The signal at the bottom of the food and beverage sector is clear, and institutions suggest seizing the overall trend of consumer goods for the year and prioritizing clearing white liquor targets.

Guotai Haitong released a research report stating that in July, market trading showed a high-low shift, with the liquidity of traditional sectors represented by liquor significantly recovering. Coupled with increased holdings by China Reform Holdings, China Cheng Tong, and various state-owned investment and operation platforms, valuations are undergoing a round of repair. Under the rebalancing of the market, the bottom value of the food and beverage sector has become more prominent, with consumer goods being a main theme throughout the year, seizing the opportunity for low-position at this stage. It is expected that the fundamentals of liquor will accelerate the search for a bottom, recommending an early clearance of targets. Liquor: Market style rebalancing drives valuation repair In July, market trading showed a high-low shift, with the liquidity of traditional sectors represented by liquor significantly recovering. Coupled with increased holdings by China Reform Holdings, China Cheng Tong, and various state-owned investment and operation platforms, valuations are undergoing a round of repair. According to performance forecasts and shareholder meeting survey results from several liquor companies, it is expected that the liquor industry will continue to show a clearance state in the Q2 report for 2026, with only a few stocks likely to achieve year-on-year flat or positive growth. Considering the significant improvement in the current sectors micro trading structure, the configuration ratio of heavy liquor stocks in Q2 2026 decreased by 1.93 percentage points to 0.97%. Meanwhile, the dividend yield and valuations have a certain appeal. With the acceleration of the bottoming out of fundamentals combined with transaction factors, an early clearance of targets is advisable. Consumer Goods: Recovery trend clear, inflection point for raw milk evident After a short-term decline in high-frequency consumption data for consumer goods from April to May, there was a marginal stabilization starting in June, and Q3 is expected to show further moderate improvement, with a clear recovery trend for the year. The penetration of health foods is increasing, and growth continues. The catering supply chain and condiments benefit from improvements on both the supply and demand sides. It is expected that leading companies will still maintain stable growth during the off-season in Q2; this remains the main theme throughout the year. Some beverage and beer leaders are outperforming the overall situation in their segments, and after the expected decline, the price-performance ratio of valuations has become prominent. In Q2 2026, Eastroc Beverage had a single-quarter revenue increase of 11.3% year-on-year, a net profit attributable to the parent company increasing by 15.4% year-on-year, and a net profit excluding non-recurring items increasing by 6.56% year-on-year. It plans a cash dividend ratio of 76%, and also announced a plan to distribute dividends of no less than 80% each year from 2026 to 2028, along with a Hong Kong stock repurchase plan, highlighting its value. The inflection point of the raw milk cycle is gradually becoming clear, driving improvements in dairy and livestock leading companies. YOURAN DAIRY has released a positive profit forecast, expecting a net profit attributable to the parent company in H1 2026 to be 739 million to 903 million yuan, compared to a net loss of 297 million yuan in H1 2025, anticipating a turnaround to profitability. With the resonance of meat and milk, profit elasticity is strong. In Q2 2026, the allocation ratio of heavy food and beverage stocks decreased by 2.41 percentage points to 1.49%, within which the allocation ratio of the consumer goods sector decreased by 0.48 percentage points to 0.52%. Clearance on a trading level is also quite evident. Supported by the trend of fundamental recovery, the bottom rebound of consumer goods targets that are growing and have been oversold shows strong certainty.