Core Viewpoint - Shede Liquor achieved significant growth in revenue and net profit in the second quarter of 2025, driven by strategic initiatives and market expansion efforts [1][2][5]. Financial Performance - In the first half of 2025, Shede Liquor reported revenue of 2.701 billion yuan and a net profit of 443 million yuan [1]. - The net profit for the second quarter reached 97.17 million yuan, marking a year-on-year increase of 139.48% compared to 40.58 million yuan in the same period of 2024 [2]. - The company's total assets increased to 12.407 billion yuan, reflecting a year-on-year growth of 7.13% [2]. - The net profit margin improved by 2.22 percentage points to 8.56% in the second quarter [5]. Strategic Initiatives - Shede Liquor implemented a "channel down, brand up, fully towards C" strategy, achieving notable results in the incremental market [1]. - The company adopted a "control quantity, support price" strategy to assist distributors in promoting product sales amid industry challenges [4]. - The international business was expanded to 40 countries and regions, with significant growth in the Southeast Asian market, where sales increased by 50% [5]. Marketing and Sales Channels - E-commerce sales grew by 31.38%, with the company leveraging new marketing strategies and platforms like Douyin and Kuaishou [6][7]. - The introduction of the new product "Shede Zizai," a 29-degree drinking-type liquor, aims to attract younger consumers and fill market gaps [8]. Industry Context - The liquor industry has been undergoing a deep adjustment phase since 2024, with sales pressures and a gradual recovery in customer confidence [4]. - The overall performance of national liquor companies has been better than that of local companies, driven by brand and resource advantages [6]. - Historical trends suggest that companies with quality barriers and strategic determination will enjoy valuation premiums in the current market environment [8].

Group 1 - The core viewpoint of the article highlights a significant increase in the A-share market for liquor stocks, with Shede Liquor leading the gains by over 7% [1] - Other notable performers include Shui Jing Fang, Shanxi Fen Jiu, Ying Jia Gong Jiu, and Luzhou Laojiao, all experiencing gains of over 1% [1] Group 2 - Shede Liquor (600702) saw a rise of 7.34%, with a total market capitalization of 21.8 billion and a year-to-date change of -0.06% [2] - Shui Jing Fang (600779) increased by 1.85%, with a market cap of 22.5 billion and a year-to-date decline of -11.63% [2] - Ying Jia Gong Jiu (603198) rose by 1.71%, with a market cap of 35.7 billion and a year-to-date decline of -14.09% [2] - Shanxi Fen Jiu (600809) increased by 1.68%, with a market cap of 243.8 billion and a year-to-date increase of 12.31% [2] - Luzhou Laojiao (000568) rose by 1.58%, with a market cap of 195.4 billion and a year-to-date increase of 11.27% [2] - Other companies such as Jinzhongzi Jiu (600199) and Gujing Gong Jiu (000596) also showed minor increases, with market caps of 7.4 billion and 87.5 billion respectively [2]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company reported a revenue of 2.701 billion yuan in the first half of 2025, a year-on-year decrease of 17.41%, with a net profit attributable to the parent company of 443 million yuan, down 24.98% [1] - In Q2 2025, the company achieved a revenue of 1.152 billion yuan, a year-on-year decrease of 3.44%, while the net profit attributable to the parent company increased by 139.48% to 97 million yuan, indicating a significant improvement compared to the previous four quarters [2] - The company is focusing on its core market and actively exploring new growth points, demonstrating operational resilience during the industry adjustment period [2] Financial Performance Summary - The total revenue for 2023 was 7.087 billion yuan, with a growth rate of 17.0%. For 2024, it is projected to decrease to 5.357 billion yuan, a decline of 24.4%, followed by further declines in 2025 and 2026 [3] - The net profit attributable to the parent company for 2023 was 1.769 billion yuan, with a year-on-year growth of 5.0%. It is expected to drop to 346 million yuan in 2024, a decrease of 80.5%, before recovering to 543 million yuan in 2025 [3] - The gross profit margin for 2025 is estimated to be 62.9%, down from 74.6% in 2023 [3] Strategic Developments - The company is effectively managing costs, with a decrease in sales expense ratio by 3.27 percentage points and management expense ratio by 1.16 percentage points, leading to an improvement in net profit margin by 5.15 percentage points to 8.64% in Q2 2025 [2] - The e-commerce channel has shown strong performance, generating 336 million yuan in revenue, a year-on-year increase of 31.38%, accounting for 13.9% of total revenue [2] - The company plans to launch low-alcohol products in the second half of the year to reach younger consumer groups [2]

Summary of Shede Liquor Industry Conference Call Company Overview - **Company**: Shede Liquor Industry - **Industry**: Liquor/Alcohol Industry Key Points and Arguments Financial Performance - In Q2 2025, Shede Liquor's profit increased by **139.5%** year-on-year, while revenue remained stable compared to the previous year, indicating a recovery in performance [2][3] - The company implemented cost reduction and efficiency improvement measures, controlling procurement and operational expenses, which will continue until 2026 to navigate the industry's deep adjustment period [2][5] Market Outlook - The company holds a positive outlook for the upcoming Mid-Autumn Festival and National Day, with good sales momentum and a commitment to high-end product positioning [2][6] - The "Three Good" pricing management system was introduced to stabilize the market, balancing supply and demand, managing costs, and governing channels [2][6] Product Strategy - The product structure remained largely unchanged, but performance varied across price segments. High-end products like Shede Ten Years saw nearly **100%** growth, while lower-tier products faced challenges [4][14] - The company plans to launch a **29-degree** product to attract consumers, reflecting a shift in consumer preferences [2][22] Sales Channels and Growth Strategies - Shede is focusing on e-commerce and direct sales teams to explore new markets, targeting seven core base markets [2][6][15] - The company has initiated the "Thunder Action" to recover low-priced products in the market and control promotional efforts to ensure stable profits for distributors [2][10] Competitive Environment - In response to competitive pressures, Shede is enhancing its pricing management, innovating product structures, and expanding sales channels [8][20] - The company is also focusing on banquet scenarios and corporate group purchases to offset declines in business consumption [9][20] Regional Market Development - Shede has identified six major base markets for expansion, aiming to increase market share in these regions over the next 3-5 years [17] Internationalization - The company has begun international expansion, which not only boosts sales but also enhances brand reputation [18] Employee and Distributor Relations - Maintaining distributor profitability is crucial, with over **85%** of distributors currently profitable, fostering strong relationships [25] - The company has implemented a performance-based incentive system to maintain team morale and efficiency [24][26] Future Demand and Market Trends - The company anticipates a recovery in demand across different price segments, with a focus on high-end and low-end markets [16] - The introduction of ultra-low alcohol products targets both existing consumers and new demographics, such as younger drinkers [23] Conclusion - Shede Liquor is strategically positioned to navigate the current industry challenges through cost management, product innovation, and market expansion efforts, with a cautiously optimistic outlook for the remainder of 2025 [7][16]

Investment Rating - The investment rating for the company is "Accumulate" [1] Core Views - The company's operating performance has significantly improved, with cash flow and advance payments being reasonable [3] - The revenue and profit for the first half of 2025 met market expectations, despite a year-on-year decline [2] - The growth in ordinary liquor sales has compensated for some declines in high-end liquor, indicating a stabilizing distribution system [4] - The company has effectively controlled costs, showing potential for recovery in profitability [6][7] Summary by Sections Financial Performance - In H1 2025, the company achieved total revenue of 2.701 billion yuan, down 17.41% year-on-year, and a net profit attributable to shareholders of 443 million yuan, down 24.98% year-on-year [2] - In Q2 2025, total revenue was 1.125 billion yuan, a decline of 3.44% year-on-year, while net profit increased by 139.48% year-on-year to 97 million yuan [3] Product and Sales Analysis - In Q2 2025, liquor revenue decreased by 4.52% year-on-year, with high-end liquor revenue down 15.65% and ordinary liquor revenue up 62.25%, driven by strong sales of the main product T68 [4] - The company had 2,585 distributors at the end of Q2 2025, indicating a gradual stabilization in the distribution system [4] Regional Performance - In Q2 2025, revenue from within the province decreased by 21.20% year-on-year, while revenue from outside the province increased by 4.84% [5] Cost Control and Profitability - The gross margin for Q2 2025 was 60.60%, a slight decrease of 0.33 percentage points year-on-year, with the overall gross margin for H1 2025 down 3.73 percentage points [6] - The net profit margin for Q2 2025 improved to 8.56%, an increase of 4.92 percentage points year-on-year, although it remains low compared to peers in the liquor industry [7] Investment Recommendations - The company's revenue forecasts for 2025-2027 have been revised downwards, with expected revenues of 4.898 billion yuan, 5.315 billion yuan, and 5.670 billion yuan respectively [8] - The earnings per share (EPS) estimates for the same period have been adjusted to 1.87 yuan, 2.12 yuan, and 2.30 yuan [8]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but showed signs of recovery in the second quarter, with a focus on innovation and brand enhancement to drive future growth [1][4]. Financial Performance - For 25H1, total revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 2.7 billion, 440 million, and 440 million respectively, representing year-on-year declines of 17.4%, 25.0%, and 24.1% [1]. - In 25Q2, total revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 1.13 billion, 100 million, and 100 million respectively, with year-on-year changes of -3.4%, +139.5%, and +194.2% [1]. Product and Market Strategy - The company is focusing on four core products and innovating cultural products targeted at younger demographics to create differentiation [1]. - The strategy emphasizes channel development post-inventory reduction in 2024, leveraging platform push and consumer pull to enhance sales and brand influence [1]. - The company aims to find growth in existing markets by implementing a strategy of "downward channel, upward brand, and comprehensive C-end focus" [1]. Regional Performance - In 25H1, revenue from mid-to-high-end liquor was 1.97 billion, while ordinary liquor revenue was 440 million, with year-on-year changes of -24% and +16% respectively [2]. - By region, revenue from within the province was 780 million, and from outside the province was 1.64 billion, with year-on-year changes of -14% and -21% [2]. - The company has 2,585 distributors as of the end of 25Q2, a decrease of 78 from the end of 24 [2]. Cost and Profitability - The gross profit margin for 25H1 decreased by 3.7 percentage points to 65.7%, primarily due to product mix changes [3]. - The selling expense ratio increased by 1.1 percentage points to 21.2% in 25H1, attributed to higher marketing investments [3]. - The net profit margin for 25H1 was 16.4%, reflecting a year-on-year decrease of 1.7 percentage points [3]. Future Outlook - The company maintains a long-term perspective, anticipating a recovery in business demand to improve performance [4]. - Revenue forecasts for 2025-2027 have been slightly adjusted downwards to 4.69 billion, 4.90 billion, and 5.21 billion respectively, with year-on-year changes of -12.5%, +4.5%, and +6.4% [4]. - The earnings per share (EPS) estimates for 2025-2027 have been slightly increased to 1.47, 1.57, and 1.71 respectively, reflecting a positive outlook [4].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company is in a phase of bottoming out and stabilizing, with profit recovery expected [1] - The report highlights that the industry demand is at a bottoming stage, and the recovery of mid-to-high-end demand still faces significant challenges [8] - The company is leveraging its operational advantages and adopting a more proactive approach to explore sales growth through innovation [8] Financial Performance Summary - For 2023, total revenue is projected at 7,087 million yuan, with a year-on-year growth of 17.04% - In 2024, total revenue is expected to decline to 5,357 million yuan, a decrease of 24.41% - The forecast for 2025 estimates total revenue at 4,784 million yuan, down 10.70% year-on-year, with a gradual recovery expected in subsequent years [1] - The net profit attributable to the parent company is forecasted to be 1,769.39 million yuan in 2023, with a significant drop to 345.77 million yuan in 2024, followed by a recovery to 637.37 million yuan in 2025 [1] - The earnings per share (EPS) is projected to be 5.31 yuan in 2023, dropping to 1.04 yuan in 2024, and recovering to 1.91 yuan in 2025 [1] Revenue and Profit Breakdown - In the first half of 2025, the company achieved revenue of 2.7 billion yuan, a year-on-year decline of 17.4%, with a net profit of 440 million yuan, down 25.0% [8] - The second quarter of 2025 saw revenue of 1.13 billion yuan, a decrease of 3.4% year-on-year, but net profit increased by 139.5% to 100 million yuan [8] - The report indicates that the revenue decline has significantly narrowed, with product structure stabilizing [8] Product and Market Strategy - The company is focusing on long-term product layout and channel innovation to drive growth [8] - It is actively promoting high-end products and exploring new sales channels, including e-commerce and group purchases [8] - The company has introduced new products and is planning innovative channel strategies to enhance market penetration [8]

Performance Summary - In H1 2025, the company reported revenue of 2.7 billion yuan, a year-on-year decrease of 17.4%, and a net profit attributable to shareholders of 440 million yuan, down 25.0% [1] - In Q2 2025, revenue reached 1.13 billion yuan, a year-on-year decline of 3.4%, while net profit attributable to shareholders was 100 million yuan, an increase of 139.5%, indicating a better-than-expected profit recovery [1] Operational Analysis - Revenue breakdown by product in H1 2025: high-end liquor, ordinary liquor, and non-liquor businesses generated 1.97 billion, 440 million, and 280 million yuan, with year-on-year changes of -24.1%, +15.9%, and -0.7% respectively; in Q2 2025, the figures were 740 million, 240 million, and 150 million yuan, with year-on-year changes of -15.6%, +62.3%, and +4.3% [2] - Revenue by region in H1 2025: domestic and external sales were 780 million and 1.64 billion yuan, with year-on-year changes of -13.9% and -21.2%; in Q2 2025, the figures were 290 million and 690 million yuan, with year-on-year changes of -21.2% and +4.8% [2] - Revenue by channel in H1 2025: e-commerce and wholesale generated 340 million and 2.08 billion yuan, with year-on-year changes of +31.4% and -23.7%; in Q2 2025, the figures were 130 million and 840 million yuan, with year-on-year changes of +23.8% and -7.8% [2] - The company added 253 new distributors and exited 331, resulting in a net decrease of 78 distributors, with a total of 2,582 remaining at the end of H1 2025, focusing on stabilizing existing distributors while nurturing small and micro clients [2] Financial Structure Analysis - In Q2 2025, the net profit margin increased by 5.2 percentage points to 8.6%, with a gross margin decrease of 0.3 percentage points to 60.6%; the sales expense ratio decreased by 3.3 percentage points, and the management expense ratio decreased by 1.2 percentage points, indicating a recovery in profit margins [3] - The balance of contract liabilities at the end of H1 2025 was 160 million yuan, a decrease of 50 million yuan quarter-on-quarter; considering the variable of contract liabilities, Q2 2025 revenue decreased by 1% year-on-year [3] Profit Forecast, Valuation, and Rating - Revenue forecasts for 2025-2027 are -4.9%, +8.9%, and +14.5%; net profit attributable to shareholders is expected to grow by 121.2%, 20.8%, and 28.1%, reaching 765 million, 924 million, and 1.183 billion yuan respectively; EPS is projected to be 2.30, 2.77, and 3.55 yuan [4] - The current stock price corresponds to PE valuations of 26.5, 22.0, and 17.1 times for the years 2025, 2026, and 2027, maintaining a "buy" rating [4]

Core Viewpoint - Shede Liquor's half-year report for 2025 shows a significant decline in revenue and net profit, but a strong recovery in the second quarter indicates effective strategies in place to manage market challenges [1][5]. Financial Performance - For the first half of 2025, the company achieved revenue of 2.701 billion yuan, a decrease of 17.41% year-on-year [2]. - The net profit attributable to shareholders was 562 million yuan, down 29.34% compared to the previous year [2]. - In the second quarter, revenue reached 1.125 billion yuan, remaining stable year-on-year, while net profit surged by 139.5% to 97.17 million yuan [1][4]. Cash Flow and Assets - The net cash flow from operating activities for the first half was 67.37 million yuan, showing a significant increase of 427.77% year-on-year [3][9]. - The net assets attributable to shareholders increased by 3.61% to 7.054 billion yuan, and total assets rose by 5.12% to 12.407 billion yuan [3]. Market Strategy - The company is implementing a "control volume and support price" strategy to manage inventory and support future sales, which has shown positive results [5][9]. - The focus on high-end products has led to revenue of 1.973 billion yuan from mid-to-high-end liquor, while ordinary liquor represented by T68 saw a revenue increase of 15.86% to 445 million yuan [5]. Sales Channels and Regional Performance - Sales through wholesale and agency channels amounted to 2.082 billion yuan, while e-commerce sales reached 336 million yuan, reflecting a year-on-year growth of 31.38% [7]. - Revenue from the domestic market was 783 million yuan, while the revenue from outside the province was 1.635 billion yuan [7]. International Expansion - The company is actively pursuing international strategies, currently operating in 40 countries and regions, enhancing its global presence [7]. Brand Development - The company has been focusing on brand building and product upgrades, with initiatives such as the "Shede Wisdom Characters" series and the fourth Old Liquor Festival to enhance brand recognition [13]. - The "Old Liquor Strategy" has been a key focus since 2019, aligning with market trends that show increasing demand for aged liquor [11]. Future Outlook - For the second half of 2025, the company plans to maintain its strategic focus on the Old Liquor Strategy while advancing multi-brand, youth-oriented, and international strategies [13].

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company reported a revenue of 2.7 billion yuan for the first half of 2025, a year-on-year decrease of 17.4%, and a net profit attributable to shareholders of 440 million yuan, down 25.0% year-on-year. However, the second quarter showed signs of recovery with a revenue of 1.13 billion yuan, a decrease of only 3.4% year-on-year, and a net profit of 100 million yuan, which is an increase of 139.5% year-on-year [2] - The revenue structure indicates that high-end liquor and ordinary liquor segments faced declines, while non-liquor business showed growth. The company is focusing on e-commerce channels and product innovation to drive growth [3] - The company is expected to see a revenue decline of 4.9% in 2025, followed by growth of 8.9% in 2026 and 14.5% in 2027. Net profit is projected to increase significantly in the coming years, with a forecasted growth of 121.2% in 2025 [5] Revenue Analysis - In the first half of 2025, the revenue from high-end liquor, ordinary liquor, and non-liquor businesses was 1.97 billion, 440 million, and 280 million yuan respectively, with year-on-year changes of -24.1%, +15.9%, and -0.7% [3] - The company added 253 new distributors while 331 exited, resulting in a net decrease of 78 distributors, indicating a focus on stabilizing existing relationships while nurturing smaller clients [3] Profitability Metrics - The net profit margin for Q2 2025 increased by 5.2 percentage points to 8.6%, with a gross margin of 60.6%. The company is expected to see an acceleration in cost optimization in the second half of 2025 [4] - The report indicates a significant recovery in profitability metrics, with the company focusing on cost reduction and efficiency improvements [4] Financial Forecast - The projected earnings per share (EPS) for 2025, 2026, and 2027 are 2.30, 2.77, and 3.55 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 26.5, 22.0, and 17.1 [5] - The company is expected to recover from a significant drop in net profit in 2024, with a forecasted net profit of 765 million yuan in 2025, increasing to 1.18 billion yuan by 2027 [10]