According to the news app Zhitong Finance and Economics, Orient Securities released a research report stating that during the Dragon Boat Festival period, most white wine enterprises' pricing and demand performance remained relatively stable. At the same time, many listed white liquor companies have recently concluded their shareholder meetings. With Yanghe as the representative, liquor companies are more focused on deepening their development in regional strongholds and high-end markets while paying more attention to increasing dividend rate to ensure shareholder returns. In terms of scenarios, the demand for banquet scenarios is expected to be high in the future, as the high school entrance examination ends in June, and banquet scenarios such as teacher appreciation dinners and graduation dinners increase in July and August, coupled with the low base number of banquet scenarios during the Mid-Autumn Festival and National Day last year. At the same time, recently, there have been many positive policies in the real estate industry, which may boost the commercial demand brought by downstream real estate. Recently, the white wine sector has been affected by market sentiment, and the stock prices have fallen relatively. The investment highlights of certain liquor companies with undervalued + high dividends are further highlighted.

Orient Securities' main points are as follows:

The macro data is updated.

Macroeconomic data related to consumption continues to show an upward trend. In April 2024, the total retail sales of consumer goods, catering revenue, cigarette and alcohol retail sales, and beverage retail sales increased by 2.3%, 4.4%, 8.4%, and 6.4% year on year, respectively, and the growth rate narrowed month on month. According to the latest financial data released in April, M2 in China increased by 7.2% year-on-year, and the scale of social financing decreased by 0.07 trillion yuan month-on-month, a year-on-year decrease of 1.3 trillion yuan, while the stock of social financing maintained a growth rate of 8%.

White wine pricing data.

As of June 7th, according to Wind and today's liquor price data, the wholesale price for Feitian Maotai in original box and in individual bottles reached about 2,720 yuan and 2,470 yuan respectively; the wholesale price for Puwu and Guojiu 1573 were about 970 yuan and 880 yuan respectively. The wholesale price for Feitian Maotai in individual bottles decreased month-on-month, while that of Puwu remained stable, and that of Guojiu increased month-on-month. The main high-end product prices remained stable. As of June 7th, the wholesale prices of Mengzhilan M6+, Qinghua 30, Crystal Sword, Taste Hudson, Sichuan Swellfun and Jiugui Red Altar reached about 570, 860, 410, 360, 455 and 420 yuan/500ml respectively.

Beer quantity and price data.

In April 2024, China's beer production that month fell by 9.1% year-on-year, with a cumulative growth of 2.1% from January to April, mainly due to the high base number of the same period last year. The average import price of barley continued to decline marginally, with an average import unit price of 273 US dollars/ton in April 2024, a year-on-year decrease of 27%. The import price of barley is showing a downward trend, mainly benefiting from China's suspension of the "double reverse" policy on Australian barley. The price of corrugated paper in China continues to decline, with an average ex-factory price of about 2,658 yuan/ton as of the week of May 24th, a year-on-year decrease of 21%. As of the week of June 1st, the settlement price of glass futures reached 1,545 yuan/ton, a year-on-year decrease of 10%. The price of aluminum in the nonferrous metals market of the Yangtze River continues to rise, and as of June 1st, the average price of aluminum in the nonferrous metals market of the Yangtze River is about 21,208 yuan/ton, a year-on-year increase of 15%.

Dairy product price data.

The price of fresh milk in China's main production areas continued its downward trend, while the prices of powdered milk and cheese increased relatively stably. As of May 30th, the average price of fresh milk in major producing areas in China was about 3.34 yuan/kg, a year-on-year decrease of 13.2%. According to GDT data, as of ****, the average winning bids for whole milk powder and skimmed milk powder were 3,478 and 2,722 US dollars/ton, respectively, an increase of 1.7% and 3.0% respectively compared with half a month ago; as of ****, the average winning bid for cheese was 4,248 US dollars/ton, a 0.2% increase compared with half a month ago. According to data from the Ministry of Commerce, as of May 31st, the retail prices of milk and yogurt were 12.21 yuan/liter and 15.98 yuan/liter, respectively, a 0.16% and 0.12% decrease compared with a week ago. Overall, the terminal prices of milk and yogurt changed only slightly, while the cost-side price of raw milk decreased, and the profitability of dairy product companies improved.

Investment recommendations and targets.

Recommended sectors and individual stocks: the market's focus on cyclical sectors has increased. It is recommended to focus on opportunities for the recovery of white wine and beer sectors. For the white wine sector, it is recommended to focus on Wuliangye (000858.SZ) with benign sales and upward pricing trends, Luzhou Laojiao (000568.SZ) with a strong brand, Shanxi Xinghuacun Fen Wine Factory (600809.SH) with good sales and stable pricing, and excellent regional liquor companies that perform strongly in their home provinces and have potential for nationwide expansion, such as Anhui Gujing Distillery (000596.SZ), Jiangsu King's Luck Brewery Joint-Stock (603369.SH), and Hebei Hengshui Lao Baigan Liquor (600559.SH). The beer sector benefits from the decline in imported barley prices, which eases the pressure on costs. It is recommended to focus on Tsingtao Brewery (600600.SH), which has achieved relatively smooth structural enhancement.

Risk warning: slower than expected recovery in consumer demand, regional economic growth slowdown, and food safety incidents risk.