China Galaxy Securities: National Day and Mid-Autumn Festival food and beverage industry weak recovery, focus on third quarter performance.

China Galaxy Securities released a research report stating that, according to industry insiders, during the Mid-Autumn Festival and National Day holidays, overall sales of Baijiu (Chinese liquor) decreased by 20%-30%, showing characteristics of differentiation in scenes, regions, and brands. In terms of scenes, demand for business banquets remained weak, while general consumption and party banquets were relatively strong. In terms of catering, National Day travel steadily increased, with the Ministry of Transportation preliminary statistics showing that from October 1st to the 8th, the total interregional population flow was approximately 2.432 billion people, with an average of 304 million people daily, a 6.2% year-on-year increase, reaching a new high in historical periods, driving marginal weak recovery. Looking ahead to October, the market will focus on third-quarter performance reports, and related high-performance stocks and sectors should be closely watched. Main viewpoints of China Galaxy Securities: 1. Moderate improvement in September, weak recovery during National Day and Mid-Autumn Festival Baijiu Industry: According to industry insiders, sales of Baijiu during the Mid-Autumn Festival and National Day holidays decreased by 20%-30%, showing characteristics of differentiation in scenes, regions, and brands. In terms of scenes, demand for business banquets remained weak, while general consumption and party banquets were relatively strong. In terms of regions, traditional Baijiu consumer provinces such as Henan, Shandong, and Jiangsu remained relatively stable. In terms of brands, demand for top-tier liquors rebounded, with inventory decreasing after the first half of the year. For example, market research in sixteen provinces and cities in the fall showed that the sales of Kweichow Moutai liquor increased by about 1 times compared to the previous month since September, with a year-on-year growth of over 20%, further boosting from August. Food and Beverage Supply Chain Industry: The Ministry of Commerce and nine other departments issued a document outlining "Several Policy Measures to Expand Service Consumption," which is expected to boost consumer confidence. In September, Amap released the "Amap Scan Street List" and launched the "Fireworks Good Store Support Plan," aiming for an average daily increase of 10 million customers in offline catering and other service industries. National Day travel steadily increased, with the Ministry of Transportation preliminary statistics showing that from October 1st to the 8th, the total interregional population flow was approximately 2.432 billion people, with an average of 304 million people daily, a 6.2% year-on-year increase, reaching a new high in historical periods, driving marginal weak recovery. Tracking Data: Pressure on Baijiu wholesale prices, differentiation in raw material costs Baijiu wholesale prices in September were 1790/1765 yuan for Feitian whole boxes and loose bottles, down 40/40 yuan from the previous month and 600/530 yuan from the same period last year; Badai Pufive wholesale price was 840 yuan, down 20 yuan from the previous month and 120 yuan from the same period last year; Guojiao 1573 wholesale price was 840 yuan, up 10 yuan from the previous month and down 20 yuan from the same period last year; Qinghua 20 wholesale price was 360 yuan, unchanged from the previous month and down 15 yuan from the same period last year; M6+ wholesale price was 540 yuan, unchanged from the previous month and down 10 yuan from the same period last year. Packaging materials, as of September 24th, 2025, PET/film prices were down 7.1%/4.8% year-on-year, while aluminum/glass/cardboard prices were up 3.2%/2.6%/8.0% year-on-year. Raw material costs, sugar/flour/quail eggs/pork prices were down 8.8%/2.7%/2.1%/26.5% year-on-year; soybeans/palm oil/sunflower seeds prices were up 0.3%/7.0%/9.4% year-on-year. In August 2025, barley import prices were up 4.2% year-on-year. In dairy products, as of September 18th, fresh milk prices were 3.03 yuan/kg, down 3.5% year-on-year; GDT auction whole milk powder bid price was 3790 USD/ton, up 9.9% year-on-year. Investment Recommendations The Food and Beverage Index in September performed relatively weak compared to the broader market, with all sub-sectors in a consolidation phase. Looking ahead to October, the market will focus on third-quarter performance reports, and related high-performance stocks and sectors should be closely watched. Looking to the 25Q4, under the expectation of the gradual transmission from PPI improvement to CPI improvement, the focus should be on the cyclical direction of supply clearance + bottom valuation. In the medium to long term, it is recommended to continue focusing on three main trends: 1) Growth stocks in new product categories and channels, such as GUOQUAN (02517), Fujian Wanchen Biotechnology Group (300972.SZ), Eastroc Beverage (605499.SH), WL DELICIOUS (09985), Yanker Shop Food (002847.SZ), Jinzai Food Group (003000.SZ), YouYou Foods (603697.SH), Ligao Foods Co., Ltd (300973.SZ), etc. 2) Sectors with relatively stable demand and improved competitive landscape, including NONGFU SPRING (09633), U-PRESID CHINA (00220), CR BEVERAGE (02460), TINGYI (00322), etc. 3) Cyclical recovery direction, focusing on Baijiu sectors such as Kweichow Moutai (600519.SH), Shanxi Xinghuacun Fen Wine Factory (600809.SH), Wuliangye Yibin (000858.SZ), Luzhou Laojiao (000568.SZ); Mass market sectors such as Tsingtao Brewery (600600.SH), Beijing Yanjing Brewery (000729.SZ), Chongqing Brewery (600132.SH), CHINA RES BEER (00291), Zhengzhou Qianweiyangchu Food Co., Ltd (001215.SZ), Shanghai Bolex Food Technology (603170.SH), etc. Risk Warning Risks include demand recovery falling short of expectations, increased industry competition, downstream channel transformation not meeting expectations, and food safety risks.