Core Viewpoint - The liquor industry is facing sales pressure, with significant short-term performance decline for Zhenjiu and Lidu, as they focus on market relief and inventory control [1][2] Group 1: Financial Performance - Zhenjiu and Lidu expect revenue for the first half of 2025 to be between 2.4 billion to 2.55 billion yuan, representing a year-on-year decline of 38.3% to 41.9% [1] - Expected net profit attributable to shareholders is projected to decrease by 23% to 24%, with adjusted net profit (non-IFRS) anticipated to decline by 39% to 40% [1] Group 2: Market Challenges - The decline in liquor consumption is attributed to economic uncertainties and recent policy impacts, particularly affecting business banquets, social gatherings, and gift-giving scenarios [1] - The high-end product segment, particularly Zhen30 and above, is impacted by downward price adjustments in premium liquor, leading to a focus on volume control and price stabilization [1] Group 3: Strategic Initiatives - The company plans to launch a new flagship product, Dazhen, in June 2025, targeting a market gap between Zhen15 and Zhen30, with positive sales progress expected [2] - The chairman is actively promoting the brand through personal marketing efforts on social media platforms [2] - The company aims to enhance its existing flagship products' competitive edge through refined sales strategies and increased market penetration [2] Group 4: Product Expansion - A high-end beer brand named "Niushi" is set to launch on August 8, with the first product priced at 88 yuan per 375ml aluminum bottle [2] - The company is focusing on emerging consumer trends and plans to develop products tailored for specific occasions like birthdays and weddings [2] Group 5: Long-term Growth Potential - The company is recognized as a rare listed entity in the liquor sector, with strong operational momentum and significant future growth potential [2] - Zhenjiu is positioned in the second tier of the liquor market, with opportunities to leverage brand and channel advantages in a concentrated market [2] - Lidu is seen as a rising star in the high-end segment, with innovative marketing strategies enhancing its market presence [2]

Core Viewpoint - The company anticipates a significant decline in revenue and net profit for the first half of 2025, primarily due to high base effects, cyclical downturns, and impacts from Q2 market conditions [1] Revenue Summary - The company expects revenue for H1 2025 to be between 2.4 to 2.55 billion RMB, representing a year-on-year decline of 38.3% to 41.9% [1] - All sub-brands are estimated to face pressure, with the main brand, Zhenjiu, experiencing a decline consistent with the overall trend, while Lidu shows limited decline [1] Profit Summary - The forecasted net profit attributable to shareholders for H1 2025 is between 570 to 580 million RMB, reflecting a year-on-year decrease of 23% to 24% [1] - The non-IFRS net profit is expected to be between 610 to 620 million RMB, indicating a decline of 39% to 40% [1] - The adjusted net profit margin is projected to remain stable at 24% to 25% [1] Market Strategy - The company is actively controlling shipment rhythms to help clear channels, with stable sales shares for key products in core markets [1] - The company is focusing on nurturing brand recognition and has positive progress in new product launches, which are expected to contribute to revenue in H2 2025 [1] Industry Context - The industry is undergoing a deep adjustment, with the company adapting its strategy to address the pressures from declining business consumption and price reductions in premium liquor [1] - The company is shifting its customer base towards new quality-driven enterprises and is introducing high-quality products at competitive price points [1] Future Outlook - The company anticipates a potential recovery in revenue growth in H2 2025, following a concentrated clearing and product updates in 2025 [2] - The non-IFRS net profit forecasts for 2025 to 2027 have been adjusted to 1.23 billion, 1.37 billion, and 1.68 billion RMB respectively, reflecting a more cautious outlook [2]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is facing significant revenue pressure in the first half of 2025, with expected revenue decline of 38.3% to 41.9% year-on-year, and net profit decline of 23% to 24% [7] - Despite the challenges, the company is actively managing its operations, maintaining a stable profit margin of 24% to 25% in the first half of 2025, indicating strong cost and expense control capabilities [7] - The company is focusing on clearing inventory and optimizing its distribution channels, with expectations for a more controlled revenue decline in the second half of 2025 as market conditions improve [7] - The company is adapting to industry pressures by shifting its customer base and product offerings, including the introduction of new products at competitive price points [7] Financial Forecasts - Total revenue is projected to be 7,060 million in 2023, with a slight increase to 7,067 million in 2024, followed by a significant drop to 5,026 million in 2025 [1] - The net profit for 2023 is estimated at 2,327 million, decreasing to 1,324 million in 2024, and further to 1,158 million in 2025 [1] - Non-IFRS net profit is expected to be 1,623 million in 2023, with a decline to 1,676 million in 2024, and a drop to 1,233 million in 2025 [1] - The report adjusts the non-IFRS net profit forecasts for 2025 to 12.3 billion, 13.7 billion, and 16.8 billion for 2025, 2026, and 2027 respectively [7] Market Data - The closing price of the stock is 7.38 HKD, with a market capitalization of approximately 22,749.82 million HKD [5] - The company has a price-to-earnings (P/E) ratio of 9.77 for the current price and latest diluted earnings per share (EPS) of 0.69 [1] - The company’s book value per share is 4.12, with a debt-to-asset ratio of 28.84% [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is actively responding to industry adjustments by transforming its strategies, focusing on nurturing enterprise customer structures and launching new products in the mid-to-high price range to create incremental growth [8] - The company aims to maintain price stability for existing products while introducing high-quality new products priced between 500-600 RMB to attract consumers [8] - The company is implementing a dual-driven strategy for national expansion and price range diversification, with a focus on experiential marketing to drive steady revenue growth [8] - The financial forecasts for the company indicate a stable performance in 2025, with slight adjustments to the non-IFRS net profit predictions for 2025-2027 [8] Financial Summary - Total revenue for 2023 is projected at 7,060 million RMB, with a growth rate of 20.56%. By 2027, revenue is expected to reach 8,929 million RMB, reflecting a growth rate of 14.54% [1] - The net profit attributable to the parent company for 2023 is estimated at 2,327 million RMB, with a significant increase of 125.96%. By 2027, it is projected to be 2,106 million RMB, with a growth rate of 22.98% [1] - The latest diluted EPS for 2023 is 0.69 RMB, expected to rise to 0.62 RMB by 2027 [1] - The company’s P/E ratio is projected to decrease from 15.88 in 2024 to 9.98 in 2027, indicating an improving valuation over time [1]

Core Viewpoint - Zhenjiu Lidu has demonstrated resilience and adaptability in a challenging market, achieving steady growth in revenue and profit while transitioning from scale expansion to value cultivation in the face of industry-wide downturns [3][10]. Financial Performance - In 2024, Zhenjiu Lidu achieved revenue of 7.07 billion yuan, a year-on-year increase of 0.5%, and an adjusted net profit of 1.68 billion yuan, up 3.3% [1]. - The gross margin improved to 58.6%, and the adjusted net profit margin rose to 23.7%, both up by 0.6 percentage points year-on-year [1][5]. - Operating cash flow reached 780 million yuan, reflecting a significant growth of 116.3% [1]. Market Position - Zhenjiu Lidu has maintained its position as the ninth largest listed liquor company in China for two consecutive years and is recognized as the first listed liquor company in Hong Kong [1][3]. - The company has successfully navigated the challenges of the 2024 liquor market, which has seen a decline in consumption demand across various price segments [3][10]. Strategic Shift - The company has shifted its focus from "scale expansion" to "value cultivation," emphasizing high-quality development and optimizing its product, capacity, and market strategies [3][10]. - Zhenjiu Lidu has implemented a major product strategy, concentrating on core products like Zhen 15 and Zhen 30, while reducing low-margin products [5][6]. Product and Brand Development - The flagship brand Zhenjiu generated revenue of 4.48 billion yuan, accounting for 63.4% of total revenue, while Lidu contributed 1.31 billion yuan, representing 18.6% [5]. - The revenue share of mid-to-high-end products has increased to 67% [5]. Channel Strategy - Zhenjiu Lidu employs a dual strategy of deepening domestic market penetration while expanding internationally, with significant growth in high-end liquor sales [6][10]. - The company has entered markets in Malaysia, Singapore, and Australia, enhancing its international presence [6]. Industry Recognition - Zhenjiu Lidu has been recognized as one of the top three private liquor companies in China and the fourth largest sauce liquor brand, following Moutai, Xijiu, and Langjiu [8][10]. - The company has been listed among the "Top 500 Most Valuable Brands in China," ranking third among sauce liquor brands [12].

Core Viewpoint - Zhenjiu Lidu has demonstrated robust growth since its listing as the first Hong Kong stock liquor company in 2023, achieving a revenue of 7.07 billion yuan in 2024, a year-on-year increase of 0.5%, and an adjusted net profit of 1.68 billion yuan, up 3.3% [2][3] Financial Performance - From 2020 to 2024, adjusted net profit surged from 520 million yuan to 1.68 billion yuan, marking a 223% increase over four years [3] - In 2024, the gross margin reached 58.6%, with an adjusted net profit margin of 23.7%, both showing a year-on-year increase of 0.6 percentage points [3] Market Strategy - The company focuses on two core products, Zhen 15 and Zhen 30, and has introduced high-end products that have received positive market feedback [5] - Zhenjiu Lidu is expanding production capacity in Guizhou, Hunan, and Jiangxi, with a storage of 100,000 tons of quality base liquor and a production capacity of 44,000 tons [7] Brand Development - The company employs a multi-brand strategy, leveraging its quality production and cultural attributes to enhance brand influence [7] - Zhenjiu Lidu has successfully entered international markets, including Hong Kong, Malaysia, Singapore, and Australia, and collaborates with China Duty Free Group to expand its reach [10] Social Responsibility and Sustainability - Zhenjiu Lidu has received multiple awards for its green initiatives, including recognition as a "National Green Factory" [13] - The company actively engages in social responsibility projects, contributing over 17.9 million yuan to various causes and supporting rural development through agricultural partnerships [15] Industry Context - The liquor industry is undergoing structural adjustments, with Zhenjiu Lidu's growth reflecting a broader trend of differentiation among companies [16] - The company emphasizes a long-term strategy focused on quality improvement, channel optimization, and social responsibility, positioning itself as a leader in the evolving market landscape [16]