Investment Rating - The investment rating for Shanxi Fenjiu is maintained as "Buy" [1] Core Views - The company has demonstrated strong performance in a challenging industry environment, with a projected net profit of CNY 12.28 billion, CNY 13.13 billion, and CNY 14.42 billion for 2025-2027, reflecting year-on-year growth of +0.3%, +6.9%, and +9.8% respectively [4] - The earnings per share (EPS) are expected to be CNY 10.07, CNY 10.76, and CNY 11.82 for the same period, with corresponding price-to-earnings (P/E) ratios of 19.9, 18.6, and 17.0 times [4] - The company has a robust product structure and a healthy national distribution, which has allowed it to outperform the industry [4] Financial Performance - For the first three quarters of 2025, revenue from Shanxi Fenjiu was CNY 32.17 billion, with a year-on-year increase of +5.5%, while other liquor categories saw a decline of -15.9% [5] - Provincial revenue was CNY 11.01 billion, down -7.5%, while out-of-province revenue reached CNY 21.81 billion, up +12.7% [5] - The company has actively optimized its distributor structure, canceling contracts with 33 distributors and penalizing over 400 for violations [6] Market Position - The company has maintained a competitive edge with its next-high-end Qinghua series, which has shown significant growth due to its unique flavor profile and high consumer loyalty [5] - Despite industry challenges, the profitability of distributors for Shanxi Fenjiu remains strong, supported by a diverse product mix and stable pricing [7] Financial Summary and Valuation Metrics - Projected operating revenue for 2025 is CNY 37.865 billion, with a year-on-year growth of +5.1% [8] - The gross margin is expected to be 74.5%, and the net margin is projected at 32.4% for 2025 [8] - Return on equity (ROE) is forecasted to decline to 28.5% by 2025, reflecting a strategic focus on sustainable growth [8]

Core Viewpoint - The recent resignation of Zhang Deqin as chairman of Kweichow Moutai marks the fourth leadership change in five years, reflecting the company's ongoing challenges and the need for strategic adjustments during a period of industry downturn [1][5][7]. Group 1: Leadership Changes - Zhang Deqin served as chairman for less than 18 months before resigning due to work adjustments, with Chen Hua recommended as his successor [2][4]. - The past five years have seen four different chairmen, indicating a pattern of frequent leadership changes at Kweichow Moutai [5][6]. - Each chairman has brought different strategies, from high-profile marketing initiatives to a focus on core business and traditional culture [7][8]. Group 2: Strategic Adjustments - During Zhang Deqin's tenure, several measures were implemented to stabilize the market, including increasing direct sales channels to 45% and abolishing the controversial "拆箱令" policy [4][5]. - The company has faced declining revenue growth, with Q2 results showing a revenue increase of only 7.28% and a net profit increase of 5.25% year-over-year [4][9]. - The leadership changes reflect a broader need to balance market supply and demand amid industry adjustments, with each chairman proposing unique initiatives [6][7]. Group 3: Industry Context - The frequent changes in leadership may lead to strategic inconsistencies, impacting long-term projects and market positioning [7][8]. - Kweichow Moutai's actions have significant implications for the broader liquor industry, influencing smaller enterprises and regional competition [8][9]. - The new chairman will face challenges in achieving growth targets while navigating the current industry downturn and balancing various stakeholder interests [9].