Investment Rating - The report assigns an "Accumulate" rating for the company for the first time [1] Core Views - The marketing strategy focuses on high-end branding, maintaining a high sales expense ratio above 26% to build a foundation for premiumization [2] - The company is increasing its investment in high-end products despite pressure on demand for mid-to-high-end products, with a focus on leveraging high-end offerings to drive growth in lower-tier products [2] - The company is adopting a dual-channel strategy to enhance efficiency and precision in its distribution, utilizing a "mushroom strategy" to target both established and emerging markets [2] Summary by Sections Company Overview - Sichuan Shui Jing Fang Co., Ltd. is a well-known mid-to-high-end liquor company in China, with its origins tracing back to 1951 [26] - The company has undergone several name changes and restructuring, becoming a national player in the mid-to-high-end liquor market [26] Market Analysis - The mid-to-high-end liquor market reached over 100 billion yuan in 2022, with a compound annual growth rate of nearly 20% from 2016 to 2022 [42] - The market is characterized by a fragmented structure, providing opportunities for established brands to gain market share [42] Product Strategy - The company focuses on high-priced products, with a product matrix that emphasizes mid-to-high-end offerings [2] - Key products include "Zhenrong Ba" and "Tianhao Chen," which are positioned to capture both high-end and mass-market segments [2] Financial Projections - The company is expected to achieve net profits of 1.37 billion yuan, 1.52 billion yuan, and 1.71 billion yuan for the years 2024, 2025, and 2026, respectively, with year-on-year growth rates of 7.8%, 11.5%, and 12.0% [2]
水井坊:剑指高端,坚守征程