Huachuang Securities: Emphasizing the catalysis of the bottom of the liquor industry, selecting the industry trend of popular premium products.

Huachuang Securities released a research report stating that the inventory of liquor companies is accelerating, and top liquor and other traditional consumer goods are entering a period of bottoming and fund accumulation. The upcoming peak season is expected to boost valuations. The trend in mass-selected industries shows that snacks, beverages, and yellow wine are performing well, while traditional sectors such as beer and dairy are showing signs of improving returns on equity. The restaurant supply chain is still at the bottom due to demand factors. In terms of liquor, the focus is on catalysts before and after the third quarter report, with priority given to top-performing and deeply reformed companies. Liquor companies are accelerating their inventory clearance in the mid-year report, speeding up the bottoming process of the cycle. The three stages of the liquor cycle bottoming are: supply clearance, supply-demand rebalancing, and demand recovery. At the bottom of the cycle, it is crucial to continuously perceive forward signals and gradually confirm the positive cycle in order to capture the investment opportunities in the liquor cycle. In the third quarter, the focus should be on Maotai, Fenjiu, Gujing, and Jiangsu King's Luck Brewery Joint-Stock. Companies that are expected to confirm the bottom of their performance this year and drive new highs through market share are recommended. Also, companies undergoing deep reforms, such as Yanghe, should be closely observed. From the perspective of dividend yield, Wuliangye Yibin and Laobaigan are suggested. In terms of consumer goods, overseas yeast growth drivers, improvements in ROE in the beer and dairy industries, and a strategic recommendation for yellow wine are highlighted. AnQi is the top choice from the perspective of transitioning to certainty, with overseas high-growth drivers leading to increased revenue, depreciation cycles, and resonating cost cycles enhancing profitability elasticity. In the next two years, performance is expected to improve, driven by long-term potential growth in microbial protein. At the forefront of the dairy and beer industries, companies such as CHINA RES BEER and Yili are recommended, along with Yanjing, Tsingtao, and Mengniu. For growth-oriented selections, a strategic recommendation is made for the yellow wine sector, with products such as Kuaijishan Shaoxing Rice Wine 1743 showing impressive sales performance. Additionally, focus on Lanting and the volume of Dongpeng in the beverage sector, as well as the fast-growing new products and market growth limits. Farmers expect better growth in the second half of the year due to a low base. In the snack sector, channel and category resonance is evident, with a layout of Yanjin and a focus on Weilong. At the bottom level, focus on restaurants supply chains such as Haitian, Ligao, and Zhongju, and keep an eye on Babi and Xianle.