Luzhou Laojiao (.SZ)_ 3Q24 Earnings Review_ Focus on high-quality sustainable growth in 2025 and channel health_pricing in N-T

Company and Industry Key Points 1. Company Overview and Results: * Luzhou Laojiao reported 3Q24 results on Oct 30 with sales/NP in line with GSe. [3] * Management reiterated the focus on sustainable growth with healthy channel inventory and stable wholesale prices. [5] 2. Product Performance: * Guojiao 1573 grew by SD% yoy in 3Q24, accounting for c.6570% of total sales. [10] * Tequ 60 continued to see positive growth in YTD, with Red Tequ 60 for banquet scenarios receiving encouraging market feedback. [10] * Upper-mid-end and mid-end products combined grew faster than Guojiao 1573 in 9M24 but all declined in 3Q24. [10] 3. Regional Performance: * North/Southwest/East regions combined accounted for 70-80% of total sales, with Southwest and North China outperforming other regions. [11] 4. Growth Strategy: * Management expects Guojiao 1573 and Tequ 60 to drive growth, supported by further penetration in north regions and expansion in new markets. [13] 5. Expenses and Margin: * Company redirected some selling expense investments to customer red pockets, leading to GPM contraction in 3Q24. [14] 6. Earnings Revisions: * Post results, Goldman Sachs lowered sales forecasts by 210% in 2024E-26E on lower ASP and volume. [6] * Earnings estimates reduced by up to 8% in 2024-26E with help from more disciplined SG&A. [6] 7. Price Target and Rating: * Goldman Sachs maintains a Buy rating on Luzhou Laojiao with a 12-month TP of Rmb162. [9] 8. Downside Risks: * Potential consumption tax rate hike. * Potential competitive threat from Moutai-flavor brands. * Intensifying competition in high-end spirits. [21]