. In terms of performance, the sequence of liquor financial statements was: beginning to slow down (during the ban on alcohol in Q4 2012) → beginning to decline significantly (Q2 2013, about 0.5 years later) → growth rate began to recover (Q4 2014, with a slowdown cycle of about 1.5 to 2 years).

In terms of wholesale prices, as a core forward-looking indicator of liquor fundamentals, the sequence of the wholesale price of Feitian Moutai per bottle was a continuous decline (from around 1,200 yuan in early 2013 to a historical low of around 810 yuan in November 2014, roughly corresponding to the financial statement slowdown cycle) → slow recovery (relatively flat for about 1.75 years) → short-term rapid and significant rebound (from around 880 yuan in early Q3 2016 to around 950 yuan at the end of Q3 2016, which was also the starting point of a new upward cycle for liquor).

In terms of stock prices, taking early January 2013 as a baseline, the liquor index reached a cumulative deepest decline of 46% in January 2014; it wasn't until April 2015 that it began to achieve a cumulative increase of 3%. Overall, during the last round of sector adjustments, the sequence was: wholesale price decline > stock price bottoming > financial statement destocking; during the sector recovery, the sequence was: stock price increase > wholesale price recovery > financial statement repair.

The moment of absolute value has arrived

From the supply side, liquor companies continue to promote destocking and price stabilization, and the financial statements are generally accelerating destocking by Q3 2025, with risks continuously being released. From the demand side, the wholesale prices and sales of liquor continue to bottom out. In terms of valuation, the liquor sector's valuation, market expectations, and institutional holdings are at historical lows, while leading liquor companies like Moutai, WLY, and LZLJ have set benchmarks in dividends. The low valuation of high-quality leaders combined with dividend support makes it an opportune time for absolute return positioning in the liquor sector.

Investment Recommendations

The sales ice point has passed, and the financial statements are deeply bottoming out. The risks of accelerated destocking in supply and demand are waiting to follow the trend. The absolute allocation value is gradually emerging. Recommended allocations: 1) Short-term marginal change elastic targets: Luzhou Laojiao (000568.SZ), Hong Kong stock Zhenjiu Lidu (06979), Shede Liquor (600702.SH), JGJC (000799.SZ), Shuijingfang (600779.SH); 2) Chip structure optimization: Yingjia Gongjiu (603198.SH), Yanghe (002304.SZ), Laobaigan Liquor (600559.SH), etc.; 3) Medium to long-term quality leading targets: Guizhou Moutai (600519.SH), WLY (000858.SZ), Shanxi Fenjiu (600809.SH), Gujing Gongjiu (000596.SZ), Jianshiyuan (603369.SH), etc Risk Warning

Consumer power and scenario recovery are below expectations, industrial policy adjustments, and intensified industry competition