Investment Reminder: We have upgraded Changyu's B-share rating from “prudent recommendation” to “recommendation”. Considering that the stock has lagged behind in recent sector gains, we are more optimistic about the prospects for wine consumption in China, and from a fundamental point of view, Changyu's long-term growth prospects are strong. Reason: Changyu's leading position in the market, pioneering advantage in a flat sales network, and the strongest sales team in the industry have brought it optimal profit margins, high operating efficiency, and low market risk. At the same time, Changyu is leading the upward trend in wine consumption in the Chinese market, reflecting that the average sales price of products has increased by more than 11% each year over the past five years, and the CAGR of sales revenue and profit have reached 28% and 37%, respectively. Changyu has a wide range of products and many wine products, which is conducive to diversifying market risks. Compared with neighboring countries such as Japan and South Korea, wine still accounts for a low share of total alcohol consumption in China, so wine consumption in China will continue to grow. In addition, the current average retail price of domestic wine is still less than 40 yuan/bottle, so Changyu's long-term growth prospects are worth looking forward to. Changyu's victory in the “Jiebaina” trademark lawsuit is another benefit. In the long run, the strategic move to the western region to obtain the supply of raw materials and open up new markets will also be successful. Valuation and investment advice: Although Changyu is in a leading position in the Chinese wine market and has a significant pioneering advantage in strategy formulation and actual market execution, Changyu B's current price is only equivalent to 23.3 times the 2010 price-earnings ratio, which is lower than the average of its peers, and slightly higher than Dynasty Liquor and Chinese Food. Based on the DCF model, we arrived at a target price of HK$89.94, which more reasonably reflects the company's short-term and long-term growth prospects. Generous cash dividends and a dividend yield of over 2.4% further increased the attractiveness of the stock.