On January 16th, the food and beverage sector continued its correction, with the Huabao Food and Beverage ETF (515710), which reflects the overall trend of the sector, weakening persistently after the market opened. As of this writing, its on-market price had fallen by 0.85%.
In terms of constituent stocks, baijiu led the declines, while some consumer staples like condiments also performed poorly. As of this writing, Lianhua Holdings and Qianhe Condiments & Food both fell over 2%, while Shanxi Xinghuacun Fen Wine Factory, Foshan Haitian Flavouring & Food Co., Ltd., Yanghe Distillery Co., Ltd., and several others dropped more than 1%, dragging down the sector's performance.
On the news front, Kweichow Moutai's entire core product line has been launched on the "i Moutai" platform. It is reported that since the 53% vol 500ml Kweichow Moutai launched on January 1st this year, nearly 20 major Moutai products have been added to "i Moutai" within 15 days. The popularity of "i Moutai" has skyrocketed, adding over 2.7 million new users and more than 400,000 transacting users in just the first 9 days.
Aj Securities pointed out that the market's wait-and-see sentiment regarding the new channel rules is being digested, with previous selling pressures gradually easing and market expectations slowly improving. Looking ahead to the Spring Festival peak season, the broadening effect of i Moutai on the consumer end and the restocking demand following the depletion of previous social inventories are expected to keep sales momentum on an upward trajectory.
From a valuation perspective, the food and beverage sector's valuation is at a historical low, suggesting the current period might be a favorable time for left-side positioning in the sector. Data shows that as of yesterday's close (January 15th), the price-to-earnings ratio of the Segmented Food Index, which the Huabao Food and Beverage ETF (515710) tracks, was 19.94 times, sitting at a low point of only the 4.71th percentile over the past decade, highlighting its medium to long-term investment appeal.
Looking forward, CSCI pointed out that reviewing the volume and price changes of premium baijiu during 2012-2016, 2016-2021, and 2022-2025, the baijiu industry's "five-bottom phase" (policy bottom, inventory bottom, sales bottom, wholesale price bottom, production & sales bottom) is resonating with the capital market's "three lows and one high" (low expectations, low valuation, low mutual fund holdings, high dividends). Combined with the recent implementation of market strategies by Kweichow Moutai, Wuliangye, and Luzhou Laojiao, and with the Spring Festival peak season approaching, the inflection point of this baijiu adjustment cycle may be near. With capital market expectations often leading, the baijiu sector might present a cycle-bottom allocation opportunity.
Aj Securities stated that baijiu companies are entering a phase of rapid earnings clearance. As policy pressures gradually subside, demand is expected to experience a weak recovery catalyzed by consumption-boosting policies. The industry is currently at a valuation low with pessimistic expectations fully priced in; subsequent industry clearance direction is anticipated to become clearer, making the bottom more evident. Leading distilleries are controlling volume and stabilizing prices to push wholesale prices higher, which in turn drives increases in dividend payout ratios and yields, enhancing their allocation attractiveness.
For one-stop access to the core assets of the food and beverage sector, focus on the Huabao Food and Beverage ETF (515710). According to China Securities Index Co., Ltd., the Huabao Food and Beverage ETF (515710) tracks the CSI Segmented Food & Beverage Industry Theme Index, with approximately 60% of its allocation in leading premium and sub-premium baijiu stocks, and nearly 40% covering leading stocks in sub-sectors like beverages/dairy, condiments, and beer. Its top ten holdings include Kweichow Moutai, Wuliangye, Luzhou Laojiao, Shanxi Fenjiu, Yanghe, Inner Mongolia Yili Industrial Group, Foshan Haitian Flavouring & Food, among others. Off-exchange investors can also gain exposure to the core assets of the F&B sector through the Huabao Food and Beverage ETF Link Fund (Class A: 012548 / Class C: 012549).
Note: The subscription fee rate for Huabao Food and Beverage ETF Link A is: below 1 million yuan, 1%; 1 million yuan (inclusive) to 2 million yuan, 0.6%; 2 million yuan (inclusive) and above, a flat fee of 1,000 yuan per transaction. The redemption fee rate is: within 7 days, 1.5%; 7 days (inclusive) to 180 days, 0.5%; 180 days (inclusive) and above, 0%.
The redemption fee rate for Huabao Food and Beverage ETF Link C is: within 7 days, 1.5%; 7 days (inclusive) and above, 0%. The sales service fee rate is 0.2%.
Risk Warning: The Huabao Food and Beverage ETF passively tracks the CSI Segmented Food & Beverage Industry Theme Index. The base date for this index is December 31, 2004, and it was published on April 11, 2012. The composition of the index's constituent stocks is adjusted according to its compilation rules, and its backtested historical performance is not indicative of its future performance. Individual stocks mentioned herein are listed solely for the objective presentation of index constituents and do not constitute recommendations for any specific stock, nor do they represent the investment direction of the fund manager or the fund. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and expressions of any form) is for reference only, and investors are responsible for any independent investment decisions. Furthermore, any views, analysis, or predictions in this article do not constitute investment advice of any form to readers, and neither shall the fund manager be held liable for any direct or indirect losses arising from the use of this content. Investors should carefully read the "Fund Contract," "Prospectus," "Fund Product Summary," and other fund legal documents to understand the fund's risk-return characteristics and choose products that match their own risk tolerance. The past performance of a fund is not indicative of its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Based on the fund manager's assessment, the Huabao Food and Beverage ETF has a risk rating of R3-Medium Risk and is suitable for investors with a Balanced (C3) or higher risk profile. The suitability matching opinion is subject to the selling institution. Selling institutions (including the fund manager's direct sales channels and other selling institutions) conduct risk assessments of the above fund according to relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by the fund manager. Suitability opinions from various selling institutions may not necessarily be consistent, and the risk rating evaluation results for the fund product issued by fund selling institutions shall not be lower than the risk rating evaluation result made by the fund manager. There are differences between the fund's risk-return characteristics described in the fund contract and its risk rating due to different consideration factors. Investors should understand the fund's risk-return situation, combine it with their own investment objectives, investment horizon, investment experience, and risk tolerance to prudently select fund products and bear the risks themselves. The China Securities Regulatory Commission's registration of the above funds does not indicate a substantive judgment or guarantee of their investment value, market prospects, or returns. Fund investment involves risks.
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