Core Viewpoint - Bairun Co., Ltd. reported a decline in revenue and net profit for the first half of 2025, primarily due to a downturn in its alcoholic beverage segment, particularly the RIO ready-to-drink products, which experienced significant sales and production drops [2][4][5]. Financial Performance - In the first half of 2025, Bairun achieved revenue of 1.489 billion yuan, a year-on-year decrease of 8.56% [2] - The net profit attributable to shareholders was 389 million yuan, down 3.32% year-on-year, with a non-recurring net profit decline of 9% [2] - In Q2 alone, revenue was 752 million yuan, reflecting a 9% year-on-year decline, while net profit fell over 10% [2] Alcoholic Beverage Segment - Revenue from alcoholic products was 1.297 billion yuan, a year-on-year decrease of 9.35%, accounting for nearly 90% of Bairun's total revenue [4] - RIO's sales volume dropped by 12.68% in the first half of the year, with production also experiencing a double-digit decline [5] Product Strategy - RIO continues to focus on strengthening its "358" brand positioning and launching new products, including seasonal flavors and innovative offerings like jelly wine [5][9] - Despite these efforts, the overall downward trend in sales persists, attributed to weak offline channels, which saw a 9% revenue decline [6] Cost Management - Bairun managed to reduce advertising expenses by half, leading to a 24% year-on-year decrease in sales expenses, which helped maintain stable gross margins despite declining revenues [6][7] Whiskey Business Development - Bairun's whiskey segment, particularly the Laizhou Distillery, has launched several new products, including limited editions and a range of whiskey offerings, but has yet to significantly impact overall revenue [9][10] - As of June 2025, the distillery had accumulated 500,000 barrels, showing substantial growth from the previous year [11]

Core Viewpoint - Bairun Co., Ltd. reported a decline in revenue and net profit for the first half of 2025, primarily due to a downturn in its alcoholic beverage segment, particularly the RIO pre-mixed cocktails, which have seen significant drops in sales and production [1][2][3]. Financial Performance - In the first half of 2025, Bairun achieved revenue of 1.489 billion yuan, a year-on-year decrease of 8.56% [1]. - The net profit attributable to shareholders was 389 million yuan, down 3.32% year-on-year, with the non-recurring net profit declining by 9% [1]. - In Q2, revenue was 752 million yuan, a 9% year-on-year decline, with net profit dropping over 10% [1]. Alcoholic Beverage Segment - The revenue from alcoholic products in the first half was 1.297 billion yuan, a decline of 9.35%, accounting for nearly 90% of Bairun's total revenue [2]. - Sales volume of RIO products fell by 12.68% year-on-year, with production also experiencing a double-digit decline [3]. Product Development and Marketing - RIO's focus remains on strengthening the "358" brand positioning and launching new products, including a limited edition Qingmei Longjing flavor and a new jelly wine that sold out quickly [3][5]. - Despite these efforts, the overall downward trend in sales persists, attributed to weak offline channels, which saw a 9% drop in revenue [4]. Cost Management - Bairun has managed to keep its gross margin stable due to a 24% reduction in sales expenses and a decrease in operating costs that outpaced revenue decline [5][6]. Whiskey Business - Bairun's whiskey segment, launched from the Laizhou Distillery, has introduced several products but has not yet significantly impacted overall revenue [8][10]. - As of June 2025, the Laizhou Distillery had accumulated 500,000 barrels, showing significant growth from the previous year [10].

Investment Rating - The report upgrades the investment rating to "Buy" with a target price of 36.18 CNY, reflecting a reasonable valuation level of 27 times the earnings per share for 2027 [4][5]. Core Views - The company is expected to experience a second growth curve, driven by its dual attributes in beverages and small category wines, particularly in the whiskey market, which is still in its early stages in China [2][3]. - The whiskey market in China has significant growth potential, with the current market size being only 55 billion CNY, representing a mere 0.8% of the total liquor market [13][20]. - The company has successfully localized imported products, as evidenced by its previous success in the ready-to-drink (RTD) segment, and aims to replicate this success in the whiskey market [8][36]. Financial Forecast and Investment Recommendations - The forecast for earnings per share from 2025 to 2027 is 0.81 CNY, 1.00 CNY, and 1.34 CNY respectively, with a projected revenue growth of 19.2% in 2025, 18.0% in 2026, and 26.2% in 2027 [4]. - The company’s revenue is expected to reach 3,634 million CNY in 2025, 4,288 million CNY in 2026, and 5,410 million CNY in 2027, indicating a strong growth trajectory [4]. Market Analysis - The whiskey segment is projected to grow significantly, with the potential for domestic brands to capture a larger market share, aiming for a 50% domestic market penetration by leveraging local production and unique flavor profiles [37][39]. - The report highlights that the company’s whiskey products are positioned in the mass market price range, which is crucial for stimulating initial consumer interest and expanding market share [57][58]. Strategic Positioning - The company is building a liquor matrix with its whiskey brands, including Baileys and Laizhou, to establish itself as a leader in the domestic whiskey market [33]. - The marketing strategy focuses on experiential marketing and collaboration with local distributors to enhance brand recognition and consumer engagement [34][36].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is actively embracing new channels and focusing on the rhythm of new product launches, particularly in the instant retail sector, which is expected to drive growth [7] - The instant retail market for alcoholic beverages in China is projected to grow significantly, with an expected market size of 1,000 billion by 2027, up from approximately 360 billion in 2024 [7] - The company aims to leverage the advantages of the Yima delivery platform to enhance brand recognition and reach younger consumers, thereby boosting sales of its whiskey and other alcoholic products [7] Financial Projections - Total revenue is projected to reach 3,499 million in 2025, with a year-on-year growth of 14.80% [1] - The net profit attributable to the parent company is expected to be 806.85 million in 2025, reflecting a 12.20% increase year-on-year [1] - Earnings per share (EPS) is forecasted to be 0.77 in 2025, with a price-to-earnings (P/E) ratio of 34.23 [1] Revenue and Profit Growth - The company targets a revenue growth of 15% in 2025, 14% in 2026, and 18% in 2027 [7] - The net profit is expected to grow by 12% in 2025, 20% in 2026, and 22% in 2027 [7] Market Position - The company is positioned to capture a significant share of the instant retail market through its strategic partnerships and product offerings [7] - The introduction of new whiskey products is anticipated to contribute positively to the company's growth trajectory [7]

Core Viewpoint - The company, Bairun Co., is facing challenges with declining revenue and net profit, marking a shift in growth momentum for its core product, RIO pre-mixed cocktails, amid changing consumer preferences and market dynamics [1][9]. Financial Performance - In the fiscal year 2024, the company reported revenue of 3.048 billion yuan, a year-on-year decrease of 6.61%, and a net profit of 719 million yuan, down 11.15% [1]. - The first quarter of 2025 showed a slight recovery in net profit, which increased by 7.03% year-on-year, although revenue still declined by 8.11% [1][6]. Main Product Decline - RIO, established in 2003, remains the leading brand in the domestic pre-mixed cocktail market, accounting for 87.83% of the company's revenue in 2024, but its revenue fell by 7.17% with sales volume down by 8.81% [2][3]. - The offline distribution network has contracted, with the number of distributors decreasing from 2,164 to 2,068, particularly in the East China region, which saw a 16% decline [2]. Consumer Trends - The younger generation is shifting towards new beverage options such as hard seltzers and craft beers, which are squeezing the market space for RIO's low-alcohol sweet cocktails [3]. - Despite frequent new product launches, the lifecycle of these products is shortening, leading to decreased brand loyalty and repurchase intent among consumers [3]. Operational Challenges - The company has a high sales expense ratio, with total sales expenses reaching 750 million yuan, accounting for over 24% of revenue, which is considered high compared to industry peers [6]. - Inventory levels have increased significantly, with total inventory rising by 33.7% to 1.043 billion yuan, raising concerns about potential cash flow impacts [7]. New Business Development - The company is focusing on developing its whiskey business as a second growth curve, with over 400,000 barrels in aging capacity and the launch of new whiskey products [8]. - However, the whiskey business is still in its early stages and has not yet contributed significantly to revenue, facing challenges related to long aging periods and market education [8]. Overall Outlook - Bairun Co. is at a critical juncture with its main business entering a growth plateau, while new business lines require ongoing investment and market cultivation [9]. - Financially, the company maintains profitability and healthy cash flow, but the quality and sustainability of growth are under scrutiny [9].