On September 24th, the market saw a widespread rally, with the Shanghai Composite Index and the Shenzhen Component Index both rising by more than 4%, and the ChiNext Index surging by over 5%.

The food and beverage sector rose by more than 6%, ranking first on the industry gain list.

Concurrently, Kweichow Moutai, the largest weighted stock in the food and beverage sector and which announced a substantial share repurchase plan on September 20th, also showed signs of stabilization and rebound.

Observations indicate that behind the unusual movement in the food and beverage sector, there are also some positive changes occurring in the industry's fundamentals.

Recently, the news of Kweichow Moutai's substantial share repurchase has attracted market attention.

On September 20th, Kweichow Moutai announced that the company plans to repurchase shares worth between 3 billion to 6 billion yuan, for the purpose of cancellation and reduction of the company's registered capital, with the repurchase price not exceeding 1,795.78 yuan per share (inclusive).

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It should be noted that this is the first time Kweichow Moutai has implemented a cancellation-style repurchase since its listing 23 years ago.

The company stated that the implementation of the cancellation-style repurchase aims to protect the interests of the company and the majority of investors, and to enhance investment confidence.

On the first trading day after the announcement, September 23rd, Kweichow Moutai's share price once rose nearly 2% during the trading day, changing the situation of accelerated decline in the previous trading days.

On September 24th, the company's share price rose strongly by 8.80%.

It is worth mentioning that this is not the first time Kweichow Moutai has recently announced favorable measures to enhance investment confidence.

On August 8th, Kweichow Moutai released the "2024-2026 Annual Cash Dividend Return Plan," stating that the total cash dividend allocated each year from 2024 to 2026 will not be less than 75% of the net profit attributed to the parent company for that year, and dividends will be distributed twice a year in principle.

Regarding Kweichow Moutai's repurchase plan, the well-known investor Duan Yongping also expressed his latest views.

He recently stated on social media that this may be an epoch-making event, and leaders will feel a sense of achievement for this decision in the years to come.

He also said that there is no essential difference between share buybacks and dividends; both are better than the company holding too much money and wasting it.

Duan Yongping is a long-term follower of Moutai, and when talking about investment logic, he focuses more on sticking to good companies.

He recently stated that he has held Kweichow Moutai for many years, and if one can be sure that they are holding a "good company," it will be much easier than climbing a mountain.

Not only Kweichow Moutai, but recently, more and more food and beverage companies have joined the repurchase army.

According to incomplete statistics, food and beverage companies have repurchased nearly 5 billion yuan so far this year.

Looking at specific companies, Huanlejia, Yili Shares, Haidilao Flavoring, Juewei Food, and Angel Yeast have all repurchased more than 200 million yuan.

Huanlejia's repurchase amount exceeds 600 million yuan.

In addition, including Jinhui Liquor, Qiaqia Food, Shede Liquor, Shuijingfang, and many other companies, the repurchase amount exceeds 50 million yuan.

Looking at the secondary market, many companies have seen their share prices stabilize and rebound during the period of share repurchase.

Taking Haidilao Flavoring, which has a relatively high repurchase amount, as an example, it has repurchased more than 300 million yuan so far this year.

According to the company's repurchase proposal released in October 2023, it plans to repurchase 500 million to 800 million yuan within 12 months.

As of August 31, 2024, it stated that it has repurchased 563 million yuan (including 250 million yuan repurchased last year).

So far this year, Haidilao Flavoring's share price has seen several rounds of rebound with increased volume, rising by 20% in February; from July 9th to September 23rd, despite the market's pressure and adjustment, the company's share price has risen by nearly 10% against the market.

Behind the cluster of food and beverage companies repurchasing shares, the operating fundamentals are also showing positive changes.

Looking at the mid-year report data this year, most companies have made a profit in the first half of the year, and more than half of the companies have achieved growth in performance.

Looking at the statistics of 129 food and beverage companies from Shenwan, 110 companies have made a profit in the first half of this year, accounting for 85%; 72 companies have achieved performance growth in the mid-year report, accounting for 56%.

Looking further, Kweichow Moutai and Wuliangye have achieved high net profits, both at more than ten billion yuan, while Shanxi Fenjiu, Yili Shares, Tsingtao Beer, and others have achieved net profits of more than one billion yuan.

Looking at the performance growth rate, companies such as Keming Food, Shunxin Agriculture, Weiwei Shares, Zhongju High-tech, and Lianhua Holdings have all achieved growth of more than 100%, among which Keming Food has the highest net profit growth rate, increasing by 824.52% year-on-year, with a net profit of 103 million yuan in the first half of the year.

Looking at the secondary market, since February, Keming Food has seen several rounds of increases, such as a 20% increase in the company's share price from June 25th to September 2nd, with an overall performance stronger than the market.

In addition, several companies such as Three Squirrels, Jinzai Food, and Dongpeng Beverage also achieved significant performance growth in the mid-year report this year.

Overall, the performance growth is related to the recovery of the track's prosperity, increased product sales, product structure optimization, and cost reduction.

Taking Keming Food, which has the highest net profit growth rate, as an example, it stated that the performance growth in the first half of the year is related to the recovery of the pig market in the second quarter of 2024, product structure optimization, and an increase in gross margin; Lianhua Holdings, which achieved a doubling of net profit in the mid-year report, stated that the performance growth is related to the reduction of raw material procurement costs.

In communicating with investors, many food and beverage companies have also expressed an optimistic view of the industry.

For example, Wei Zhixiang stated during a survey on September 10th that recently, the prices of beef and pork raw materials have begun to rise significantly, which to some extent reflects the expansion of demand and the improvement of consumption.

The company's sales business has also seen improved feedback in the market recently.

Although the food and beverage sector has only recently stabilized and rebounded, many targets have already started a continuous upward trend.

Looking at the performance of food and beverage stocks since the second half of this year, companies such as Mogan Shares, Wanchen Group, Huangtai Liquor, Pinwo Food, Angel Yeast, Pearl River Beer, and Xinrui Dairy have all seen increases of more than 10%.

Further observation shows that many of the leading stock prices are all state-owned concept stocks.

Among them, Mogan Shares have the highest increase, with a cumulative increase of 70% from July 1st to September 20th.

On August 28th, 29th, and 30th, it closed at the daily limit for three consecutive trading days.

On September 20th, the company's share price once again closed at the daily limit, setting a new high since 2023.

Mogan Shares' main business involves wine and pharmaceuticals, with the actual controller being the Gansu State-owned Assets Supervision and Administration Commission.

Recently, due to accelerated mergers and acquisitions and capital operations, market attention to central and state-owned enterprises has continued to heat up.

At the same time as Mogan Shares' recent market-defying rise, the company also has an equity acquisition transaction.

Mogan Shares announced on August 28th that the company is planning to acquire 51% of the equity of Haotian Technology, and this transaction is expected to constitute a significant asset restructuring.

It was after the release of this news that Mogan Shares' share price ushered in a strong rise.

Angel Yeast is also the case.

The company's share price has risen by more than 17% since the second half of the year, outperforming most food and beverage targets during the same period.

On September 19th, the company's share price closed at 33.05 yuan, which is a new high in the past half year (see the attached chart).

Angel Yeast's main business is yeast, with the actual controller being the Yichang City State-owned Assets Supervision and Administration Commission, also a state-owned concept stock.

In the first half of this year, the company achieved a revenue of 7.175 billion yuan and a net profit of 691 million yuan.

The company revealed an optimistic view of its own operations and the industry during a recent survey.

It stated that the overall operating situation in August was stable.

Among them, with the overall consumption market showing a recovery trend, the two leading businesses of yeast and yeast extract both achieved good growth.

It also stated that from the continuous recovery of the domestic CPI index and the performance of the company's leading products, downstream demand has shown a recovery trend.

It is worth mentioning that behind some of the food and beverage targets with strong share price trends, one can see the layout of some well-known investment institutions or investors, and Angel Yeast is one of them.

According to Angel Yeast's disclosed second-quarter shareholder holdings, the Gaoyi Linshan No.

1 Yuanwang Fund managed by Feng Liu has increased its position in it.

In the second quarter of this year, Feng Liu increased his holdings of Angel Yeast from 26.5 million shares to 35 million shares, and the amount of increase was more than three times the holdings in the first quarter.

By the end of the second quarter, the total holding market value was close to one billion yuan.

In the second half of the year, as the share price of Angel Yeast continues to rise, if the number of shares held does not change, Feng Liu's holding market value of the company is also likely to increase to a certain extent.