Summary of Shede Liquor Industry Conference Call Company Overview - **Company**: Shede Liquor Industry - **Industry**: Liquor and Beverage Key Points and Arguments Market Demand and Performance - Shede Liquor anticipates a release of market demand during the Mid-Autumn Festival and National Day despite facing policy pressures [2][3] - The company has adjusted its inventory and performance metrics over the past year, resulting in better performance compared to peers [2][3] Inventory Management - Overall inventory levels remain high, but the company aims to prioritize sales over invoices to gradually reduce inventory [2][6] - The current inventory is estimated to cover approximately 3 to 4 months, with weaker markets showing higher inventory levels [7] Sales Strategy - The company is implementing a "small orders quick run" strategy to lower entry barriers for new distributors and attract resourceful new partners [4][12] - Sales performance in various consumption scenarios (banquets, gifts, and business) is expected to improve with the upcoming holidays [5] Consumer Insights - Shede Liquor's consumers are primarily from emerging industries, showing less brand loyalty and a greater focus on drinking comfort rather than brand recognition [9] - The company leverages its high-quality aged liquor to cater to these consumer preferences [9] New Product Development - The launch of the 29-degree "Shede Zizai" low-alcohol liquor is focused on online sales and aims to test market response in 24 cities with a zero-inventory model [10][11] - The pricing strategy for the new product is set at around 300 yuan to differentiate it from high-concentration products [11] Challenges and Opportunities - The company is exploring opportunities in the technology sector due to slow recovery in the restaurant, business, and real estate chains [8] - The performance of the "Pinwei" series products is under pressure due to weak business demand, requiring time to cultivate the market [17] Financial Outlook - Shede Liquor expects to perform better than the industry in the second half of the year, with improvements dependent on overall industry adjustments [16] - The company plans to maintain stable sales expenses while focusing on consumer engagement to stimulate sales [18] Regional Market Insights - The growth in the Henan market in Q2 is attributed to a low base from the previous year, with expectations for gradual recovery [15] - The company is focusing on seven key base markets, ensuring comprehensive coverage across all price segments [14] Distributor Relations - Most distributors are currently profitable and show high confidence in the company, supported by various initiatives to enhance market presence [4][12][14] Additional Important Content - The company emphasizes the importance of dynamic adjustments in inventory management to ensure long-term health and development [2][6] - Shede Liquor's cautious approach to new product launches aims to avoid potential damage to brand reputation [10]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but showed signs of recovery in the second quarter, with a focus on innovation and brand enhancement to drive future growth [1][4]. Financial Performance - For 25H1, total revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 2.7 billion, 440 million, and 440 million respectively, representing year-on-year declines of 17.4%, 25.0%, and 24.1% [1]. - In 25Q2, total revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 1.13 billion, 100 million, and 100 million respectively, with year-on-year changes of -3.4%, +139.5%, and +194.2% [1]. Product and Market Strategy - The company is focusing on four core products and innovating cultural products targeted at younger demographics to create differentiation [1]. - The strategy emphasizes channel development post-inventory reduction in 2024, leveraging platform push and consumer pull to enhance sales and brand influence [1]. - The company aims to find growth in existing markets by implementing a strategy of "downward channel, upward brand, and comprehensive C-end focus" [1]. Regional Performance - In 25H1, revenue from mid-to-high-end liquor was 1.97 billion, while ordinary liquor revenue was 440 million, with year-on-year changes of -24% and +16% respectively [2]. - By region, revenue from within the province was 780 million, and from outside the province was 1.64 billion, with year-on-year changes of -14% and -21% [2]. - The company has 2,585 distributors as of the end of 25Q2, a decrease of 78 from the end of 24 [2]. Cost and Profitability - The gross profit margin for 25H1 decreased by 3.7 percentage points to 65.7%, primarily due to product mix changes [3]. - The selling expense ratio increased by 1.1 percentage points to 21.2% in 25H1, attributed to higher marketing investments [3]. - The net profit margin for 25H1 was 16.4%, reflecting a year-on-year decrease of 1.7 percentage points [3]. Future Outlook - The company maintains a long-term perspective, anticipating a recovery in business demand to improve performance [4]. - Revenue forecasts for 2025-2027 have been slightly adjusted downwards to 4.69 billion, 4.90 billion, and 5.21 billion respectively, with year-on-year changes of -12.5%, +4.5%, and +6.4% [4]. - The earnings per share (EPS) estimates for 2025-2027 have been slightly increased to 1.47, 1.57, and 1.71 respectively, reflecting a positive outlook [4].

Summary of Shede Liquor Industry Conference Call Company Overview - **Company**: Shede Liquor Industry - **Date**: Q2 2025 Key Points Industry Impact and Sales Performance - The macro environment and the 518 alcohol ban have reduced consumption scenarios, impacting government and enterprise-related projects, but sales of main products remained stable during the Dragon Boat Festival [2][3] - The T68 banquet product was not affected, and the market for townships, counties, mass consumption, self-drinking, and banquet markets maintained double-digit growth [2][3] - After the 618 period, the number of opened bottles gradually recovered, indicating a loosening of demand [2][4] Inventory and Distribution - 70% of Shede's distributors are large businesses with over 5 million in sales, maintaining a healthy inventory level of two to three months [2][4] - The company has actively reduced inventory since last year, with a slight increase in inventory levels by the end of Q2 2025, but overall inventory management remains good [2][6] Pricing Strategy - Mainstream wholesale prices remained firm in Q2 2025, with the Taste series priced around 330 yuan, and the Water of the Way series priced between 190-200 yuan and 150 yuan for the Tiandao series [2][6] Market Segmentation and Product Strategy - The banquet market is a focus, but the opening rate in cities above the prefecture level is low due to unfamiliarity among participants, while products in township markets perform better [2][7] - The company is developing a 29-degree liquor product that incorporates decades-old liquor, showcasing its old liquor strategy [3][23] - Online sales channels account for about 10%-15% of total sales, primarily driven by cultural customization and youth-oriented products [2][5] Marketing and Advertising - Shede is focusing on precise advertising investments, including main products and brand building through platforms like CCTV, and targeting mass banquet consumption [3][11] - The company is innovating in youth marketing by integrating emotional value and thematic elements into online cultural products and live streaming platforms [3][24] Future Outlook and Strategic Adjustments - The company plans to strengthen its base market strategy, covering all regions and channels, and will focus on new channels and products for young consumers [3][21] - Shede is optimistic about market demand for Q3 and the upcoming festivals, with plans to enhance resource allocation and incentivize sales personnel [3][20] - The company aims to launch new cultural products for the upcoming year and upgrade its main products to ensure the best quality at competitive prices [3][22] Financial Performance - Overall profit and gross margin are expected to recover in 2025, driven by cost control and refined management practices [3][17][18] Channel Management - The company is managing channels by controlling distributor inventory and protecting product prices to create a positive sales cycle [3][19] Conclusion - Shede Liquor Industry is navigating a challenging macro environment while focusing on strategic growth areas, product innovation, and effective marketing to engage younger consumers and maintain sales momentum.