In-depth Analysis of M&A Rumors Surrounding Shuijingfang and Valuation Trends of Regional Liquor Enterprises

Shuijingfang (600779.SS), one of the “Six Golden Flowers of Sichuan Liquor”, has shown significant volatility in the secondary market recently. According to the latest trading data [0], the company’s current share price is 38.70 RMB, having corrected approximately 30% from the high of 55.00 RMB, and is operating in the middle to lower range of the one-year price interval.

Indicator	Value	Industry Position
P/E Ratio	34.6x	Highest among regional liquor enterprises
P/B Ratio	3.73x	Above average
ROE	10.63%	Medium level
Net Profit Margin	14.35%	Relatively stable

Notably, Shuijingfang’s latest financial report released in October 2025 showed performance significantly below market expectations: EPS was only 0.46 RMB, a sharp 68.82% lower than analysts’ forecast of 1.46 RMB; operating revenue was 850 million RMB, down 48.61% from expectations [0]. This performance reflects the competitive pressure the company faces in the high-end baijiu market and the pain of channel adjustments.

By comparing the valuation levels of major regional baijiu listed companies, significant structural differentiation within the industry can be observed:

Enterprise	Securities Code	Market Cap (100 million RMB)	P/E Ratio	Valuation Characteristics
Shuijingfang	600779	187.5	34.6	High valuation, high volatility
Jinshiyuan	603369	320.8	18.5	Reasonable valuation, steady growth
Yingjia Gongjiu	603198	245.3	16.8	Low valuation, steady operation
Shede	600702	156.8	25.3	Mid-high valuation, reform expectations
Kouzijiao	603589	185.6	15.2	Industry lowest, focus on inflection point

From the valuation distribution perspective, the P/E range of regional liquor enterprises spans from 15x to 35x, with a valuation difference of more than double. This differentiation mainly stems from differences in core variables such as brand nationalization degree, channel control, product structure upgrading progress, and management efficiency.

The current baijiu industry is undergoing a deep adjustment period, and the trend of industry integration is becoming increasingly obvious, mainly reflected in the following dimensions:

Leading liquor enterprises (Moutai, Wuliangye, Luzhou Laojiao, Fenjiu, Yanghe) rely on brand momentum, channel networks, and capital strength to continuously squeeze the living space of small and medium-sized liquor enterprises. Regional liquor enterprises face a strategic choice between “being integrated” or “proactively breaking through”.

• Production Capacity Synergy
  : Acquire high-quality base liquor production capacity to ensure product quality stability
• Channel Resources
  : Quickly acquire regional market channel networks
• Brand Matrix
  : Build multi-price range product portfolios to cover different consumption scenarios
• Market Layout
  : Fill blank areas in the nationalization map

As a foreign-controlled listed company (Diageo holds approximately 70% of the shares), if Shuijingfang undergoes M&A integration, its potential transaction parties may include: regional leaders with nationalization intentions, leading liquor enterprises seeking high-end production capacity layout, or strategic investors in the upstream and downstream of the industrial chain. The stock price fluctuations caused by the rumors reflect the market’s high sensitivity to the integration theme of the baijiu industry.

Against the background of slowing overall industry growth and pressure on sales, the valuation center of regional liquor enterprises may undergo reshaping. It is expected that the reasonable P/E range for high-quality regional leaders will be 15-22x, while small liquor enterprises lacking differentiated competitive advantages may further drop to 10-15x.

• High Certainty Targets
  : Targets with base market barriers, smooth product structure upgrading (such as Jinshiyuan) will obtain valuation premiums
• Marginal Improvement Targets
  : Enterprises with strong expectations of management mechanism reform (such as Shede) may enjoy reform premiums
• Risk-exposed Targets
  : Enterprises with high inventory and insufficient channel confidence will face valuation discounts

Referring to historical cases, M&A in the baijiu industry usually adopts the following valuation methods:

• Mature liquor enterprises: 8-12x EV/EBITDA or 15-20x P/E
• High-quality assets: Considering brand premium, can be increased by 20%-30%
• Distressed assets: May be below 10x P/E, but requires in-depth due diligence

1. Fundamental Inflection Point Signals
   : Stabilization and recovery of wholesale prices, accelerated inventory destocking, improved cash flow
2. Implementation of Reform Expectations
   : Optimization of management incentive mechanisms, introduction of strategic investors
3. Substantive Progress of M&A Integration
   : Announcement of formal transaction plans, establishment of valuation anchors

• Industry prosperity continues to decline beyond expectations
• Risk of collapse of the high-end baijiu price system
• Policy uncertainties such as consumption tax reform
• Deterioration of regional competition pattern

The above charts show Shuijingfang’s stock price trend and technical indicators, valuation comparison of regional liquor enterprises, yield distribution characteristics, and market cap-valuation bubble chart analysis [1]. From the charts, it can be clearly observed that Shuijingfang’s current stock price is below the medium-term moving average, its valuation is the highest among regional liquor enterprises, but its performance support is relatively insufficient.

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[0] Jinling AI Market Data - Shuijingfang Real-time Quotation and Financial Analysis (2025-12-30)
[1] Jinling AI Visual Analysis - Shuijingfang In-depth Analysis Charts (2025-12-31)