Core Viewpoint - RIO is expanding its product line by launching a new 12-degree cocktail, aiming to capture a broader market segment amidst declining sales and increasing competition in the ready-to-drink (RTD) beverage sector [2][3][4]. Product Launch and Market Position - The new 12-degree cocktail, available in three flavors, marks a significant increase in alcohol content compared to RIO's previous offerings, which ranged from 3 to 8 degrees [2][3]. - The product was launched online on August 5, but initial sales figures were disappointing, with minimal units sold on platforms like Tmall [11][12]. - RIO's core business is primarily driven by its cocktail series, which includes various sub-brands targeting different consumer preferences [3][6]. Consumer Trends and Target Audience - The shift towards higher alcohol content is a response to changing consumer preferences, particularly among younger male consumers and heavy drinkers, while still targeting female consumers with marketing strategies [7][8]. - The introduction of the 12-degree cocktail aims to fill the market gap between low and high alcohol beverages, differentiating itself from lower-alcohol products criticized for being too sweet [7][8]. Competitive Landscape - RIO faces increasing competition from both established brands and new entrants in the RTD market, including traditional liquor companies that have begun to offer their own pre-mixed cocktails [14][15]. - The company's market share has been challenged by the emergence of alternative beverages, leading to a decline in sales and a reduction in the number of distributors [16][17]. Financial Performance - RIO's parent company, BaiRun Co., reported a revenue decline of 6.61% in 2024, with a continued downward trend into 2025 [16][17]. - The pre-mixed cocktail segment, which constitutes nearly 90% of RIO's revenue, has been the primary driver of this decline, with a reported 7.17% decrease in revenue from this category [16][17]. Marketing and Brand Strategy - RIO's historical marketing strategies, including high-profile sponsorships and celebrity endorsements, have contributed to its initial success, but the brand is now struggling to maintain its relevance in a saturated market [13][15]. - The company has increased its marketing expenditures in recent years, but the effectiveness of these efforts is being questioned as consumer interest wanes [15][17].

Core Viewpoint - Genki Forest is re-entering the low-alcohol beverage market with its new sparkling wine product "Lang," which has an alcohol content of 9 degrees and is packaged in 500ml cans, priced between 12.4 to 13.2 yuan per can [3][5][20]. Group 1: Product Launch and Market Positioning - The "Lang" product features two flavors: grapefruit and lemon, and is positioned to target male consumers and social drinking scenarios, contrasting with RIO's offerings which are more female-oriented [5][6]. - "Lang" is directly competing with RIO's Qiangshuang, which has been a significant revenue driver for its parent company, Bai Run [20][21]. - Genki Forest previously attempted to enter the low-alcohol market with "Pingye Xida," but it did not gain traction due to the company's developmental stage at that time [6][8]. Group 2: Brand Strategy and Challenges - Genki Forest employs a brand "migration" strategy, reusing brand names across different product types, as seen with the "Lang" brand which was previously used for a less successful carbonated juice [8][9]. - The company faces challenges in effectively managing both soft drink and alcoholic beverage segments, as few companies globally successfully operate in both markets [15][17]. - Establishing a dedicated alcoholic beverage division may be necessary for Genki Forest to succeed in this new market, but it remains uncertain if the company will make such a commitment [18][26]. Group 3: Competitive Analysis - RIO's Qiangshuang has a stronger cost control capability due to its in-house production, while "Lang" relies on external manufacturing, impacting pricing strategies [21][24]. - RIO has established brand recognition in the low-alcohol market, which poses a significant challenge for "Lang" to gain consumer awareness and market share [20][21]. - "Lang" does not currently present significant competitive advantages over RIO, but it may still find a niche if it can differentiate itself from other low-alcohol products [24][26]. Group 4: Future Prospects - Genki Forest is not stopping with "Lang" and plans to introduce more alcoholic products, including a milk foam wine, indicating a long-term strategy in the alcoholic beverage sector [27][28]. - The company’s ongoing investments and acquisitions in the alcoholic beverage space suggest a serious commitment to this market, although it still has a long way to go in terms of operational expertise [27][28].

Investment Rating - The report maintains a "Recommended" rating for the company [6]. Core Insights - The company shows resilience in its ready-to-drink cocktail business, with a projected recovery in growth for 2025. The whisky business has entered the product sales phase, which is expected to be a significant highlight for 2025 [6]. - The company has adjusted its earnings forecast based on the latest performance and increased expectations for whisky business profitability, projecting EPS of 0.77, 1.00, and 1.29 for 2025-2027 [6]. Financial Performance Summary Revenue and Profitability - 2024 projected revenue is 30.48 billion, with a decline of 6.61% year-on-year. The net profit attributable to the parent company is projected at 7.19 billion, down 11.15% year-on-year [2][6]. - For 2025 Q1, revenue is estimated at 740 million, a decrease of 8.1% year-on-year, while net profit is expected to be 180 million, an increase of 7.03% year-on-year [6]. Revenue Growth Forecast - Revenue growth rates are projected at 23.00% for 2025, 23.45% for 2026, and 20.43% for 2027 [2][8]. - The ready-to-drink cocktail business is expected to recover in 2025, with an estimated revenue of around 650 million for Q1 [6]. Profitability Metrics - Gross margin is expected to improve from 69.67% in 2024 to 73.08% by 2027 [2][8]. - The net profit margin is projected to increase from 23.59% in 2024 to 24.37% in 2027 [8]. Valuation Ratios - The P/E ratio is expected to decrease from 40.87 in 2024 to 20.16 by 2027, indicating an improving valuation as earnings grow [2][8]. - The P/B ratio is projected to decline from 6.27 in 2024 to 4.05 in 2027 [2][8]. Business Segment Insights Ready-to-Drink Cocktails - The ready-to-drink cocktail segment generated 26.8 billion in revenue for 2024, showing a slight decline but with a stable development outlook due to consumer loyalty and ongoing product updates [6]. Whisky Business - The whisky segment has launched new products and is expected to contribute significantly to revenue in 2025, with a strong product pipeline and marketing strategy [6].

Core Viewpoint - The company reported a decline in revenue and net profit for 2024, primarily due to strong sales pressure on its flagship product, while also indicating improvements in gross margin and a focus on key product marketing [1][2][4]. Financial Performance - In 2024, the company achieved revenue of 3.05 billion yuan, a decrease of 6.6% year-on-year, with net profit attributable to shareholders at 720 million yuan, down 11.2% [1][2]. - The fourth quarter of 2024 saw revenue of 660 million yuan, with net profit of 140 million yuan, reflecting a year-on-year revenue decline of 18.0% [2]. - Cash receipts for 2024 totaled 3.32 billion yuan, a decrease of 5.2% year-on-year [2]. Product Performance - The company's food flavor segment generated revenue of 340 million yuan, an increase of 6.3% year-on-year, while the ready-to-drink cocktail segment reported revenue of 2.68 billion yuan, down 7.2% [2]. - The ready-to-drink cocktail segment faced pressure due to a high base from the previous year, expected to account for nearly half of total revenue [2]. Channel Analysis - Revenue from offline, digital, and ready-to-drink channels in 2024 was 2.71 billion yuan, 270 million yuan, and 40 million yuan, respectively, with declines of 1.5%, 30.8%, and 43.6% year-on-year [3]. - The company shifted its focus back to offline development post-pandemic, reducing online investment and maintaining price expectations [3]. Margin and Cost Structure - The gross margin for 2024 was 69.7%, an increase of 3.0 percentage points year-on-year, benefiting from cost reductions [4]. - The gross margin for food flavors was 69.1%, up 1.5 percentage points, while ready-to-drink cocktails had a gross margin of 70.0%, up 2.4 percentage points [4]. - Sales and management expense ratios increased by 2.9 and 0.8 percentage points, respectively, with marketing expenses rising to 400 million yuan, an increase of 11.7% [4]. Future Outlook - The ready-to-drink cocktail business is stabilizing, and new whiskey products are being rolled out, with expectations for earnings per share (EPS) of 0.78, 0.89, and 1.03 yuan for 2025-2027 [2][5]. - The current stock price corresponds to a 34 times price-to-earnings ratio for 2025, leading to an upgrade to a "strongly recommended" rating [5].

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The demand for pre-mixed cocktails remains weak, while the whiskey business is expected to provide new growth momentum [1][8] - The company has launched its whiskey products, which are anticipated to drive faster revenue growth [6][7] Financial Performance Summary - In 2024, the company achieved operating revenue of 3.05 billion yuan, a year-on-year decrease of 6.6%, and a net profit attributable to shareholders of 720 million yuan, down 11.2% year-on-year [3][4] - For Q4 2024, the company reported operating revenue of 660 million yuan, a decline of 18% year-on-year, while net profit attributable to shareholders was 140 million yuan, an increase of 0.5% year-on-year [3][4] - In Q1 2025, the company recorded operating revenue of 740 million yuan, down 8.1% year-on-year, with a net profit of 180 million yuan, up 7% year-on-year [3][4] Product Performance Summary - The pre-mixed cocktail segment generated revenue of 2.68 billion yuan in 2024, a decrease of 7.17% year-on-year, with sales volume down 8.81% [4] - The food flavoring segment saw revenue of 337 million yuan, an increase of 6.3% year-on-year, indicating stable growth [4] Channel Performance Summary - Offline retail remains the primary sales channel, contributing 2.71 billion yuan in revenue, a decline of 1.48% year-on-year, accounting for 89.96% of total revenue [4] - Digital retail channels experienced a significant drop in revenue, down 30.75% year-on-year, while the ready-to-drink channel saw a decline of 43.58% [4] Profitability and Cost Analysis - The company's gross margin improved to 69.67% in 2024, up 2.97 percentage points year-on-year, primarily due to slight price increases and reduced commercial discounts [5] - The net profit margin for Q4 2024 was 21.88%, reflecting a significant year-on-year increase due to higher other income [5] Future Outlook and Valuation - The company has adjusted its net profit forecasts for 2025 and 2026 to 809 million yuan and 940 million yuan, respectively, reflecting a downward revision of 13% and 12% [8] - The report projects earnings per share (EPS) of 0.77 yuan for 2025, with a price-to-earnings (P/E) ratio of 34x [8]

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The demand for pre-mixed cocktails remains weak, while the whiskey business is expected to provide new growth momentum [1][8] - The company has experienced a decline in revenue and net profit in 2024, with a year-on-year revenue decrease of 6.6% to 3.05 billion yuan and a net profit decrease of 11.2% to 720 million yuan [3][4] - The launch of whiskey products is anticipated to drive faster revenue growth in the future [6][7] Revenue Performance - In 2024, the pre-mixed cocktails segment generated 2.677 billion yuan in revenue, down 7.17% year-on-year, with sales volume decreasing by 8.81% [4] - The offline retail channel remains the primary sales channel, accounting for 89.96% of total revenue, despite a slight decline of 1.48% year-on-year [4] Profitability Analysis - The company's gross margin improved to 69.67% in 2024, with a notable increase in Q4 gross margin to 68.09% [5] - The net profit margin for Q4 2024 increased significantly to 21.88% year-on-year, attributed to higher other income [5] Future Projections - The company has revised its net profit forecasts for 2025 and 2026 downwards to 809 million yuan and 940 million yuan, respectively, reflecting a decrease of 13% and 12% from previous estimates [8] - The earnings per share (EPS) for 2025-2027 are projected to be 0.77 yuan, 0.90 yuan, and 1.05 yuan, respectively [8] Market Positioning - The whiskey products are targeted at the mid-range market, focusing on young consumers who are new to whiskey [7] - Marketing strategies include online content marketing and offline experiential activities to enhance brand visibility [7]