Up 2.76% on Monday! Up 3.37% on Wednesday! Up another 3.6% on Friday! With three positive sessions and two negative ones this week, the Baijiu Index has climbed 5.8%, marking its largest single-week gain in nine months. The sharp rebound from a low of 44,340.28 points on Monday raises the question: is an investment reversal for the baijiu sector on the horizon? This week's analysis will examine the market trend, current valuations, and broker perspectives to assess the sustainability of the baijiu industry's strength.
Four Baijiu Stocks Gain Over 10% in a Week As volatility increased in the high-flying semiconductor industry chain this week, the major consumer sector, led by baijiu, staged a strong rebound. As of the close on May 29, the Wind Baijiu Index rose 5.8% for the week, closing at 47,424.53 points. This is the first time since August 25, 2025, that the index has posted a weekly gain exceeding 5%.
Looking at individual stock performance, Sichuan Swellfun Co., Ltd. (水井坊), Jiugui Liquor Co., Ltd. (酒鬼酒), Jiangsu King’s Luck Brewery Joint-Stock Co., Ltd. (今世缘), and Anhui Golden Seed Winery Co., Ltd. (金徽酒) all gained over 10% this week. Among them, Sichuan Swellfun Co., Ltd. led with a weekly surge of 17.92%. Shede Spirits Co., Ltd. (舍得酒业), Xinjiang Yilite Industry Co., Ltd. (伊力特), and Anhui Kouzi Distillery Co., Ltd. (口子窖) also performed well, each gaining more than 5%.
Notably, the significant rebound in baijiu stocks this week is widely attributed by the market to its linkage with the strong rally in real estate. However, Orient Securities believes the baijiu sector is accelerating its decoupling from real estate dependence, and the pace of earnings downgrades is slowing. The broker points out that the traditional cycle of "credit expansion → rising household income → increased willingness to consume" under the real estate chain model is being disrupted. Baijiu's price elasticity is weakening while its fast-moving consumer goods (FMCG) attributes are strengthening. Considering the external environment, Orient Securities expects the trend of strong performance at the high and low ends but weak performance in the mid-range of baijiu consumption to continue through 2026. Companies with a solid market share logic are expected to be the first to emerge from the adjustment.
On a quarterly basis, Orient Securities views Q1 2026 as the period of most severe earnings downgrades for the baijiu sector. It forecasts that industry revenue and profit will still be in a declining range in Q2 2026, but the rate of decline will narrow. Shanxi Xinghua Fen Wine Factory Co., Ltd. (山西汾酒) and Kweichow Moutai Co., Ltd. (贵州茅台) are seen as having relatively stronger earnings certainty.
Beyond the baijiu sector, other alcoholic beverage companies also saw substantial stock price increases. For instance, Shanghai Bairun Investment Holding Group Co., Ltd. (百润股份) rose 12.48% for the week, while shares of HuiQuan Beer Co., Ltd. (惠泉啤酒), Beijing Yanjing Brewery Co., Ltd. (燕京啤酒), and Guangzhou Zhujiang Brewery Co., Ltd. (珠江啤酒) gained over 5%.
Possibly a Short-Term Oversold Rebound With intraday gains exceeding 2% in three separate trading sessions this week, rather than a one-day rally, does this signal a true reversal for the baijiu industry? Market analysts note that the Wind Baijiu Index's weekly turnover reached 100.206 billion yuan this week, indicating moderate volume expansion. However, this turnover is significantly lower than the volume seen during the rebound before the 2026 Spring Festival. This suggests, on one hand, that selling pressure on baijiu stocks is currently decreasing. On the other hand, it indicates that buying forces are acting with restraint, reflected in the fact that not all stocks surged to their daily limit and speculative behavior is limited. Both factors are conducive to the continuation of the short-term rebound in the baijiu sector.
Nevertheless, from a fundamental perspective, a profit inflection point has not yet appeared in the baijiu industry. Q2 of this year might even see another low point in profitability. It is still premature to talk about a reversal, especially as valuations for many individual stocks are not as low as one might think.
As of the close on May 29, the Wind Baijiu Index's trailing price-to-earnings ratio (PE-TTM) stood at 20.5x. While this is significantly below its historical median and at a historically low level, it remains above the sub-19.5x PE-TTM seen over the past year.
Looking at specific stocks, the PE-TTM levels for Shanxi Xinghua Fen Wine Factory Co., Ltd. (山西汾酒), Luzhou Laojiao Co., Ltd. (泸州老窖), Anhui Yingjia Distillery Co., Ltd. (迎驾贡酒), Jiangsu King’s Luck Brewery Joint-Stock Co., Ltd. (今世缘), and Anhui Gujing Distillery Co., Ltd. (古井贡酒) are all relatively low, at less than 20x. Among these, Luzhou Laojiao Co., Ltd.'s PE-TTM is particularly low at 13.47x. The leading sauce-aroma baijiu producer, Kweichow Moutai Co., Ltd. (贵州茅台), maintains a stable PE-TTM around 20x. In contrast, Anhui Golden Seed Winery Co., Ltd. (金徽酒), Anhui Kouzi Distillery Co., Ltd. (口子窖), Sichuan Swellfun Co., Ltd. (水井坊), and over ten other stocks have PE-TTM ratios exceeding 30x, indicating valuations that are not cheap.
Market analysts point out that the core reason for the current valuation divergence within the baijiu sector lies in differences in earnings performance. Valuations for companies with resilient earnings are supported, while those for companies under earnings pressure or with insufficient balance sheet clearance lack fundamental profit support. If future earnings fail to materialize, highly valued baijiu companies will still face pressure from valuation corrections.
Commenting on this valuation divergence, Soochow Securities analysis indicates that the baijiu industry as a whole entered a deep adjustment phase in Q2 2025 and is expected to continue its clearing and bottoming-out trend through the first half of 2026. Currently in a critical clearing period, a new inventory cycle (characterized by price stabilization and improved restocking willingness) is anticipated to emerge in Q3 2026. Therefore, it is judged that the baijiu industry's year-on-year revenue growth in 2026 will be low in the first half and higher in the second half. Positive sector expectations are likely to form around mid-year. Investors may prioritize relatively blue-chip companies with "high credibility in clearing, leading management and operational capabilities, and future growth potential."
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