Key takeaway

In 2Q26, the expanded supply of Feitian Moutai on the i-Moutai platform underpinned the company's fundamental performance, with Moutai products remaining solid and the direct sales ratio rising to 60%. Multiple price hikes during the year have laid the foundation for full-year earnings. We believe 2Q likely marked the bottom for Moutai, with QoQ improvement in growth potentially visible in 3Q and 4Q. Recently, both Feitian and non-standard product wholesale prices have risen notably. We are bullish on Moutai's earnings elasticity next year and the possibility of better-than-expected wholesale prices during the Mid-Autumn Festival. Combined with China Securities Finance Corporation and Central Huijin fully exiting Moutai in 2Q, we firmly favor Moutai's allocation value at the cyclical trough of the baijiu industry's ten-year cycle in 2026.

Event

The company released 1H26 earnings results The company announced that in 1H26, it achieved total revenue of RMB 92.278bn, up 1.30% YoY; operating revenue of RMB 90.703bn, up 1.47% YoY; and net profit attributable to the parent company of RMB44.517bn, down 1.95% YoY. In 2Q26, it achieved total revenue of RMB37.575bn, down 5.23% YoY; operating revenue of RMB36.794bn, down 5.14% YoY; and net profit attributable to the parent company of RMB17.274bn, down 6.90% YoY. 2Q26 revenue came in slightly below expectations.

Risks: Household demand recovery may fall short of expectations. In the past 2 years, economic growth has slowed due to macroeconomic factors, and household income growth has also been affected. The pace of shortto medium-term household income growth and consumer spending power recovery may not meet expectations. Slower-than-expected economic recovery: If the company's cash flow recovery is slower than expected, the resurgence in demand for the company's products in business catering scenarios may be slower than expected. Food safety: In recent years, food safety has always been the focus of consumers. Although the company in the food industry has continuously improved production quality control levels, since it involves many links and enterprises, there are still food quality and safety risks. Abnormal stock price fluctuations. Changes in the capital market sentiment or expectation towards the company may lead to abnormal stock price fluctuations.