2025-09-03 13:23Summary of the Conference Call on Chinese Liquor Industry - 2Q25 Results Industry Overview - Industry: Chinese Liquor - Companies Covered: Lao Jiao (Luzhou Lao Jiao Co. Ltd) and Gujing (Anhui Gujing Distillery Company Limited) Key Financial Results Lao Jiao - Sales: Decreased by 8% year-over-year (YoY) in 2Q25, which was in line with expectations [6] - Net Profit: Decreased by 11% YoY in 2Q25, also in line with expectations [6] - Operating Profit Margin (OPM): Decreased by 3.3 percentage points (ppts) [6] - Gross Profit Margin (GPM): Decreased by 4.7 ppts due to a higher business tax [6] - Operating Expenses Ratio: Decreased by 1.3 ppts [6] Gujing - Sales: Decreased by 14% YoY in 2Q25, which was below expectations [6] - Net Profit: Decreased by 12% YoY in 2Q25, also below expectations [6] - Operating Profit Margin (OPM): Increased by 1.0 ppt [6] - GPM: Remained flat, with a decrease in operating expenses ratio by 1.0 ppt [6] Product and Sales Mix - Midrange to High-End Liquor Sales: Accounted for 92% of core sales, with a decrease of 1% YoY (volume increased by 13%, average selling price (ASP) decreased by 13%) [6] - Low-End Liquor Sales: Decreased by 17% YoY (volume decreased by 7%, ASP decreased by 11%) [6] - Sales Channels: - Traditional wholesale offline channel (94% of liquor sales) saw a decrease of 4% YoY, with a GPM of 87.4% [6] - New online channel experienced an increase of 28% YoY, with a GPM of 83.5% [6] Customer Advances and Cash Position - Customer Advances: Increased to RMB 3.5 billion in 2Q25 from RMB 2.3 billion in 2Q24 [6] - Cash from Selling Products: Decreased by 15% YoY in 2Q25 to RMB 9.5 billion [6] - Net Cash Position: Increased to RMB 34.3 billion in 2Q25 from RMB 31.4 billion in 1Q25 and RMB 25.1 billion in 2Q24 [6] Regional Performance - Northern China: Sales decreased by 27% YoY [6] - Central China: Sales increased by 4% YoY [6] - Southern China: Sales decreased by 6% YoY [6] Analyst Reactions - Anhui Gujing Distillery Company Limited: Unchanged outlook with a modest shortfall and a modest revision lower [8] - Luzhou Lao Jiao Co. Ltd: Outlook remains unchanged and largely in line with expectations [8] Additional Insights - Product Mix in 1H25: Mid-market to high-end Vintage increased by 2% YoY to RMB 11.0 billion; mass market Gujing series decreased by 4% YoY to RMB 1.2 billion; low-end segment including Huanghelou increased by 7% YoY to RMB 1.5 billion [6] - Cash Position for Gujing: Cash from selling products increased by 19% YoY in 2Q25 to RMB 7.0 billion [6] - Net Cash for Gujing: RMB 15.3 billion in 2Q25 compared to RMB 16.2 billion in 1Q25 and RMB 16.0 billion in 2Q24 [6] This summary encapsulates the key financial metrics, product performance, and regional insights for the Chinese liquor industry, specifically focusing on Lao Jiao and Gujing for the second quarter of 2025.