According to the Wisdom Financial APP, Haitong Securities released a research report stating that in 24Q3, under the weak demand environment, the industry's operations were under pressure, entering an adjustment period, downstream channels became more cautious in receivables, major liquor companies began to proactively adjust to relieve channel pressure, resulting in white liquor revenue/receivables/cash flow/profits declining on a month-on-month basis, with some also declining year-on-year, and receivables/cash flow weaker than apparent revenue. From 24Q1-3 to 24Q3, the gross margin of the beer sector (A-shares) increased by +1.67% / +0.72% year-on-year to 44.6% / 45.7%, and the improvement in the gross margin in Q3 narrowed, which may be related to pressure on prices. The current main raw material prices for beer are still in a downward channel, and the cost advantages are expected to continue in the short to medium term, providing continuous support for beer profit improvement.

The main points of Haitong Securities are as follows:

Baijiu: Actively slowing down to relieve pressure under weak demand, exacerbating differentiation and highlighting the Matthew effect.

From 24Q1-3, the total revenue/net profit attributable to shareholders of listed liquor companies in the white liquor sector increased by +9.3% / +10.7% to 340.063 / 131.697 billion yuan respectively, with single-season 24Q3 increasing by +0.7% / +2.1% to 96.452 / 36.015 billion yuan, with the year-on-year growth rate further narrowing compared to Q2, possibly due to weak environmental demand and some liquor companies proactively adjusting to relieve pressure.

On the revenue side, the sector's revenue in Q3 slightly increased year-on-year, with high-end baijiu showing stronger resilience (+9.6%), while nationally secondary high-end (-0.4%) and regional baijiu (-17.9%) declined year-on-year, with intensified internal differentiation.

On the receivables side, the sector's contract liabilities decreased by -1.4%/-6.5% month-on-month/year-on-year in Q3, with the year-on-year growth rate lower than revenue, mainly due to cautious receivables under channel pressure, disruptions in dealer receivable pace and credit cycles, and active control by some liquor companies. After adjusting for contract liabilities, high-end/nationally secondary high-end/regional baijiu revenues increased by +7.8% / +5.1% / -15.7% year-on-year.

On the cash collection side, the sector as a whole is under pressure &; internal differentiation trends are consistent with the income side. In Q3, the median year-on-year growth rates of industry sales, cash collection, and operational cash flow net amounts are -1.5%/-20.5%, with high-end/national near high-end/regional baijiu cash collection year-on-year changes of +3.8%/+12.4%/-11.7% respectively.

On the profit side, the gross margin in Q3 continues its upward trend while expenses stabilize, with the sector's profitability steadily increasing. In Q3, the sector's gross margin year-on-year increased by +1.13 percentage points, with high-end/near high-end/regional liquor year-on-year changes of +0.84%/-1.65%/-3.61%, leading to a shift in some liquor companies' product structures. In terms of expense, the sales/management expense ratios of the sector in Q3 year-on-year increased by +0.04%/+0.02%, seeing some brands responding to weak demand by increasing marketing and market expenses during the peak season. A slight increase in gross sales differential has helped boost the sector's net margin, with industry net margin in 24Q1-3/24Q3 year-on-year increasing by +0.49%/+0.48% to 38.7%/37.7%.

In terms of investor returns, Wuliangye has introduced a 3-year dividend plan, while Shede Spirits plans to repurchase no more than 0.2 billion yuan of company shares for employee incentives. Since the beginning of the year, major liquor companies have successively introduced sincere dividend and repurchase plans, which are expected to stabilize and enhance shareholder return expectations and increase the sector's investment value.

Overall, in a weak demand environment, the industry's operations are under pressure and entering an adjustment period. Downstream channels are becoming more cautious in payments, prompting major liquor companies to proactively adjust to relieve channel pressure. This has led to a month-on-month slowdown in baijiu revenue/payments/cash flow/profits, some year-on-year declines, with payments/cash flow weaker than apparent revenue. Further brand differentiation intensifies, with some liquor companies' financial reports falling short of expectations under the triple impact of environment, competition, and inventory clearance. Structurally, high-end baijiu growth is steady, with Moutai continuing to lead. National near high-end demand is under pressure, continuously differentiating, Xinghuacun Fen wine continues its growth momentum, and regional famous liquors show highlights, with Anhui Gujing Distillery and Jiangsu King's Luck Brewery Joint-Stock maintaining rapid revenue growth, and Hebei Hengshui Laobaigan Liquor performing well.

Beer: Weak demand in Q3 puts pressure on the peak season's volume and price, while cost benefits continue to support profits.

24Q1-3 listed beer sector (A shares) achieved a total operating income/parent net profit of 60.233/8.402 billion yuan, down by -1.9%/+7.6% year-on-year, with Q3 single quarter achieving 19.964/2.599 billion yuan, down by -3.3%/-2.3% year-on-year. Overall, beer companies' third-quarter financial statements are generally under pressure, with both revenue and profit slowing down compared to the first half of the year, some year-on-year declines, mainly due to weak external consumer demand and extreme weather in some regions affecting beer sales and structure. Guangzhou Zhujiang Brewery/Beijing Yanjing Brewery have relatively good performance, with Q3 revenue slowing down month-on-month but still showing year-on-year growth, at +6.9%/+0.2% respectively, and profit continuing double-digit growth, with Q3 net profit attributable to parent company up by +10.6%/+19.8% year-on-year.

The extent of profit improvement has narrowed due to pressure on ton price, but cost benefits are expected to continue. In 24Q1-3/24Q3, the beer sector (A shares) gross margin year-on-year increased by +1.67%/+0.72% to 44.6%/45.7%, with the improvement in gross margin in Q3 narrowing, possibly due to pressure on ton price. On the cost side, current beer raw material prices are still in a downward trend, and cost benefits are expected to continue in the short to medium term, providing sustained support for beer's profit improvement. In terms of expenses, in Q3 single quarter, the A-share beer sector's sales/management/period expense ratios year-on-year increased by +0.72%/+0.36%/+0.82% to 14.3%/5.4%/19.2%. In a weak demand environment, strengthening expense investments may limit the extent of profit improvement to a certain extent. 24Q1-3/24Q3 beer sector (A shares) net profit margins year-on-year increased by +1.23%/+0.13% to 13.9%/13.0%.

Investment recommendations: Recommend high-end baijiu with robust demand growth: Kweichow Moutai (600519.SH), Wuliangye (000858.SZ), Luzhou Laojiao (000568.SZ), as well as regional market relatively superior to large single product growth momentum high-end baijiu: Shanxi Xinghuacun Fen Wine (600809.SH), Anhui Gujing Distillery (000596.SZ), Anhui Yingjia Distillery (603198.SH), Jiangsu King's Luck Brewery Joint-Stock (603369.SH); Focus on the beer sector benefiting from catering recovery, consumer scene restoration, and cost reduction: Beijing Yanjing Brewery (000729.SZ), Tsingtao Brewery (600600.SH), Chongqing Brewery (600132.SH), China Resources Beer (00291).

Risk Warning: Increased industry competition, slower-than-expected high-end process, rising raw material prices.