Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative price increase of over 20% against the market benchmark within the next six months [15]. Core Views - The company's main business in the liquor sector is currently undergoing adjustments, with a notable decline in revenue. However, there is optimism regarding the growth potential of the whiskey segment, which is expected to drive future growth [2][4]. - The company reported a total revenue of 1.489 billion yuan for the first half of 2025, a decrease of 8.56% year-on-year, with a net profit attributable to shareholders of 389 million yuan, down 3.32% year-on-year [2]. - The company is focusing on a strategic layout that includes stable pre-mixed drinks, growing whiskey sales, and synergy in the flavor business, with expectations for new product launches to stimulate growth [4]. Financial Performance Summary - In Q2 2025, the company achieved a gross margin of 71.00%, a slight decrease of 0.79 percentage points year-on-year, while maintaining a net profit margin of 27.62% [3]. - The revenue from the liquor product segment was 1.297 billion yuan in the first half of 2025, down 9.35% year-on-year, while the flavor business generated 169 million yuan, down 3.91% year-on-year [2]. - The company’s cash flow from operating activities improved significantly, reaching 491 million yuan, an increase of 67.06% year-on-year [2]. Earnings Forecast and Valuation - The report has adjusted the earnings forecast for 2025 and 2026, now estimating net profits of 797 million yuan and 951 million yuan respectively, with a new forecast for 2027 at 1.087 billion yuan [4]. - The expected earnings per share (EPS) for 2025, 2026, and 2027 are projected to be 0.76 yuan, 0.91 yuan, and 1.04 yuan respectively, with corresponding price-to-earnings (P/E) ratios of 37x, 31x, and 27x [4][6].

Core Viewpoint - Baijiu Co., Ltd. continues to experience a decline in performance, with a significant drop in revenue and net profit in the first half of 2025, indicating ongoing challenges in its core business and the failure of new product launches to reverse the trend [2][3]. Financial Performance - In the first half of 2025, Baijiu Co., Ltd. reported 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, while the non-recurring net profit fell by 9% [2]. - The company's revenue in Q2 2025 was 752 million yuan, a decline of 9.0% year-on-year, with net profit dropping by 10.9% to 208 million yuan [3]. Product Performance - The RIO pre-mixed cocktail, once a leading product, has seen a significant decline in sales, with revenue from RIO dropping to 2.677 billion yuan in the previous year, a decrease of 7.17% [3]. - The introduction of new products, such as the RIO 12-degree flavored liquor, has not met market expectations, resulting in poor sales performance [4]. Market Competition - The low-alcohol beverage market is becoming increasingly competitive, with various brands, including traditional liquor companies, entering the pre-mixed cocktail segment [5]. - The presence of alternative products in the market has intensified competition for RIO, which is struggling to maintain its market share [5]. Strategic Initiatives - Baijiu Co., Ltd. has invested in the liquor segment, establishing a distillery in Sichuan to develop whiskey as a potential growth area [6]. - Despite the challenges, the company remains optimistic about its whiskey business, with significant increases in barrel storage capacity reported [7]. - The company has reduced its sales expenses by 24% in the first half of 2025, contributing to stable gross margins despite declining revenues [7].