Core Viewpoint - The company is experiencing a significant decline in revenue and net profit, indicating pressure in the liquor industry, particularly in the mid-to-high-end segment, leading to inventory clearance efforts [1][2][3] Group 1: Financial Performance - In H1 2025, the company reported revenue of 3.16 billion and net profit of 1.13 billion, reflecting year-on-year declines of 16.89% and 18.19% respectively [1] - Q2 2025 figures show revenue of 1.11 billion and net profit of 302 million, with year-on-year declines of 24.81% and 35.22% respectively [1] - The company's contract liabilities at the end of Q2 2025 were 440 million, down by 22 million year-on-year and 16 million quarter-on-quarter, indicating a significant drop in cash flow [1] Group 2: Profitability and Cost Structure - Q2 2025 gross margin and net profit margin were 68.33% and 27.10%, down by 2.82 percentage points and 4.78 percentage points year-on-year [2] - Sales and management expense ratios increased to 13.41% and 5.51%, up by 3.41 percentage points and 2.10 percentage points year-on-year [2] - Revenue from mid-to-high-end liquor decreased by 23.60%, while ordinary liquor saw a decline of 32.90% in Q2 2025 [2] Group 3: Market Dynamics and Channel Performance - The company is focusing on inventory clearance in response to demand pressure, with Q2 2025 cash flow from sales down by 22% year-on-year [1] - The company’s direct sales channel revenue increased by 1.46%, while wholesale agent revenue decreased by 27.40%, indicating a shift towards direct sales [3] - The number of distributors at the end of Q2 2025 was 1,383, with a slight increase in both provincial and non-provincial distributors [3] Group 4: Future Outlook - The company forecasts net profits for 2025-2027 to be 2.13 billion, 2.26 billion, and 2.46 billion respectively, with year-on-year growth rates of -17.64%, 5.90%, and 8.99% [3] - The current price-to-earnings ratios for the upcoming years are projected at 17.1, 16.15, and 14.81 [3] - The company is expected to show resilience in revenue and net profit due to strong channel management and brand recognition in the Anhui market [3]

Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [4][12]. Core Views - The company reported a significant decline in revenue and net profit for the year 2024, with revenue at 5.36 billion RMB, down 24.4% year-on-year, and net profit at 346 million RMB, down 80.5% year-on-year [1][4]. - The company's performance is under pressure due to a downturn in industry demand, leading to a net loss in Q4 2024 [2][4]. - The report forecasts a gradual recovery in revenue and net profit from 2025 to 2027, with expected revenue growth rates of 1.5%, 6.6%, and 13.4% respectively [4][7]. Summary by Sections Performance Review - In 2024, the company achieved revenue of 5.36 billion RMB, a decrease of 24.4% year-on-year, and a net profit of 346 million RMB, down 80.5% year-on-year. Q4 2024 revenue was 900 million RMB, down 51.1% year-on-year, resulting in a net loss of 320 million RMB [1]. Operational Analysis - The company's revenue structure weakened, with high-end and regular liquor sales at 4.1 billion RMB and 690 million RMB respectively, both showing declines of 27.6% and 23.4% year-on-year. Q4 2024 saw even steeper declines of 60.3% and 26.3% [2]. - The overall gross margin decreased by 9.0 percentage points to 65.5% due to rising costs and declining sales [2][3]. Financial Metrics - The report indicates a significant drop in net profit margin to 6.5% in 2024, down 18.6 percentage points, attributed to a decrease in gross margin and an increase in sales expenses [3]. - The company’s dividend payout ratio for 2024 was 40.9%, reflecting ongoing capital expenditure needs despite the downturn [3]. Profit Forecast and Valuation - The report projects a 57% and 56% reduction in net profit for 2025 and 2026, with expected net profits of 453 million RMB and 530 million RMB respectively. The earnings per share (EPS) is forecasted to be 1.36 RMB in 2025 and 1.59 RMB in 2026 [4][7].