Investment Rating - The report maintains an "Increase" rating for the food and beverage industry [1] Core Insights - The food and beverage sector continues to see a decline in holdings, with a shift towards mass-market products. The proportion of active equity funds in the food and beverage sector decreased to 4.04% in Q4 2025, down from 4.18% in Q3 2025, reflecting a 0.14 percentage point decline [9][15] - The report highlights a continued reduction in allocations to alcoholic beverages, while holdings in mass-market products have shown signs of recovery. The proportion of holdings in white liquor decreased by 0.29 percentage points to 2.92% in Q4 2025 [14][17] - Major consumer funds have reduced their allocations to alcoholic beverages, with a notable decrease of 2.22 percentage points in white liquor holdings, while overall food and beverage allocations have increased [17][21] Summary by Sections 1. Food and Beverage Holdings Continue to Decline, Structure Shifts Towards Mass-Market Products - As of Q4 2025, the total scale of active equity fund heavy holdings is approximately 19.4 trillion yuan, with food and beverage holdings at 78.4 billion yuan, reflecting a 9.01% decline [9][10] - The decline in alcoholic beverage holdings is evident, with white liquor allocations decreasing to 2.92% and beer and pre-mixed drinks also seeing slight reductions [14][15] 2. Holdings Become More Diversified, Capturing Marginal Recovery Themes - The number of heavy holdings in the food and beverage sector has become more diversified, with only Kweichow Moutai remaining in the top 20 heavy holdings [24] - The report notes that the top five stocks with the largest increase in heavy holdings include Baba Foods, Yingjia Gongjiu, Youran Dairy, Ximai Foods, and Modern Animal Husbandry [28][29] 3. Investment Recommendations - The report suggests five key directions for investment: focusing on functional health foods, improving supply chains and product/channel resonance in leading snack companies, expanding quality retail formats, investing in long-lifecycle beverage leaders, and tracking sectors with potential recovery such as dairy and large-scale dining [10][29]

Group 1: Report Industry Investment Rating - No information provided in the given content. Group 2: Core Viewpoints of the Report - In 2026, focus on provinces with large maturity scales of industrial bonds, such as Inner Mongolia, Heilongjiang, and Jilin, and avoid entities with industry downturns, weakened profitability, and financing channels, or those with non - bond debt risks [2]. - The broad private real estate developers still face challenges, and other industries have a low probability of concentrated risks, but entities with weak competitiveness, significant profit decline, cash - flow pressure, and concentrated debt maturities should be focused on [2]. - For convertible bonds, weak - quality entities with low - priced underlying stocks and high conversion premiums may face difficulties in exiting through conversion, and potential losses should be watched out for [2]. Group 3: Summary by Relevant Catalogs 1. Overall Bond Market Situation - As of January 6, 2026, the national credit bond balance was 36.18 trillion yuan, with urban investment bonds at 17.73 trillion yuan (49.00%) and industrial bonds at 18.45 trillion yuan (51.00%, down from 54.57% last year) [5]. - Beijing has the largest bond balance, followed by Jiangsu, Guangdong, Zhejiang, and Shandong. Inner Mongolia has the highest short - term bond maturity ratio at 81.09%, followed by Heilongjiang at 40.39% [5]. 2. Urban Investment Bonds - Since 2023, with a series of policies and measures, the debt pressure of urban investment platforms has been relieved, the issuance cost and credit spread of urban investment bonds have decreased, the financing cost is generally below 3%, and the debt term has been significantly extended [10]. 3. Industrial Bonds Provincial - level Analysis - Excluding urban investment bonds, Beijing has the largest industrial bond scale at over 7 trillion yuan, mainly central - enterprise bonds. Inner Mongolia has the highest short - term industrial bond maturity ratio at 82.64%, followed by Tibet, Heilongjiang, Tianjin, and Jilin [11]. - Inner Mongolia, Heilongjiang, and Jilin have a bond issuance coverage ratio of less than 1 for the next - year's maturity scale, indicating weak refinancing ability [14]. Industry - level Analysis - In 2025, default industries included 12 sectors such as automobile services and real estate development. The industrial holding and power industries have the largest bond balances, over 2 trillion yuan each [15]. - The paper - making, automobile services, medical devices, medical services, and publishing media industries have a short - term debt ratio of over 50%, with poor debt term structures [15]. - Industries with large short - term debt repayment pressures include rail transit, packaging, heating, furniture and home appliances, textiles, automobile services, and information technology [15]. 4. Real Estate Industry - In 2025, the default rate of real estate development entities remained high, with Vanke and Zhengxinglong defaulting. As of January 6, 2026, the real estate development enterprise bond balance was 11,528.76 billion yuan, mainly held by local and central state - owned enterprises [18]. - The short - term bond maturity pressure of public, Sino - foreign joint - venture, and private enterprises is over 40%. The broad private enterprises still face pressure, with an issuance amount of only 234.38 billion yuan in the past year, 76.93% of the next - year's maturity amount [20]. - In 2026, private real estate enterprises to focus on are Longfor and Yida Development [23]. 5. Loss - making Industrial Entities - Large - loss entities (losses over 10 billion yuan in 2024 and still in losses in the first three quarters of 2025) are mainly in the real estate development industry, including state - owned enterprises such as Overseas Chinese Town Group and financial street - related companies, as well as steel giant Ansteel Group [24]. - Entities with losses between 5 and 10 billion yuan involve industries such as electrical equipment, chemical, steel, and airport [26]. 6. ABS Market - From 2023 - 2025, the default rate of CSRC - regulated ABS was 1.10%, 0.77%, and 0.88% respectively. As of January 6, 2026, the ABS balance was 25,021.96 billion yuan, with a one - year maturity amount of 3,541.59 billion yuan (14.15%). The 2025 issuance amount covered the next - year's maturity amount 3.97 times, with good continuation [32]. 7. Convertible Bond Market - Since 2024, the convertible bond repayment risk has increased. As of January 6, 2026, the convertible bond balance was 5553.51 billion yuan, a 22.89% year - on - year decrease. The broad private enterprises accounted for 64.73%, with a relatively large proportion [33]. - Entities such as Anhui Honglu Steel Structure, Shenzhen Huayang International Engineering Design, and Shanghai Kehua Bio - Engineering face large convertible bond repayment pressures, but the conversion mechanism can reduce credit risks to some extent [35]. - Entities such as Dongfang Fashion Driving School, Hainan Pulili Pharmaceutical, and Jiangsu Fumiao Technology, although not facing immediate repayment pressures, have negative information such as business fluctuations, financial fraud, and equity freezes, and their dynamic changes should be continuously monitored [36].

Investment Rating - The report maintains a "Positive" outlook on the food and beverage industry, particularly in the dairy sector, anticipating a recovery in raw milk prices by 2026 [2]. Core Insights - The current adjustment cycle in milk prices is nearing its end, with the previous cycle lasting approximately seven years, driven by over-expansion of dairy enterprises and weakened demand post-pandemic [4]. - Domestic dairy cow inventory is projected to decline to 6.3 million heads in 2024, marking a 4.55% year-on-year decrease, while raw milk production is expected to be 40.79 million tons, down 2.8% year-on-year [5]. - The report suggests that despite a slight increase in milk production due to improved yield per cow, the overall supply of raw milk is stabilizing and may slightly contract in the coming years [6]. - Demand for dairy products remains weak, with per capita consumption expected to decline to 12.6 kg in 2024, but there is potential for long-term growth as current consumption levels are significantly below global averages [7]. - The report highlights that the dairy industry is experiencing a shift towards higher-end products, with growth in segments like milk powder and cheese, indicating a diversification in consumer preferences [7]. Summary by Sections 1. Raw Milk Price Cycles - The report outlines the cyclical nature of raw milk prices, typically spanning six years, with the current cycle characterized by prolonged adjustments due to supply-demand imbalances [4][20]. - Historical analysis shows three significant U-shaped cycles in raw milk prices since 2008, with the latest cycle beginning in 2021 and marked by a decline in prices due to oversupply [23][30]. 2. Supply-Side Analysis - The supply of raw milk is influenced by factors such as dairy cow inventory, production efficiency, and feed costs, with the latter accounting for over 60% of total costs [32]. - The report notes a significant reduction in dairy cow inventory due to economic pressures, with a shift towards larger, more efficient dairy farms contributing to increased milk yields [41][43]. - The decline in imported dairy products is attributed to price discrepancies, with domestic raw milk becoming more competitive as international prices rise [55]. 3. Demand-Side Analysis - Demand for dairy products has been inconsistent, with per capita consumption fluctuating due to economic conditions and consumer behavior changes [63]. - The report emphasizes the potential for growth in dairy consumption, particularly in rural areas, as current levels remain low compared to global standards [7][63]. - The diversification of dairy products and the rise of high-end segments are seen as positive indicators for future demand growth [7]. 4. Future Price Trends - The report anticipates a recovery in raw milk prices by 2026, driven by declining cow inventories and a potential stabilization of supply [8]. - Short-term demand may see slight improvements, but long-term growth is expected to be modest, primarily driven by deep processing and import substitution [8].

Investment Rating - The report maintains an "Outperform the Market" rating for the food and beverage sector [4][5][11]. Core Views - The food and beverage sector is expected to perform well in 2026, driven by cost advantages, efficiency improvements, innovation, and potential recovery opportunities in the liquor segment [3][11][15]. - The report highlights a diversified performance across sub-sectors, with beverages outperforming food and liquor categories [2][11]. Summary by Relevant Sections 1. Sector Overview - The food and beverage sector saw a cumulative decline of 1.37% this week, with A-shares down 1.57% and H-shares up 1.21% [1]. - Key performers included companies like Hao Xiang Ni and Wei Zhi Xiang, with significant weekly gains [1]. 2. Sub-sector Insights - **Liquor**: - Moutai's price remains stable with an upward trend, and the focus is on sales momentum during the Spring Festival. Recommendations include Moutai, Shanxi Fenjiu, and Luzhou Laojiao [2][11]. - **Beverages**: - The dairy segment is seeing orderly preparations for the Spring Festival, with a focus on leading companies like Yili. Recommendations include Nongfu Spring and Dongpeng Beverage [2][15]. - **Snacks**: - The report emphasizes strong alpha stocks in the snack sector, particularly in konjac products, with companies like Weidong and Yanjinpuzi showing strong innovation [2][13]. - **Catering Supply Chain**: - The sector is entering a peak season for inventory and sales, with new standards for prepared dishes being solicited for public opinion [2][14]. 3. Investment Recommendations - The report suggests a focus on four main lines for investment: cost advantages, efficiency improvements, innovation-driven companies, and potential recovery in the liquor sector [3][11]. - Recommended stocks include Baba Foods, Dongpeng Beverage, Weidong, and Shanxi Fenjiu, which have shown resilience and growth potential [17][19]. 4. Earnings Forecasts - Key companies are projected to maintain strong earnings growth, with Moutai expected to achieve a stable performance and Yili showing significant recovery potential [4][15][19]. - The report provides detailed earnings forecasts for several companies, indicating a positive outlook for the food and beverage sector [4][19].

Summary of Key Points from the Conference Call Industry Overview - **Sector**: China Consumer Sector - **Key Insights**: The sector shows signs of consumption recovery despite a near-term property market downturn. Valuation remains attractive, approximately 1 standard deviation below 10-year averages, indicating that a consumption recovery is not yet priced in [2][21]. Consumer Staples - **Baijiu**: Anticipated demand support for mid-end baijiu due to easing alcohol bans and private consumption growth. Companies are expected to accelerate channel transformations for sustainable EPS growth [3][8]. - **Beer**: Premiumization continues through product diversification and in-home channel expansion, despite on-trade softness. CR Beer expects low-single-digit volume growth in 2025, with Heineken volumes projected to grow by 20% YoY [3][8]. - **Dairy**: Liquid milk sales are expected to recover modestly in 2026, driven by marketing and innovation, despite a weak 2025. Fresh milk shows resilience with double-digit growth [3][8]. - **Freshly-Made Beverages (FMB)**: Guming is expected to maintain steady SSSG in 2026 through category expansion and dine-in growth, despite the phase-out of delivery subsidies [3][8][19]. - **Condiments**: Sequentially improving demand is expected, with Haitian focusing on multi-product categories and Jonjee anticipating a cleaner 2026 after a weak 4Q25 [3][8]. Consumer Discretionary - **Home Appliances**: Companies like Midea and Haier expect higher overseas growth compared to domestic markets in 2026. Strategies include price hikes and operational efficiencies [4][10]. - **Jewelry**: Brands with unique designs may consolidate post-VAT reform. Laopu is expected to achieve strong sales growth due to increased focus on value-added services [4][10]. - **Restaurants**: Intense competition leads to divergent strategies, with some companies lowering prices while others upgrade offerings. DPC Dash is on track for expansion despite market uncertainties [4][10]. Stock Implications - **Most Preferred Stocks**: CR Beer, Guming, MIXUE, China Foods, YUM China, among others, are highlighted as preferred investments due to their growth potential [5]. - **Least Preferred Stocks**: Companies like Swellfun, Nongfu, and Gree are noted as less favorable due to various challenges [5]. Key Risks - Risks include demand recovery uncertainties, cost inflation or deflation, and changes in the competitive landscape. These factors could significantly impact the consumer sector's performance [21]. Additional Insights - **Pet Food**: The industry is shifting towards online sales, with over 85% of sales occurring digitally. Competition is intensifying, pushing brands towards innovation and product differentiation [13]. - **Snack Sector**: Rapid category diversification and channel restructuring are creating growth opportunities, particularly through snack discounters [9][12]. This summary encapsulates the essential insights and projections from the conference call, providing a comprehensive overview of the current state and future outlook of the China consumer sector.

Investment Rating - The report maintains a positive outlook on the liquor sector, particularly on premium brands like Guizhou Moutai, Luzhou Laojiao, and Shanxi Fenjiu, while also highlighting the potential of other brands such as Wuliangye and Jinjing Wine [2][7]. Core Insights - The liquor market is undergoing a restructuring phase, with expectations of a double-digit decline in sales year-on-year for Q1 2026, but a potential stabilization in Q2 and a turning point in Q3 [2][7]. - The report anticipates a recovery in the liquor sector by the end of 2026 and into 2027, driven by improved fundamentals and valuation [2][7]. - The consumer goods sector is showing structural improvements, with competition shifting from price to quality, leading to a gradual balance in supply and demand [2][9]. Summary by Sections 1. Weekly Insights on Food and Beverage - The food and beverage sector saw a decline of 1.41% last week, with liquor down 2.80%, underperforming the Shanghai Composite Index by 2.25 percentage points [6]. - Notable stock performances included a 19.59% increase for Haoxiangni and a 14.32% rise for Wancheng Group [6]. 2. Market Performance of Food and Beverage Sectors - The report highlights the price stability of Moutai, with a current price of 1560 RMB per bottle, up 20 RMB from the previous week, indicating a positive trend in pricing [8][27]. - The report notes that Moutai's pricing has found a bottom, reducing downward risks significantly, and anticipates a potential increase in sales volume as the Spring Festival approaches [8]. 3. Industry Events and Updates - The report mentions the upcoming IPO of Mingming Hen Mang, a leading snack retail chain, which is expected to catalyze the snack sector [10]. - The report emphasizes the importance of supply chain management and digitalization in enhancing competitive advantages for companies like Mingming Hen Mang [10]. 4. Valuation Table - The food and beverage sector's dynamic PE is currently at 19.27x, with a premium rate of 10%, while the liquor sector's dynamic PE stands at 17.50x, indicating a zero premium [27].

Investment Rating - The report maintains an "Accumulate" rating for the food and beverage industry [5] Core Insights - The upcoming Spring Festival is expected to boost sales in the liquor sector, with Moutai leading the industry towards an unexpected improvement. Short-term focus should be on the demand for the Spring Festival, while medium-term investments should target leading brands across various price segments [1] - In the beer segment, new product launches are being prepared, with a focus on high-growth channels and consumer trends towards personalized and diversified consumption [2] - The baking sector is showing stable performance, with companies like Lihigh Foods preparing for the sales peak and benefiting from favorable policies regarding cream products [3] Summary by Relevant Sections Liquor Sector - The Spring Festival is driving demand, with Moutai expected to lead the market. Key short-term stocks include Guizhou Moutai, Guo Jiu Gong Jiu, and others, while medium-term focus should be on Wuliangye and Shanxi Fenjiu [1] Beer Sector - Current beer sales are in a low season, but new product launches and high growth in instant retail channels are promising. Companies like Chongqing Beer are launching new 1L cans to meet consumer preferences [2] Food Sector - Lihigh Foods is preparing for the sales peak with a focus on quality over quantity, while Anqi Yeast is benefiting from declining sugarcane prices, enhancing profit margins [3] - Yizhi Konjac is experiencing rapid demand growth, with a stable supply chain and product innovation driving its market position [4]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The food and beverage sector is currently at a low position in terms of fundamentals and valuations, presenting significant investment opportunities as the peak season approaches [4][12] - The food and beverage index experienced a decline of 1.4% from January 19 to January 23, ranking 25th among 28 sectors, underperforming the CSI 300 by approximately 0.8 percentage points [12][13] - The Consumer Price Index (CPI) rose by 0.8% year-on-year in December 2025, indicating a mild recovery trend, and has returned to relatively high levels compared to recent years [4][12] - The upcoming Spring Festival is expected to catalyze performance in the sector, with strong demand for consumer goods, particularly in the snack segment, which continues to show upward momentum [4][12] Summary by Sections Weekly Insights - The food and beverage sector is positioned for a recovery as it approaches the peak season, with a notable increase in demand expected during the Spring Festival [4][12] - The sector's current valuation aligns with policy support aimed at boosting consumption, providing a safety margin for investments [4][12] Market Performance - The food and beverage index's performance was weaker than the broader market, with specific sub-sectors like snacks (+6.1%), processed foods (+4.9%), and baked goods (+4.3%) showing relative strength [12][13] Upstream Data - Recent data indicates a decline in some upstream raw material prices, with whole milk powder prices down 13.5% year-on-year as of January 20, 2026 [19][21] - The price of fresh milk was reported at 3.03 CNY per kilogram, reflecting a year-on-year decrease of 2.6% [19][21] Alcohol Industry Data - In December 2025, the production of liquor (65-degree equivalent) decreased by 12.1% year-on-year, with a total production of 354.9 million liters for the year [42][43] Recommended Investment Targets - Key investment opportunities identified include raw milk/dairy products, the snack sector, and the restaurant supply chain, with specific companies highlighted for their growth potential [4][5][12]

Market Overview - The beverage and dairy sector experienced a decline of 0.18% on January 23, with Miaokelan leading the drop [1] - The Shanghai Composite Index closed at 4136.16, up 0.33%, while the Shenzhen Component Index closed at 14439.66, up 0.79% [1] Stock Performance - Notable gainers in the beverage and dairy sector included: - Quanyangquan (code: 681009) with a closing price of 8.37, up 2.45% and a trading volume of 419,500 shares, totaling 351 million yuan [1] - Huanlejia (code: 300997) closed at 24.80, up 2.31% with a trading volume of 98,400 shares, totaling 242 million yuan [1] - Qiaoyuan Beverage (code: 603156) closed at 33.86, up 1.93% with a trading volume of 108,900 shares, totaling 364 million yuan [1] - Conversely, the following stocks saw declines: - Miaokelan (code: 600882) closed at 23.75, down 3.34% with a trading volume of 153,200 shares, totaling 368 million yuan [2] - Weiweijia (code: 600300) closed at 3.71, down 2.11% with a trading volume of 665,200 shares, totaling 248 million yuan [2] - New Dairy (code: 002946) closed at 19.19, down 1.34% with a trading volume of 45,200 shares, totaling 86.94 million yuan [2] Capital Flow - The beverage and dairy sector saw a net outflow of 141 million yuan from institutional investors, while retail investors contributed a net inflow of 229 million yuan [2] - Detailed capital flow for selected stocks includes: - Yili Group (code: 600887) with a net inflow of 1.10 billion yuan from institutional investors, but a net outflow of 162.69 million yuan from retail investors [3] - Huangshi Group (code: 002329) had a net inflow of 13.98 million yuan from institutional investors, with a net outflow of 5.66 million yuan from retail investors [3] - Liziyuan (code: 605337) saw a net inflow of 8.75 million yuan from institutional investors, with a net outflow of 1.70 million yuan from retail investors [3]

Core Viewpoint - The AI Fund Nuon New Power Flexible Allocation Mixed A (320018) reported a profit of 4.9971 million yuan for Q4 2025, with a weighted average profit per fund share of 0.2548 yuan. The fund's net value growth rate for the reporting period was 7.26%, and the fund size reached 65.8123 million yuan by the end of Q4 2025 [3][14]. Fund Performance - As of January 22, the unit net value of the fund was 3.565 yuan. The fund manager, Li Xiaojie, has managed four funds over the past year, all of which have yielded positive returns. The highest growth rate among these funds was 48.16% for Nuon Low Carbon Economy Stock A, while the lowest was 5.05% for Nuon Huili Mixed A [3]. - The fund's net value growth rates over various periods are as follows: 2.18% over the last three months (ranking 1015/1286), 2.83% over the last six months (ranking 1146/1286), 16.89% over the last year (ranking 980/1286), and -15.38% over the last three years (ranking 1190/1286) [3]. Investment Strategy - The fund's Q4 holdings were primarily in dividend-related assets such as banks, oil and petrochemicals, and non-bank financials. The fund reduced its allocation in the banking sector while increasing its positions in non-bank financials and oil and petrochemicals [3]. Risk Metrics - The fund's Sharpe ratio over the last three years was -0.0472, ranking 1192/1275 among comparable funds [8]. - The maximum drawdown over the last three years was 30.05%, with the largest single-quarter drawdown occurring in Q1 2022 at 17.43% [10]. Portfolio Composition - As of December 31, the fund's average stock position over the last three years was 74.15%, compared to the industry average of 72.57%. The fund reached a peak stock position of 79.28% at the end of 2021 and a low of 51.69% by the end of Q3 2022 [13]. - The top ten holdings of the fund as of Q4 2025 included China Ping An, China Pacific Insurance, China Petroleum, Oppein Home, China Shenhua, New China Life Insurance, Sinopec, Shaanxi Coal and Chemical Industry, Yili Group, and Jiangsu Bank [17].