Production and Market Trends - In the first four months of 2025, the production of liquor in China reached 1.308 million kiloliters, a year-on-year decrease of 7.8%, with April's production at 281,000 kiloliters, down 13.8% year-on-year [1] - The national coverage rate of Gujing Gongjiu has exceeded 70%, with a focus on maintaining market share in core provinces while expanding into new markets [2] - The average price index for liquor in mid-May showed a slight decline of 0.03%, with the index for famous liquor down 0.06% and local liquor down 0.01% [3][4] Company Developments - Luzhou Laojiao's management visited the China Food Institute to discuss collaboration on museum construction and marketing strategies [1] - Gujing Gongjiu plans to optimize its product structure and expand its market share in various price segments, focusing on its core products [2] - Langjiu Group emphasizes quality construction and aims to enhance the experience at its distillery while aligning production with brand development [3] New Product Launches - Gubeichun launched three strategic new products, "Gold Edition," "Silver Edition," and "Hong Edition," to boost consumption and expand its market presence [3] Regulatory and Quality Control Initiatives - The Ningxia Helan Mountain wine industry park is conducting a quality safety inspection to ensure compliance in the use of inputs and production processes [6] Leadership Changes - Qingdao Beer appointed Jiang Zongxiang as the new chairman, with interim responsibilities for the presidency until a successor is chosen [5] - Zhang Daohong was elected as the new president of the Yichang Enterprise Federation [5] - Zhang Li was appointed as the general manager of Jiu Bian Li [5] Investment Projects - A 5 billion yuan project for the production of sauce-flavored liquor is set to be established in the Bozhou District, covering an area of 1,080 acres [5]

Core Viewpoint - The company has decided not to set specific growth targets for 2025, reflecting a broader industry consensus on slowing growth due to various macroeconomic factors and increased competition [2][3][6]. Group 1: Financial Performance - In 2024, the company achieved total revenue of 23.578 billion yuan, a year-on-year increase of 16.41% [2]. - The net profit attributable to shareholders reached 5.517 billion yuan, growing by 20.22% compared to the previous year [2]. - The cash flow from operating activities was 4.727 billion yuan, marking a 5.15% increase year-on-year [2]. - The white liquor business revenue was 22.865 billion yuan, with a growth rate of 16.43% and a gross margin of 81.74% [2]. - The "Year Original Sauce" series saw significant growth, generating 18.086 billion yuan in revenue, up 17.31%, with a gross margin of 86.12% [2]. Group 2: Strategic Direction - The company continues to adhere to a "nationalization and mid-to-high-end" strategy, focusing on market construction and core provincial areas [6][7]. - The company has achieved a national coverage rate of over 70%, with a provincial to non-provincial sales ratio of 6:4 [7]. - The company aims to capture the mid-to-high-end market with its "Gu 20" product while also consolidating its offerings in the mass market [7]. Group 3: Industry Context - The white liquor industry is experiencing a transition from rapid growth to structural growth, influenced by high inventory levels, price inversions, and intense competition [6]. - The declining marriage rates, with a reported 20.5% drop in 2024, are impacting traditional consumption scenarios for liquor [7].

Core Insights - The company achieved a revenue of 23.578 billion yuan in 2024, representing a year-on-year growth of 16.41%, and a net profit attributable to shareholders of 5.517 billion yuan, up 20.22% year-on-year [1] - In Q1 2025, the company reported a revenue of 9.146 billion yuan, a year-on-year increase of 10.38%, and a net profit of 2.330 billion yuan, up 12.78% year-on-year, slightly exceeding market expectations due to resilient income [1] Revenue Growth - The company's business in Anhui province continues to be a major contributor to revenue growth, with the annual raw liquor series showing ongoing structural upgrades [1] - In Q1 2025, revenue grew by 10.4% year-on-year, driven by strong performance from brands such as Gu 8 and Gu 16, while Gu 5 also performed well [1] - The revenue from the annual raw liquor series in the second half of 2024 increased by 9.7% year-on-year, with a slight slowdown in volume growth but a continuation of structural upgrades [1] Cost Management - The company demonstrated strong cost control capabilities, with a net profit growth of 12.8% in Q1 2025, driven by a reduction in expense ratios [2] - The sales expense ratio decreased by 0.6 percentage points to 26.6%, and the management expense ratio fell by 0.5 percentage points to 4.4% [2] - The company is expected to benefit from the expansion of the 100-300 yuan price range in Anhui province, along with improved banquet demand due to the dual spring year effect [2] Profit Forecast and Valuation - Due to overall weak consumption, the company has lowered its 2025 profit forecast by 3% to 6.14 billion yuan and introduced a 2026 profit forecast of 6.77 billion yuan [3] - The target price remains at 226 yuan, corresponding to a price-to-earnings ratio of 19.5x for 2025 and 17.6x for 2026, indicating a potential upside of 35.2% from the current stock price [3]

Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 300 yuan [1]. Core Views - The company is expected to achieve a revenue of 23.58 billion yuan in 2024, representing a year-on-year growth of approximately 16.4%. The net profit attributable to shareholders is projected to be 5.51 billion yuan, up about 20.2% year-on-year [1]. - The fourth quarter revenue is estimated at 4.51 billion yuan, reflecting a year-on-year increase of 4.9%, while the net profit is expected to decrease by 1.2% to 770 million yuan [1]. - The company is focusing on healthy growth and has successfully completed its New Year sales, establishing a solid operational foundation for the year ahead [1]. Financial Summary - **Revenue and Profit Forecasts**: - Total revenue (million yuan): 2023A: 20,254; 2024E: 23,577; 2025E: 26,054; 2026E: 28,726 [1]. - Net profit (million yuan): 2023A: 4,589; 2024E: 5,518; 2025E: 6,181; 2026E: 6,912 [1]. - Earnings per share (元): 2023A: 8.68; 2024E: 10.44; 2025E: 11.69; 2026E: 13.08 [1]. - **Valuation Ratios**: - Price-to-earnings ratio (倍): 2023A: 20; 2024E: 16; 2025E: 15; 2026E: 13 [1]. - Price-to-book ratio (倍): 2023A: 4.2; 2024E: 3.6; 2025E: 3.1; 2026E: 2.6 [1]. Market Performance - The company has shown resilience in its core markets, with a focus on inventory optimization and maintaining price stability. The performance in the domestic market remains strong, while there is noticeable differentiation in performance across regions [1].