Guotai Haitong: Baijiu clearing has bottomed out, ushering in a sector value re-rating

Guotai Haitong released a research report stating that baijiu clearing has bottomed out, ushering in a sector value re-rating. In the past two years, liquor companies have focused on easing channel pressure, generally abandoning mandatory collections and inventory stuffing, shifting assessment to bottle openings and sell-through, redirecting expenses from channel rebates to C-end scan codes, alleviating the phenomenon of downstream distributors leveraging up to stockpile, with channel inventory and capital leverage deleveraging in tandem. The bank believes that as actual transaction prices of core single products stabilize, product flow velocity and sell-through continue to improve, and distributor restocking pace stabilizes, this is expected to drive a recovery in liquor companies' collection and shipment pace. Recommendations: 1) The largest adjustment phase for baijiu has passed, with regional liquor bottoming first and high-end baijiu bottoming successively; 2) Gradually allocate to targets undergoing deep adjustment and about to clear. Guotai Haitong's main views are as follows: Financial reporting side: Clearing is relatively sufficient, with high-end and regional leaders first verifying the bottom. Baijiu pessimistic expectations are reflected, with financial reports having cleared for 7 consecutive quarters, and the 26Q3 trend continuing, with industry revenue and profit down 10% and 13% YoY respectively, with the decline narrowing sequentially. Currently, financial report adjustments are relatively sufficient, the industry's largest decline phase has passed, and a structural bottom is in place. Among them, Moutai's 26Q3 revenue and profit grew 3% and 4% YoY respectively, and some liquor companies that cleared earlier, had lighter burdens, and better sell-through continued YoY financial report growth in 26Q3, such as Anhui Yingjiagongjiu and Jiangsu King's Luck Brewery Joint-Stock, with profit better than revenue. The bank believes that the financial report pressure brought by earlier shipment control and channel adjustments has been relatively fully released, and the industry has entered a stage where high-end and regional leaders stabilize first, with other liquor companies diverging in recovery. Baijiu financial report pressure is expected to usher in an inflection point after gradually being unloaded, and considering expectations lead, the market is expected to start trading the inflection point in advance. Channel side: Sell-through at some high-end and regional liquor leaders has begun to stabilize, entering a substantive destocking phase. In the past two years, liquor companies have focused on easing channel pressure, generally abandoning mandatory collections and inventory stuffing, shifting assessment to bottle openings and sell-through, redirecting expenses from channel rebates to C-end scan codes, alleviating the phenomenon of downstream distributors leveraging up to stockpile, with channel inventory and capital leverage deleveraging in tandem. The bank believes that as actual transaction prices of core single products stabilize, product flow velocity and sell-through continue to improve, and distributor restocking pace stabilizes, this is expected to drive a recovery in liquor companies' collection and shipment pace. After deep adjustments in 2025-2026, positive channel signals continue to accumulate: Inventory clearing has "moved from reducing quantity to adjusting structure," with turnover of major single products at leading liquor companies accelerating, while small and medium brands and development products continue to clear; After the dual-holiday peak season, wholesale prices of mainstream single products have not fallen significantly, and channel selling pressure has been effectively alleviated; The 27-year Spring Festival base is low; if the sell-through decline continues to narrow and wholesale prices stabilize and rebound, financial reports are expected to stabilize and match sell-through. The bank believes the industry's bottoming is nearing completion, and companies that cleared earlier and have healthy sell-through and channels will have the opportunity to perform first. Stock price adjustment is sufficient, with valuation and institutional holdings both at historically low levels. The food and beverage sector has declined for 6 consecutive years since 2021. As of November 5, 2026, the baijiu sector's PE TTM is 23.1X, with sector valuation at the 36.2% percentile since 2005. From the perspective of fund heavy holdings, the food and beverage industry's 26Q3 fund holding ratio is 2.2%, which, although up sequentially from Q2, remains at a historical low, leaving substantial room for valuation repair. The baijiu sector's 26Q3 institutional holding is 1.4%, with heavy holding ratios in Kweichow Moutai, Shanxi Xinghuacun Fen Wine Factory, Anhui Gujing Distillery, and Jiangsu King's Luck Brewery Joint-Stock rebounding sequentially. The bank believes current valuation and positioning have relatively fully reflected market pessimistic expectations; once the price floor of core major single products stabilizes and profit expectations stop being revised down, market sentiment will heat up rapidly, and subsequent prosperity, policies, etc. are all expected to become catalysts, with allocation replenishment expected to drive valuation repair. Risk warnings: Consumer policy tightening again, sharp decline in wholesale prices, peak season demand falling short of expectations, food safety risks.