Core Viewpoint - The overall white liquor industry is still in an adjustment period, leading to a downward revision of the profit forecast for Zhenjiu Lidu (06979) for 2025-2027 [1] Financial Performance - For H1 2025, the company reported revenue of 2.497 billion yuan, a year-on-year decrease of 39.6%, and a net profit of 575 million yuan, down 23.5% [1][2] - The expected revenue for 2025-2027 is revised to 5.978 billion, 6.590 billion, and 7.141 billion yuan, down from previous estimates of 7.328 billion, 8.100 billion, and 8.786 billion yuan [1][5] - The expected net profit for the same period is adjusted to 1.073 billion, 1.294 billion, and 1.700 billion yuan, compared to previous forecasts of 1.525 billion, 1.820 billion, and 2.305 billion yuan [1][5] Sales and Volume Analysis - The company's liquor business revenue for H1 2025 was 2.497 billion yuan, with a volume decrease of 35.58% to 9,125 tons and an average price drop of 6.20% to 273,700 yuan per ton [2] - Revenue by brand showed Zhenjiu, Lidu, Xiangjiao, and Kaikouxiao at 1.492 billion, 611 million, 277 million, and 81 million yuan respectively, with year-on-year declines of 44.80%, 9.40%, 38.73%, and 63.91% [2] Margin and Cost Analysis - The gross margin for H1 2025 improved by 0.28 percentage points to 59.04%, while the net profit margin increased by 4.83 percentage points to 23.02% [4] - The improvement in gross margin is attributed to a higher proportion of Lidu, which has a better margin, and the release of self-owned production capacity, reducing unit costs [4] Strategic Outlook - The company is focusing on mid-to-high-end products and expanding banquet scene channels to drive stable growth in 2025 [5] - The company maintains a "buy" rating despite the overall adjustment in the white liquor industry [1][5]

Core Viewpoint - The overall white liquor industry is still in an adjustment period, leading to a downward revision of the profit forecast for Zhenjiu Lidu (06979) for 2025-2027, with expected revenues of 5.978 billion, 6.590 billion, and 7.141 billion yuan, and net profits of 1.073 billion, 1.294 billion, and 1.700 billion yuan respectively, maintaining a "buy" rating [1] Revenue and Profit Analysis - In H1 2025, the company's liquor business revenue was 2.497 billion yuan, a year-on-year decrease of 39.58%, with sales volume down 35.58% to 9,125 tons and average price down 6.20% to 273,700 yuan per ton [1] - By brand, revenues for Zhenjiu, Lidu, Xiangjiao, and Kaikouxiao were 1.492 billion, 611 million, 277 million, and 81 million yuan respectively, with year-on-year changes of -44.80%, -9.40%, -38.73%, and -63.91% [2] - The gross profit margins for Zhenjiu, Lidu, Xiangjiao, and Kaikouxiao were 58.3%, 66.5%, 58.7%, and 41.7% respectively, with slight year-on-year changes [2] Channel and Cost Structure - In H1 2025, revenue from distributors and direct sales was 2.197 billion and 300 million yuan respectively, with year-on-year declines of 41.78% and 16.57% [3] - The company’s gross profit margin increased by 0.28 percentage points to 59.04%, and net profit margin increased by 4.83 percentage points to 23.02% [4] Strategic Outlook - The company is focusing on mid-to-high-end products and expanding banquet scenarios to drive stable growth in 2025, despite the overall industry adjustment [5] - The profit forecast for 2025-2027 has been revised downwards, with expected revenues and net profits reflecting the current market conditions [5]

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [5][14]. Core Views - The company reported a significant decline in revenue and net profit for the first half of 2025, with revenue at 2.497 billion yuan, down 39.6% year-on-year, and net profit at 575 million yuan, down 23.5% [1][4]. - The company is expected to see growth from the new "Da Zhen" product line in the second half of 2025, which is anticipated to drive revenue recovery [1][2]. - The overall liquor business revenue decreased by 39.58% in the first half of 2025, with sales volume down 35.58% to 9,125 tons [1][2]. Revenue Breakdown - Revenue by brand for the first half of 2025: Zhenjiu at 1.492 billion yuan (down 44.80%), Lidou at 611 million yuan (down 9.40%), Xiangjiao at 277 million yuan (down 38.73%), and Kaikouxiao at 81 million yuan (down 63.91%) [2]. - Gross margins for the brands were: Zhenjiu at 58.3%, Lidou at 66.5%, Xiangjiao at 58.7%, and Kaikouxiao at 41.7% [2]. - The company’s revenue from high-end, mid-range, and low-end products for the first half of 2025 was 575 million yuan, 982 million yuan, and 940 million yuan respectively, with high-end revenue down 47.28% [2]. Channel Performance - Revenue from distributors and direct sales in the first half of 2025 was 2.197 billion yuan and 300 million yuan, respectively, reflecting a decline of 41.78% and 16.57% [3]. - The number of distributor partners increased by 152 to 3,259, while the number of retail stores decreased by 357 to 2,835 [3]. Profitability Metrics - The company’s gross margin improved by 0.28 percentage points to 59.04%, and net profit margin increased by 4.83 percentage points to 23.02% [3]. - The improvement in gross margin is attributed to a higher proportion of Lidou sales and the release of self-owned production capacity, which reduced unit costs [3]. Future Outlook - The company plans to focus on mid-range and high-end products in response to changing demand and aims to expand its presence in banquet scenarios to drive growth [4]. - Revenue forecasts for 2025-2027 have been lowered, with expected revenues of 5.978 billion yuan, 6.590 billion yuan, and 7.141 billion yuan, and net profits of 1.073 billion yuan, 1.294 billion yuan, and 1.700 billion yuan respectively [4].

Industry Overview - The Chinese liquor industry is experiencing an unprecedented adjustment period, with intensified competition in a saturated market, reduced business banquet scenarios, and weakened consumer confidence leading to rising channel inventory [1] - National Bureau of Statistics data indicates that the production of liquor by large-scale enterprises in China decreased by 8.9% year-on-year in the first seven months of 2025 [1] - Most liquor companies reported varying degrees of performance decline in their semi-annual reports, indicating a consensus that the industry is in deep adjustment [1] Company Performance - Despite the overall industry downturn, Zhenjiu Lidu, known as the "first stock of Hong Kong liquor," has adopted a counter-cyclical strategy, launching two strategic new products, "Dazhen Zhenjiu" and "Niushi Beer," and attracting significant attention with its "Wanshang Alliance" model [2][3] - The launch of "Dazhen Zhenjiu" was marked by a successful live-streaming event on September 19, attracting 7.298 million viewers and achieving 4.895 million likes, making it the hottest live stream of the day [2] - The "Wanshang Alliance" has signed 3,082 alliance merchants, and the new products have become rare hot sellers in the industry, with Zhenjiu Lidu's stock performance leading among liquor companies [2] Product Innovation - "Dazhen Zhenjiu" is positioned as a high-quality product with a price around 600 yuan, which is one of the largest price segments in the liquor market [7] - The product is crafted from over 200 types of high-quality base liquor, with all spirits aged no later than 2020, including a highlight of 20-year-old liquor [8][9] - The brand's historical foundation and significant investments in production capacity have allowed Zhenjiu Lidu to offer top-quality liquor at accessible prices, breaking the traditional high-end liquor pricing logic [9][11] Market Strategy - The "Wanshang Alliance" model aims to create a shared interest community among manufacturers and distributors, addressing long-standing issues in the liquor industry such as price discrepancies and inventory challenges [12][14] - The model includes a strict "full control price" strategy and a profit-sharing mechanism to prevent issues like price undercutting, ensuring that alliance merchants can operate without fear of being undercut by low-priced sales [14][15] - The "Alliance Merchant Rights Payment Plan" further strengthens the collaboration between manufacturers and distributors, allowing merchants to share in the company's growth without diluting existing shareholder equity [17][18] Brand and Communication - The personal brand of Chairman Wu Xiangdong has become a powerful marketing tool, enhancing market trust and brand recognition during the industry's adjustment period [19][20] - Wu's approachable communication style and focus on practical wisdom have resonated with consumers, leading to significant engagement on social media platforms [20] - Zhenjiu Lidu's stock price has surged, with a market value increase of over 10 billion Hong Kong dollars since the beginning of 2025, reflecting strong market recognition of its innovative strategies [21]

Investment Rating - The report suggests a positive outlook for the liquor sector, particularly for high-end brands like Guizhou Moutai and Wuliangye, indicating a left-side configuration opportunity in the white liquor segment [3][12][14]. Core Insights - The report highlights that the core products in the liquor industry, such as Feitian Moutai and Wuliangye, have seen a rebound in wholesale prices, attributed to effective channel management by manufacturers [2][12]. - It is anticipated that the sales volume in the white liquor sector will decline by approximately 20% year-on-year, but the rate of decline is expected to narrow compared to previous months, indicating a potential stabilization in the market [11][12]. - The report emphasizes the increasing diversification of purchasing channels for liquor, with a notable shift towards online and new media platforms, which is reshaping consumer behavior [2][12][14]. Summary by Sections White Liquor - The report notes a recovery in the wholesale prices of key products, driven by improved channel management and a positive reception during the upcoming Mid-Autumn and National Day holidays [2][12]. - It suggests that the white liquor sector is entering a phase where inventory levels can be significantly reduced, leading to a temporary release of price pressure [12][14]. - Recommendations include focusing on high-end brands with strong market positions and exploring potential catalysts in the broader liquor market [3][12][14]. Beer - The beer sector is experiencing steady recovery in on-premise consumption, with companies diversifying into non-draft channels and soft drinks [14]. - The report encourages continued attention to the beer sector due to its solid performance and dividend levels [3][14]. Yellow Wine - The yellow wine industry is seeing price increases among leading brands, which may lead to a more stable competitive landscape [14]. - The report highlights the importance of marketing and product innovation in the yellow wine sector as it approaches peak season [14]. Snacks - The snack industry is maintaining high growth, with new retail channels expanding rapidly and product diversity increasing [4][15]. - The report suggests that the upcoming holiday season will boost demand for snack products, particularly nut gift boxes [4][15]. Soft Drinks - The soft drink sector is nearing the end of its peak season, with segments like energy drinks and sugar-free teas showing strong growth [4][16]. - The report indicates that traditional categories are facing challenges, but health-oriented products are performing well [4][16]. Condiments - The condiment sector is stabilizing, with expectations of demand recovery in the restaurant chain segment [5][17]. - The report recommends focusing on companies with strong competitive advantages and improving profit margins [5][17].

Core Viewpoint - The rapid expansion of instant retail in China's liquor market is expected to maintain double-digit growth in the coming years, driven by the competitive landscape of food delivery services by 2025 [1][3] Group 1: Instant Retail Growth - China's retail industry has evolved through traditional retail, e-commerce, and new retail, with instant retail significantly shortening delivery times and enhancing consumer choices [1][2] - The liquor instant retail market has seen a surge since its inception on platforms like 1919 and Jiuxiaoer, with four main channel models emerging: vertical, platform-based, warehouse-store integrated, and front warehouse models [1][2] Group 2: Drivers of Instant Retail - The rise of instant retail in liquor is attributed to changing consumer habits, with a growing demand for convenience and quick fulfillment of spontaneous needs [2] - Cost efficiency is achieved by reducing distribution layers and operational costs, coupled with subsidies from some platforms, leading to significant price advantages [2] - Supply-side drivers include channel partners seeking to capture new growth and brand owners willing to collaborate with channels for new product launches and promotions [2] Group 3: Impact on the Liquor Industry - Instant retail presents both opportunities and challenges for the liquor industry, offering efficient fulfillment and better reach to younger consumers, while potentially impacting brand image and pricing structures [3] - Historical trends indicate that changes in the liquor cycle often coincide with channel transformations, and the current deep adjustment in the industry necessitates adaptation to instant retail [3] - The instant retail market for liquor in China is projected to reach 100 billion yuan by 2027, with a compound annual growth rate approaching the mid-double digits, benefiting core categories like baijiu and beer [3] Group 4: Investment Recommendations - The liquor retail channel is undergoing structural growth, with instant retail emerging as a highlight; recommended stocks include leading national brands and regional players with strong channel development capabilities [4] - Specific recommendations for baijiu include Guizhou Moutai, Shanxi Fenjiu, Wuliangye, Luzhou Laojiao, Yingjia Gongjiu, Jiansiyuan, and Guqingongjiu, while short-term elastic stocks include Zhenjiu Lidu and Shede Liquor [4] - For beer, which is the second-largest category in liquor, recommended stocks include Qingdao Beer, Zhujiang Beer, and China Resources Beer, reflecting high participation in instant retail [4]

Core Insights - The company is focusing on building a comprehensive ecosystem centered around its flagship product "Da Zhen. Zhen Jiu" to navigate the challenges in the liquor industry and reshape the competitive landscape [2][12] Group 1: Alliance Merchant Rights Payment Plan - On September 10, the company announced the "Alliance Merchant Rights Payment Plan," allocating up to 169 million shares corresponding to economic benefits to incentivize qualified alliance merchants for sustainable growth [3][5] - This plan aims to deeply bind the interests of alliance merchants with the company, transforming them from mere sellers to partners in business development, enhancing loyalty and stability in the distribution channels [5][7] - The first batch of alliance merchants has received approximately 150,000 yuan in additional equity rewards, attracting quality distributors to promote "Da Zhen. Zhen Jiu" in the market [7] Group 2: Launch of "Da Zhen. Zhen Jiu" - "Da Zhen. Zhen Jiu" was officially launched on September 19, achieving sales of 100,000 boxes and revenue of 370 million yuan during a 100-day trial period [8][10] - The product is developed with the involvement of 32 national and provincial liquor judges, using a blend of 5-year premium base liquor and 20-year rare aged liquor, allowing it to compete with products priced at 3,600 yuan while being priced at 600 yuan [10] Group 3: Innovative Business Model - The "Wan Shang Alliance" model, tailored for "Da Zhen. Zhen Jiu," has become a significant innovation in the liquor industry, ensuring a sustainable channel ecosystem through controlled pricing and continuous dividend mechanisms [12] - As of September 23, over 7,000 participants attended the Wan Shang Alliance forums, with more than 3,000 clients successfully signing up as alliance merchants, leading to nationwide sales across 30 provinces and 212 cities [12] Group 4: Entrepreneurial Branding - The company is leveraging the personal brand of its chairman, Wu Xiangdong, who has been actively engaging with distributors and consumers through various media, enhancing the brand's visibility and credibility [13][14] - Wu's influence has become a new engine for brand communication, significantly increasing awareness and reputation for "Da Zhen. Zhen Jiu" and the Wan Shang Alliance model [14] Group 5: Future Outlook - The combination of equity incentives, flagship product development, innovative business models, and personal branding is expected to create a robust ecosystem centered around "Da Zhen. Zhen Jiu," positioning it as a potential phenomenon in the liquor industry [14]

Core Viewpoint - The stock of Zhenjiu Lidu (06979) has experienced a decline of over 4%, currently trading at 8.83 HKD with a transaction volume of 120 million HKD, amid rumors of Guizhou Moutai potentially lowering its annual performance targets in the context of a deep adjustment in the liquor industry [1] Company Summary - Zhenjiu Lidu's latest flagship product "Dazhen" has been officially launched, with a reported revenue of 370 million CNY and over 2,800 national alliance merchants signed [1]

Core Viewpoint - The liquor industry is undergoing a significant adjustment, with rumors suggesting that Kweichow Moutai may lower its annual performance targets, although the company has denied this claim [1] Company Summary - Zhenjiu Lidu's stock fell over 4% in the afternoon, currently trading at HKD 8.83 with a transaction volume of HKD 120 million [1] - The company recently launched its new flagship product "Dazhen," which has already generated a revenue of CNY 370 million and signed over 2,800 alliance merchants nationwide [1] - Pacific Securities reported that the overall terminal sales in the industry have shown some recovery since August, but sales during the Mid-Autumn Festival and National Day are still expected to be under pressure compared to last year [1] Industry Summary - The liquor industry is experiencing a deep adjustment, with Kweichow Moutai's performance targets being a focal point of concern among investors [1] - The market has seen a recovery in terminal sales since August, but challenges remain for the upcoming holiday sales [1] - The introduction of high-quality products like "Dazhen" is seen as a potential driver for growth in the liquor sector, particularly for Zhenjiu Lidu [1]

Group 1 - The stock of Zhenjiu Lidu (06979) fell over 4% in the afternoon, currently down 3.92% at HKD 8.83, with a trading volume of HKD 120 million [1] - There are rumors in the market that Kweichow Moutai (600519) may lower its performance targets for the year, although the company has stated that it has not adjusted its annual performance goals and has completed its target progress for the first half of the year as planned [1] - According to Pacific Securities, channel surveys indicate that overall terminal sales in the industry have shown some recovery since August, but sales during the Mid-Autumn Festival and National Day are still expected to be under pressure year-on-year [1] Group 2 - Zhenjiu Lidu has launched its latest flagship product "Dazhen," which has already achieved a return of HKD 370 million, with over 2,800 national alliance merchants signed [1] - Huaxin Securities previously noted that the introduction of the new flagship product "Dazhen" is positioned to complement the Zhen 15 and Zhen 30 series, and its high quality-to-price ratio is expected to create a third growth curve for Zhenjiu [1]