Investment Rating - The report maintains a "Buy" rating for the company [5][8] Core Views - The company demonstrated resilience during the adjustment period, with a slight increase in total revenue and net profit in the first half of 2025 [1] - The company's revenue for the first half of 2025 reached 13.88 billion yuan, a year-on-year increase of 0.54%, while the net profit attributable to the parent company was 3.66 billion yuan, up 2.49% year-on-year [1] - The report highlights the stable performance of the company's flagship product, Year Original Liquor, amidst industry adjustments [2] Revenue Breakdown - In the first half of 2025, the company generated revenue from different segments: 13.64 billion yuan from liquor, 46 million yuan from hotels, and 194 million yuan from other businesses, with year-on-year changes of +1.57%, +10.44%, and -42.10% respectively [2] - Year Original Liquor sales increased slightly, with revenue of 10.96 billion yuan, a year-on-year increase of 1.59%, while the average factory price decreased by 8.22% to 167,500 yuan per ton [2] - The company’s sales volume for liquor reached 81,400 tons, up 10.67% year-on-year, while the sales volume for Year Original Liquor was 46,600 tons, also up 10.80% year-on-year [2] Regional Performance - The company’s revenue from different regions in the first half of 2025 was as follows: Central China 12.30 billion yuan (+3.60% YoY), North China 808 million yuan (-27.04% YoY), South China 768 million yuan (-5.84% YoY), and International 50,000 yuan (-53.68% YoY) [3] - The online sales channel showed significant growth, with revenue of 573 million yuan, a year-on-year increase of 40.19%, while offline sales slightly decreased by 0.67% to 1.33 billion yuan [3] Profitability and Cost Management - The company’s gross margin slightly declined, but the net profit margin improved due to cost savings in operating expenses. The net profit margin for the first half of 2025 was 26.38%, up 0.50 percentage points year-on-year [4] - In the second quarter of 2025, the net profit margin was 28.13%, an increase of 0.83 percentage points year-on-year, while the gross margin was 80.24%, down 0.26 percentage points [4] Financial Forecast - The company is expected to achieve net profits of 5.48 billion yuan, 5.89 billion yuan, and 6.45 billion yuan for the years 2025, 2026, and 2027, with growth rates of -0.62%, 7.40%, and 9.51% respectively [5]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, indicating challenges in the current market environment and a need for strategic adjustments to maintain growth [1][4]. Financial Performance - In the first half of 2025, the company achieved revenue of 3.16 billion yuan, a year-on-year decrease of 16.9% - The net profit attributable to shareholders was 1.13 billion yuan, down 18.2% year-on-year - The net profit after deducting non-recurring items was 1.09 billion yuan, a decline of 19.9% year-on-year - For Q2 2025, revenue was 1.11 billion yuan, down 23.8% year-on-year, with net profit at 302 million yuan, a decrease of 35.2% year-on-year [1][4]. Product and Regional Performance - In Q2 2025, revenue from high-end and regular white liquor was 817 million yuan and 210 million yuan, respectively, representing declines of 23.6% and 32.9% year-on-year - The revenue share of high-end white liquor increased by 2.19 percentage points to 79.5% - Revenue from domestic and foreign regions in Q2 2025 was 730 million yuan and 296 million yuan, down 20.3% and 36.4% year-on-year, respectively - The number of domestic and foreign distributors increased by 3 and 1, respectively, compared to Q1 2025 [2][4]. Cost and Profitability - The gross profit margin for the first half of 2025 was 73.6%, an increase of 0.18 percentage points year-on-year, while Q2 2025 gross profit margin was 68.3%, a decrease of 2.62 percentage points year-on-year - The sales, management, and R&D expense ratios for Q2 2024 were 13.4%, 5.5%, and 1.3%, respectively, with year-on-year increases of 3.43, 2.01, and 0.05 percentage points - The net profit margin for Q2 2024 was 27.1%, down 4.63 percentage points year-on-year [3][4]. Strategic Outlook - The company is focusing on consolidating core markets in the short term, differentiating competition and regional expansion in the medium term, and enhancing brand value through a "Cultural Welcome Strategy" in the long term - The company aims to maintain a healthy channel inventory by controlling shipment pace and expects stable growth in 2025 due to macroeconomic recovery and low base effects from the previous year - Revenue projections for 2025 and 2026 are 6.31 billion yuan and 6.70 billion yuan, with year-on-year changes of -14.0% and +6.1%, respectively [4].