Trim estimates slightly, and lower PO to RMB195。 Moutai posted 9% YoY lower net profit in 3Q14 on a 5% fall in liquor sales duemainly to the 43% higher administrative expenses. Similar to most staple names,Moutai’s 3Q results are soft, partially due to the negative calendar shift, yet is stillmuch resilient to its liquor peers (Table 1), indicating continued share gains. We trimour 2014-16E EPS by 4-5%. Our new RMB195 PO is still only 14x our 2015E P/E. Industry faces challenges, while Moutai has gained shares。 In 3Q, compared to Moutai’s 5% drop in liquor sales, top peers Wuliangye, Yanghe,Laojiao and Fenwine recorded 7%, flat, 61% and 43% fall, respectively, indicatingMoutai is gaining shares. In terms of earnings, peers posted a 56%, 6%, 71% and84% decline, in the same order, mainly due to a big jump in operating expenses tosupport sales. On average, peers’ average SG&A expanded 860bp to 31% in 3Q14. Unearned revenue rises QoQ, a good buffer。 After two consecutive quarters (1Q and 2Q) of decline in unearned revenue (i.e.,cash received from distributors yet to be recognized as income), the item saw a riseto RMB863mn in 3Q14 from RMB544mn in 1H14. Liquor revenue adjusted for theunearned item however fell 13.5% YoY in 3Q, partly due to a 40% high base in3Q13. We expect the unearned revenue to increase to RMB1bn by end-2014 asmore cash is to be collected for 2015’s products. Administrative expenses likely to stay high。 Despite good control over selling and distribution expenses (4.4% of sales in 3Q14vs 4.7% in 3Q13), administrative expenses increased 43% to 11.2% of sales (up370bp YoY). In particular, salaries (cash flow payment) went up 45% YoY, while theremaining increase comes from higher depreciation and amortization. We expectadministrative expenses to stay high in 2015/16 as capex spending kept rising from2012 and will not likely come down until 2016 based on current expansion pipeline.