Huachuang Securities: Liquor Sales Accelerate in Q2, Leading Brands Remain Steady

Huachuang Securities has released a research report stating that the bottom signal is gradually becoming clearer, suggesting a long-term investment approach while seizing short-term opportunities for improvement in the upcoming quarter. The second quarter saw an acceleration in inventory clearance, and the current bottom signal is becoming increasingly evident. For opportunity selection, the report suggests: first, to "plant seeds" in quality blue-chip stocks that have already emerged from their winter phase in terms of fundamentals, but whose stock prices are still experiencing severe cold; second, to choose right-side opportunities from the perspective of quarterly improvement, with particular focus on the yellow wine and snack wholesale sectors. Specifically, the white liquor sector shows an accelerated bottoming out in Q2, with a gradual recovery expected in the second half of the year against a low baseline. High-quality blue-chip companies in the consumer goods sector are primed for positioning to capitalize on marginal improvement opportunities. The main viewpoints from Huachuang Securities are as follows: White Liquor: Q2 cash returns and shipments have noticeably slowed down, with an expectation of accelerated inventory clearance in the reports. In the first half of the year, the white liquor sector is still in the clearance and bottoming phase, with industry risks fully reflected in the financial reports. Some liquor companies' adjustments have surpassed the actual decline in sales, and industry inventory continues to decrease. On the cash return front, most liquor companies have noticeably slowed their cash return and shipment rhythm in Q2. In terms of sales performance, the off-season in Q2 saw a double-digit year-on-year decline in industry sales, with only leading brands maintaining normal turnover. In terms of consumption scenes, high-end brands like Moutai and Wuliangye maintain steady sales under the current price system, while the corresponding business group purchasing scenarios for second-tier high-end products remain relatively weak. Overall family consumption in the mass price range shows a degree of resilience. Looking ahead, with accelerated inventory clearance in the second quarter, a marginal positive turn is expected in the second half of the year against a low baseline. By price tier, reports from Moutai and hundred-yuan price-level liquor companies in Q2 may show relatively greater resilience, while other liquor companies are expected to see accelerated clearance. Specifically, by price tier: High-end: Moutai remains stable, Wuliangye Yibin and Lao Jiao are still in adjustment phases. Revenue for Moutai in Q2 is expected to see a slight increase of 2% year-on-year, with profits unchanged; Wuliangye Yibin's revenue/profit is expected to be down by 55%/+300% year-on-year; Lao Jiao is expected to see a decline of 35%/-40% year-on-year. Base-type second-tier high-end: Q2 saw an overall accelerated clearance, with second-tier liquor companies showing some resilience against a low baseline. Revenue/profit for Fenjiu is expected to decline by 20%/-25% year-on-year; Yanghe's revenue is expected to drop by 15%/-20% year-on-year; Gujing's revenue is expected to decline by 40%/-50% year-on-year; Jiangsu King's Luck Brewery Joint-Stock is expected to remain flat/-5% year-on-year. Expansion-type second-tier high-end: Q2 sales pressure continues, with reports accelerating in clearance. Revenue/profit for Shede is expected to decline by 30% with losses year-on-year; Sichuan Swellfun is expected to decline by 51% with losses year-on-year. Consumer Goods: Off-season demand remains stable, with leading brands performing robustly. In April/May/June 2026, the total retail sales of consumer goods increased by 0.2%/-0.6%/+1.0% year-on-year, with dining services increasing by 2.2%/+0.6%/+1.2% year-on-year; the overall consumer recovery pace in Q2 is moderate, with the mass consumer goods sector showing stable total amounts and internal differentiation. In specific sub-sectors, leisure snacks entered a consumption off-season in Q2, and the volume wholesale channel remains a core growth driver for leading brands; soft drinks are under pressure due to delayed warming and excessive rainfall, resulting in an overall industry downturn. Conversely, healthy categories like sugar-free tea and ready-to-drink coffee show counter-trend growth; dairy demand remains robust, with the supply front's fresh milk prices in major production areas recovering from a bottom; the price cycle for raw milk turned earlier than market expectations. Leading condiment brand Haitian continues to grow steadily, while second-tier companies show improvements against a low baseline. Companies benefiting from structural upgrades, mergers, price increases, and related improvements maintain rapid growth; frozen food companies experience slowed revenue growth due to higher temperatures combined with the traditional off-season impact. Leading company Anjiu remains relatively strong, with second-tier companies generally seeing single-digit growth; chains that engaged in fierce delivery battles last year still face same-store pressure. In terms of profits, raw material cost trends continue to show differentiation, with soybeans, soybean oil, PET, and other categories experiencing phase-upward adjustments driven by international factors, while fresh milk and white sugar prices have declined year-on-year. Dairy and Meat Products: Leading companies operate steadily, with some profit fluctuations. Demand for liquid milk in Q2 is steadily recovering, but profitability is under pressure due to subsidiary drag and tax adjustments. Expected revenue/profit for Yili is +4%/-10% year-on-year, Tianrun is +3%/-58% year-on-year, New Hope Dairy is +6%/+11% year-on-year, and Shuanghui is +0%/+5% year-on-year. In H1, Mengniu is expected to report +7%/+22% year-on-year. Leisure and Functional Food & Drink: Soft drink market under pressure, snack off-season showing stable performance. Weather-induced pressures affected the beverage sector in Q2, yet leading brands show strong operational resilience, with expected revenue/profit for Dongpeng at +11%/+15% year-on-year; expected H1 revenue/profit for Nongfu is +14%/+17% year-on-year. Snack consumption remains relatively stable, with expected Q2 revenue for Salted Snack increasing by +7%/+13% year-on-year, Qiaqia is expected to increase by +9%/+640% year-on-year, and Ganyuan's revenue is expected to rise by +11%/+35% year-on-year. Baking company Anqi is expected to earn +15%/+10%, while Taoli forecasts a decline of -1%/-8% year-on-year. Health products from Xianle are expected to earn +5%/+3% year-on-year, and is expected to earn +6%/+4% year-on-year. Condiments: Leading brands grow steadily, with second-tier companies improving. Expected revenue/profit for Haitian in Q2 is +5.5%/+8% year-on-year, Zhongju is +20%/+93% year-on-year, Qianhe's revenue is expected to increase by +15% with substantial improvement in profits against a low baseline, Tianwei expected at +20%/+13% year-on-year, Baoli is expected at +15%/+11% year-on-year, Zhaocai is projected at +4%/+0% year-on-year, and Yihai expects H1 to be +12%/+17% year-on-year. Frozen Foods: Still on the upswing in fundamentals, with a positive outlook for leading companies. Expected revenue/profit for Anjiu in Q2 is projected at +12%/+12% year-on-year; Li Gao at +1%/-18% year-on-year; Qianwei at +10%/-10% year-on-year. Risk Warning: Consumer demand may decline, inventory digestion may not meet expectations, and competition may intensify.