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Equity Bottom-Up

Luzhou Laojiao Co Ltd A / Equity Bottom-Up

<ul>
  <li>Luzhou Laojiao is a leading player in the high-end baijiu market in China, with its primary product, National Cellar 1573, being a key driver of revenue and profitability. The company benefits from a strong brand heritage, including ancient cellars and traditional brewing techniques, which command pricing power and high-profit margins.</li>
  <li>The Chinese baijiu market is experiencing a premiumization trend, with consumers increasingly favoring high-quality, established brands. Luzhou Laojiao is well-positioned to capitalize on this trend with its focus on premium and super-premium products.</li>
  <li>Despite a strong domestic position, the company faces risks from a potential slowdown in the Chinese economy, which could impact consumer spending on luxury goods, and increasing competition from both domestic and international spirits brands.</li>
</ul><p><em>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.</em></p>


  Luzhou Laojiao is a leading player in the high-end baijiu market in China, with its primary product, National Cellar 1573, being a key driver of revenue and profitability. The company benefits from a strong brand heritage, including ancient cellars and traditional brewing techniques, which command pricing power and high-profit margins.
  The Chinese baijiu market is experiencing a premiumization trend, with consumers increasingly favoring high-quality, established brands. Luzhou Laojiao is well-positioned to capitalize on this trend with its focus on premium and super-premium products.
  Despite a strong domestic position, the company faces risks from a potential slowdown in the Chinese economy, which could impact consumer spending on luxury goods, and increasing competition from both domestic and international spirits brands.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: Luzhou Laojiao Co Ltd A (000568 CH) - Sep 2025

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.</li>
<li>We see attractive stories for <a href="https://www.smartkarma.com/entities/shanxi-xinghuacun-fen-wine-factory-co" target="_blank" data-smartkarma-citation="entities:9288:1" rel="noopener">Shanxi Xinghuacun Fen Wine (600809 CH)</a>, <a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring (603288 CH)</a>, <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial (600887 CH)</a> and <a href="https://www.smartkarma.com/entities/fu-jian-anjoy-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:30110:1" rel="noopener">Fu Jian Anjoy Foods (603345 CH)</a>.  </li>
<li>While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  </li>
</ul>


Chinese government will continue to boost the slowing domestic economy by supporting consumption. The A-share consumer staples sector, which is less volatile than discretionary, will be benefited.
We see attractive stories for Shanxi Xinghuacun Fen Wine (600809 CH), Foshan Haitian Flavouring (603288 CH), Inner Mongolia Yili Industrial (600887 CH) and Fu Jian Anjoy Foods (603345 CH).  
While they are trading on high-end of peer multiples, their earnings quality, leadership status and product premiumisation provide good justifications for valuation. Also, all of them have solid financial position.  


China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Qinghai Huzhu Barley Wine Co / Index Rebalance

<ul>
<li>The review period ended on 31 October, the changes should be announced on 28 November and will be effective after the close of trading on 12 December.</li>
<li>There could be one delete each for the CSI Liquor Index and the CSI Alcoholic Drink Index. Plus capping changes for a bunch of stocks.</li>
<li>The entire sector has been under pressure over the last few years with every rally being sold into.</li>
</ul>


The review period ended on 31 October, the changes should be announced on 28 November and will be effective after the close of trading on 12 December.
There could be one delete each for the CSI Liquor Index and the CSI Alcoholic Drink Index. Plus capping changes for a bunch of stocks.
The entire sector has been under pressure over the last few years with every rally being sold into.


CSI Liquor/ Alcoholic Drink Index Rebalance Preview: One Delete & Some Big Capping Changes

Gansu Huangtai Wine Mktg Ind Co., / Index Rebalance

<ul>
<li>There is 1 add for the CSI Liquor Index and 1 add/ 2 deletes for the CSI Alcoholic Drink Index in June.</li>
<li>
<a href="https://www.smartkarma.com/entities/gansu-huangtai-wine-mktg-ind-co-ltd" target="_blank" data-smartkarma-citation="entities:15244:1" rel="noopener">Gansu Huangtai Wine Mktg Ind Co., (000995 CH)</a> will be added to the CSI Liquor Index and the CSI Alcoholic Drink Index.</li>
<li>There will be big selling in <a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> due to the stock being capped in both indices. Smaller capping flows in the other stocks.</li>
</ul>


There is 1 add for the CSI Liquor Index and 1 add/ 2 deletes for the CSI Alcoholic Drink Index in June.

Gansu Huangtai Wine Mktg Ind Co., (000995 CH) will be added to the CSI Liquor Index and the CSI Alcoholic Drink Index.
There will be big selling in Kweichow Moutai (600519 CH) due to the stock being capped in both indices. Smaller capping flows in the other stocks.


CSI Liquor/ Alcoholic Drink Index Rebalance: Adds, Deletes & Capping Changes

Cambricon Technologies  Lt / Index Rebalance

<ul>
<li>With the review cutoff done, there could be three changes for the <a href="https://www.smartkarma.com/entities/ishares-ftse-a50-china-index-etf" target="_blank" data-smartkarma-citation="entities:249:1" rel="noopener">iShares A50 China (2823 HK)</a>/ <a href="https://www.smartkarma.com/entities/csop-ftse-china-a50-etf-26e3b671-fa47-4165-a12e-bf841640c5a3" target="_blank" data-smartkarma-citation="entities:23664:1" rel="noopener">CSOP China A50 (HKD) (2822 HK)</a> ETFs in March.</li>
<li>
<a href="https://www.smartkarma.com/entities/cambricon-technologies-corp-lt" target="_blank" data-smartkarma-citation="entities:31068:1" rel="noopener">Cambricon Technologies</a>, <a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:22740:1" rel="noopener">Guotai Junan Securities</a> and <a href="https://www.smartkarma.com/entities/china-united-network-a" target="_blank" data-smartkarma-citation="entities:12620:1" rel="noopener">China United Network</a> could replace <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group</a>, <a href="https://www.smartkarma.com/entities/cgn-power-co-ltd" target="_blank" data-smartkarma-citation="entities:29504:1" rel="noopener">CGN Power</a> and <a href="https://www.smartkarma.com/entities/luzhou-laojiao-co-ltd-a" target="_blank" data-smartkarma-citation="entities:4536:1" rel="noopener">Luzhou Laojiao</a> in the ETFs.</li>
<li>
<a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> is expected to be added to the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">iShares China Large-Cap (FXI) (FXI US)</a> in March, so there should be inflows for the A-shares and H-shares.</li>
</ul>


With the review cutoff done, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.

Cambricon Technologies, Guotai Junan Securities and China United Network could replace Inner Mongolia Yili Industrial Group, CGN Power and Luzhou Laojiao in the ETFs.

Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.


China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

China

Luzhou Laojiao Co., Ltd. manufactures and sells spirits products worldwide. The Company also produces glass products, manages hotels, and invests in the real estate business.

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Luzhou Laojiao Co Ltd A (000568 CH)

Primer: Luzhou Laojiao Co Ltd A (000568 CH) - Sep 2025

Luzhou Laojiao is a leading player in the high-end baijiu market in China, with its primary product, National Cellar 1573, being a key driver of...

αSK

CSI Liquor/ Alcoholic Drink Index Rebalance Preview: One Delete & Some Big Capping Changes

There could be 1 delete from the indices, plus a bunch of capping changes. Both indices have performed terribly over the last few years and have...

Brian Freitas

CSI Liquor/ Alcoholic Drink Index Rebalance: Adds, Deletes & Capping Changes

Gansu Huangtai Wine Mktg will be added to the CSI Liquor Index and the CSI Alcoholic Drink Index. There are 2 deletes for the Alcohol Index. Large...

Brian Freitas

China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

There could be 3 changes in March. The forecast adds have outperformed the forecast deletes with 2 adds breaking to new highs. Passive impact is...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Primer: Luzhou Laojiao Co Ltd A (000568 CH) - Sep 2025

Luzhou Laojiao is a leading player in the high-end baijiu market in China, with its primary product, National Cellar 1573, being a key driver of...

αSK

China A-Share Consumer Staples: An Analysis of the Opportunities Ahead

With the recent IPOs of Foshan Haitian Flavouring and Fujian Anjoy Foods (planned), we think the interest in China's consumer staples sector will...

Osbert Tang, CFA

CSI Liquor/ Alcoholic Drink Index Rebalance Preview: One Delete & Some Big Capping Changes

There could be 1 delete from the indices, plus a bunch of capping changes. Both indices have performed terribly over the last few years and have...

Brian Freitas

CSI Liquor/ Alcoholic Drink Index Rebalance: Adds, Deletes & Capping Changes

Gansu Huangtai Wine Mktg will be added to the CSI Liquor Index and the CSI Alcoholic Drink Index. There are 2 deletes for the Alcohol Index. Large...

Brian Freitas

China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

There could be 3 changes in March. The forecast adds have outperformed the forecast deletes with 2 adds breaking to new highs. Passive impact is...

Brian Freitas