KJS(SH:601579) Changjiang Securities·2025-06-17 02:58Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [11]. Core Views - The yellow wine industry is stabilizing, with a total revenue of 21 billion yuan in 2023, reflecting a year-on-year growth of 2.1%. The company, as a leading player in the industry, is expected to benefit from the ongoing trends of premiumization and targeting younger consumers, which will drive growth in both domestic and provincial markets. The projected EPS for the company in 2025 and 2026 is 0.48 yuan and 0.58 yuan, respectively, corresponding to PE ratios of 43 and 36 times [3][9]. Company Overview - The company, Kuaijishan Shaoxing Wine Co., Ltd., is a leading player in China's yellow wine industry with a rich brand heritage. It has been recognized as the exclusive yellow wine for state banquets and has been designated as the official yellow wine for the G20 summit. The company has undergone significant changes, including acquisitions and a shift in strategic focus towards high-end, youthful, and fashionable products since the change of its actual controller in 2022 [6][19][22]. Industry Analysis - The yellow wine industry is currently a niche market, primarily concentrated in the East China region, particularly in Zhejiang province. The industry has seen a significant increase in concentration, with the top three companies holding approximately 43% of the market share, up from about 18% in 2016. This indicates a stabilizing industry structure [7][59]. Strategic Initiatives - The company has implemented a dual-brand strategy focusing on "Kuaijishan" and "Lanting," emphasizing high-end and youthful product lines. The company has achieved impressive growth in its key products, with the Lanting series growing over 100% and the "One Day One Smoke" product increasing by 476% year-on-year. This growth is attributed to internal reforms and a more dynamic sales team [8][65][68]. Financial Projections - The company is expected to continue its growth trajectory, with projected EPS of 0.48 yuan and 0.58 yuan for 2025 and 2026, respectively. The current PE ratios are 43 and 36 times, indicating a favorable valuation for potential investors [9][11].