Wuliangye ( CH)_Buy_ 2025 – the year to improve marketing execution

Summary of Wuliangye (000858 CH) Earnings Call Company Overview - Company: Wuliangye - Industry: Beverages (Baijiu sector) - Current Share Price: RMB 143.55 - Target Price: RMB 173.00 (previously RMB 180.00) [6][24][32] Key Financial Highlights - 2024 Revenue Growth: Expected to grow by 6% year-on-year [6][24] - 2024-2026 Net Profit Estimates: Lowered by approximately 3-5% [6][24] - 2024 Revenue Estimates: Adjusted from RMB 90,070 million to RMB 88,315 million, a decrease of 1.9% [6][24] - 2025 Revenue Estimates: Adjusted from RMB 96,162 million to RMB 92,342 million, a decrease of 4.0% [6][24] - 2026 Revenue Estimates: Adjusted from RMB 101,852 million to RMB 98,122 million, a decrease of 3.7% [6][24] - 2024-2026 EPS Growth: Expected to grow at a CAGR of 7% [6][24] Market Performance - YTD Share Price Performance: Wuliangye's share price has dropped 2.5% since November, while the CSI 300 index has increased by 1% [6][24] - YTD Performance Against Peers: Wuliangye's share price has gained 6% YTD, outperforming the Wind Baijiu Index, which is down 13% [6][24] Strategic Initiatives - Distribution Channel Expansion: Plans to add 120 specialty stores and expand into emerging distribution channels such as group buying and new retail in 2025 [6][24] - Product Strategy: Focus on controlling the balance between sales volume and price for Puwu products, and promoting 1618 and low-alcohol content products [6][24] - New Product Launches: Plans to launch 1-2 strategic blockbuster products in mid-end markets priced at RMB 350-800 per bottle [6][24] Financial Ratios and Estimates - 2024-2026 EBITDA Margin: Expected to remain stable around 47-48% [6][24] - 2025 Revenue and Net Profit Growth: Expected to grow by 4.6% and 5.3% year-on-year, respectively [6][24] - 2025 PE Multiple: Trading at a 16x 2025e PE multiple, below the peer group average [6][24] Risks and Catalysts - Key Risks: Macroeconomic slowdown, changes in consumer preferences, policy risk, limited ASP growth, and food safety risks [6][32] - Potential Catalysts: Growth in wholesale prices of eighth generation Puwu and better-than-expected sales volume growth of Wuliangye products [6][32] Conclusion - Investment Rating: Maintain Buy rating with a target price of RMB 173, implying approximately 21% upside from the current share price [6][32] - Market Position: Wuliangye remains a preferred stock in the baijiu sector, expected to benefit from potential recovery in demand driven by macro stimulus policies in 2025 [6][32]