Shenwan Hongyuan Group: The fundamentals of the liquor industry face comprehensive pressure in Q2 2026, with operational stress accelerating.

Shenwan Hongyuan Group released a research report stating that the liquor industry's financial reports for Q2 2026 are accelerating downward, with fundamental pressures being fully exerted. The main reasons are the pressure from the external demand environment and the release of inventory accumulated over the past few years in 2026. From the stock price performance perspective, the impact of the listed companies' reports on stock prices has become limited, further validating the characteristics of a price bottom. The firm believes that the price of Moutai has already bottomed in the first quarter, marking the turning point of the current cycle. The future trend of the industry is likely to be contraction and concentration, with a strong differentiation among listed companies becoming inevitable. Despite the overall contraction, leading enterprises that remain in the long term still have room for growth, and high-quality liquor companies are currently entering a strategic allocation phase. After a full adjustment in 2026, if the external demand environment improves in 2027, leading quality enterprises are expected to welcome a double blow of valuation and performance. The main viewpoints of Shenwan Hongyuan Group are as follows: Fundamental Analysis: Q2 2026 financial reports accelerate downward, with fundamentals under comprehensive pressure. 1. In the first half of 2026, the liquor industry achieved operating income of 191.655 billion yuan, a year-on-year decrease of 6.38%, and net profit of 73.131 billion yuan, a year-on-year decrease of 8.14%. In terms of absolute revenue change, the ranking is national famous liquors > next high-end > mid-range, whereas in terms of absolute profit change, it is national famous liquors > mid-range > next high-end. In Q2 2026, the liquor industry achieved operating income of 62.868 billion yuan, a year-on-year decrease of 17.31%, and net profit of 21.223 billion yuan, a year-on-year decrease of 21.28%. The growth rates of both income and net profit are ranked as national famous liquors > mid-range > next high-end. 2. In the first half of 2026, the net profit margin for the liquor industry was 39.13%, a year-on-year decline of 0.73 percentage points. The main reasons for the decline in the net profit margin in the first half of 2026 were the decrease in gross margin and the increase in the sales expense ratio. In Q2 2026, the net profit margin for the liquor industry was 34.7%, a year-on-year decline of 1.7 percentage points, with the margin variation ranking as next high-end > mid-range > national famous liquors. 3. At the end of Q2 2026, the liquor industry had pre-receivables of 59.673 billion yuan, a decrease of 11.297 billion yuan compared to the end of Q1 2026, and an increase of 0.496 billion yuan year-on-year. 4. In Q2 2026, the net operating cash flow of the liquor industry was 11.29 billion yuan, a year-on-year decrease of 63.0%. Cash received from sales of goods and provision of services was 74.14 billion yuan, a year-on-year decrease of 28.2%, with the decline rate exceeding that of income. In the first half of 2026, the net operating cash flow of the liquor industry was 50.20 billion yuan, a year-on-year decrease of 43.6%, and cash received from sales of goods and provision of services was 196.06 billion yuan, a decrease of 22.6%, also with the decline rate exceeding that of income. Valuation Analysis: Valuation is below the historical midpoint, with a margin of safety. Due to the pressured demand environment in Q2 2026, the liquor industry accelerated its clearance, and the pressure from financial reports has begun to gradually release, with valuations remaining at historical lows. In 2026, the external demand environment continues to be significantly pressured, and companies have accumulated certain inventory over the past few years, causing financial reports to present an accelerated decline and channels to speed up destocking. The fundamentals are still under significant pressure, but they are accelerating clearance. The firm anticipates that after a year of adjustment in 2026, some leading brands are likely to fully release the pressures from financial reports and channels. If the external demand environment improves in 2027, performance and valuation are expected to experience a double blow. From a dividend yield perspective, leading brands generally have a dividend yield of over 4%, and the downward space for valuations has become very limited. If the fundamentals reverse in the future, valuation and performance are expected to experience a double blow. Risk Warning: Economic downturn affecting overall demand for liquor; food safety issues.