Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, indicating challenges in the current macroeconomic environment and a need for strategic adjustments to maintain market stability [1][2]. Financial Performance - For the first half of 2025, the company achieved revenue of approximately 1.498 billion yuan, a year-on-year decrease of about 12.8%, and a net profit attributable to shareholders of approximately 105 million yuan, down 56.5% year-on-year [1]. - In Q2 2025, revenue declined by 31.4% year-on-year, while net profit saw a significant drop of 251.2% year-on-year [1]. - The fiscal year 2025 ended with a slight revenue decline of 2.9% compared to the previous year, indicating a stable performance despite industry adjustments [1]. Product Performance - In Q2 2025, the main products, including Zhenniang No. 8 and Jingtai, faced pressure with high-end liquor revenue down by 37.0% year-on-year, while mid-range liquor Tianhao Chen saw a recovery with a 67.7% increase in revenue due to adjustments made in Q1 [1]. - The company maintained significant promotional efforts for its products, particularly in banquet and opening scenarios, which impacted profit margins [2]. Marketing and Sales Strategy - The company implemented a dynamic pricing monitoring system and channel profit protection mechanisms to stabilize market order and address issues of price chaos in specific regions [3]. - Promotional activities such as "buy six, get one free" were used to enhance the popularity of products in banquet settings [2][3]. Profitability and Cost Management - The sales net profit margin decreased by 7.1 percentage points year-on-year in the first half of 2025, primarily due to narrowing gross sales margins and fluctuations in operating taxes [2]. - The gross profit margin for the first half of 2025 was 79.3%, down 1.7 percentage points year-on-year, attributed to increased promotional discounts [2]. Future Outlook - The company has adjusted its net profit forecasts for 2025 to 950 million yuan, with subsequent years projected at 830 million yuan and 900 million yuan, reflecting changes in the consumption environment [3]. - The current market valuation corresponds to a price-to-earnings ratio of 24, 28, and 26 for the years 2025 to 2027, maintaining an "overweight" rating based on historical valuation levels [3].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company has adjusted its revenue in a timely manner, but gross sales are under pressure, which has negatively impacted profitability [1] - The company is facing a challenging macroeconomic environment, leading to a significant decline in revenue and net profit in Q2 2025 [7] - Despite the current difficulties, the company is maintaining promotional support for its products, which is expected to perform better than other second-tier high-end liquor companies [7] Financial Summary - Total revenue for 2023 is projected at 4,953 million yuan, with a year-on-year growth of 6.00%. However, revenue is expected to decline by 15.08% in 2025 [1] - The net profit attributable to shareholders is forecasted to be 1,268.80 million yuan in 2023, with a year-on-year increase of 4.36%, but a significant drop of 29.04% is anticipated in 2025 [1] - The latest diluted EPS is expected to be 2.60 yuan in 2023, decreasing to 1.95 yuan in 2025 [1] - The P/E ratio is projected to be 24.10 for 2025, indicating a relatively high valuation compared to historical levels [1] Revenue and Profitability Trends - In the first half of 2025, the company reported a revenue decline of approximately 12.8% and a net profit drop of about 56.5% [7] - The Q2 2025 revenue saw a significant year-on-year decrease of 31.4%, with net profit declining by 251.2% [7] - The company has adjusted its product offerings, with high-end liquor revenue down by 37.0% in Q2 2025, while mid-range products showed a recovery with a 67.7% increase [7] Strategic Initiatives - The company is implementing dynamic pricing and channel profit protection mechanisms to stabilize market order and address pricing issues in specific regions [7] - Promotional activities are being intensified to enhance product visibility in banquet and opening scenarios, despite the short-term impact on pricing and profitability [7]

Core Insights - The competitive landscape in the consumer goods market is intensifying, with many distributors facing declining revenues and profits, as highlighted by a report indicating that 48.7% of surveyed distributors experienced revenue drops and 63.2% saw profit declines [1] - The industry is grappling with issues such as price competition, high inventory levels, and sluggish sales, leading to an imbalance in input-output ratios and creating a challenging environment for distributors [1] - Li Jinji's strategy for 2025 focuses on stabilizing existing channels, deepening distribution, and exploring new markets to address these challenges and foster mutual benefits with partners [2][3] Market Dynamics - The current market is characterized by chaotic pricing, cross-regional smuggling, and price inversion, which undermine profit margins and market order, posing significant survival challenges for distributors [4] - Li Jinji acknowledges the need to confront these pricing issues head-on, emphasizing the importance of a stable pricing system for long-term survival and growth [4][6] Strategic Initiatives - Li Jinji is elevating price management to a long-term strategic priority, implementing strict regulations and increasing investments in market management to enhance pricing control capabilities [6][7] - The company is actively engaging with distributors through a series of communication meetings to foster a collaborative environment and reinforce market order [9][11] Collaborative Approach - Li Jinji aims to create a "community of shared destiny" with distributors, focusing on mutual growth and stability in the market [3][12] - The company is leveraging data-driven strategies to optimize product offerings for individual stores, enhancing operational efficiency and enabling distributors to transition from mere logistics providers to market operators [12][14] Market Expansion - Li Jinji is targeting county-level markets with tailored product strategies that reflect local cultural preferences and seasonal trends, aiming to maximize sales potential and strengthen distributor capabilities [14][15] - The company is committed to providing resources and training to distributors to enhance their operational capabilities in these new markets [15] Long-term Vision - Li Jinji's approach is not merely tactical but represents a fundamental rethinking of distribution, emphasizing the interconnectedness of brands, channels, and consumers [16][17] - The company's commitment to high-quality products and a strong understanding of channel dynamics is seen as essential for building trust and ensuring sustainable growth in a challenging market environment [17]