Shede Spirits (SH:600702) Shanghai Aijian Securities·2025-12-26 11:44Investment Rating - The report assigns an initial investment rating of "Buy" for the company [2][3]. Core Views - The company is expected to achieve revenues of 4.77 billion, 5.16 billion, and 5.73 billion yuan for the years 2025, 2026, and 2027, respectively, with year-on-year growth rates of -10.9%, 8.1%, and 11.0%. The net profit attributable to shareholders is projected to be 520 million, 598 million, and 742 million yuan for the same years, with growth rates of 50.3%, 15.0%, and 24.2% [3][5]. - The company maintains a long-term strategy focused on "strong sales, promoting opening bottles, and destocking," which is expected to yield benefits as policy pressures ease and industry demand recovers [3][4]. - The Chinese liquor industry is experiencing steady growth, with sales revenue from large-scale liquor enterprises reaching 756.3 billion yuan in 2023, and a compound annual growth rate (CAGR) of 9.8% from 2016 to 2023 [3][4]. Summary by Relevant Sections Financial Data and Profit Forecast - Total revenue for 2023 is reported at 7.08 billion yuan, with a year-on-year growth rate of 16.9%. However, a significant decline of 24.3% is expected in 2024, followed by a recovery in 2025 with a projected growth of -10.9% [5][18]. - The gross profit margin is expected to decrease from 74.5% in 2023 to 63.0% in 2025, before stabilizing around 65.0% by 2027 [5][18]. - The return on equity (ROE) is projected to improve from 5.1% in 2024 to 8.6% in 2027 [5][18]. Industry and Company Analysis - The company focuses on mid-to-high-end liquor and ordinary liquor, with a product matrix that includes the "Shede" series targeting the mid-to-high-end market and the "Tuopai" series catering to the mass market [3][4]. - In the first three quarters of 2025, the company reported revenues of 3.7 billion yuan, with mid-to-high-end liquor contributing 2.66 billion yuan, accounting for 71.9% of total revenue [3][4]. - The company has implemented proactive destocking measures, which have shown effectiveness in improving channel health and preparing for future growth [3][4]. Growth Catalysts - The report identifies several catalysts for growth, including the nearing end of proactive destocking, the trend towards lower alcohol consumption appealing to younger demographics, and ongoing cost reduction and efficiency improvement initiatives [4].