On the evening of April 23, Zhenjiu Lidu Group (6979.HK) issued three major announcements, namely the 2023 Annual Report, ESG Report, and Annual General Meeting Notice. With leapfrog development achievements and a sense of responsibility to continue to contribute to society, they present a typical sample of contrarian growth and comprehensive development in the industry cycle, and also provide investors and the public with a more comprehensive and three-dimensional perspective on understanding the company.
2023 Annual Report: Full disclosure of the company's growth password
On March 25 this year, Zhenjiu Li Du released its 2023 performance report. In the context of industry adjustments, Zhenjiu Li Du bucked the trend during the reporting period, achieving operating income of 7.030 billion yuan, an increase of 20.10%; adjusted net profit of 1,623 billion yuan, an increase of 35.50% year over year; all four of its major brands achieved double-digit year-on-year growth, driving both net and gross margin increases, unleashing development potential through the cycle.
According to Frost & Sullivan data, thanks to excellent performance, Zhenjiu Li Du became the third largest private wine company in China, and the flagship brand Zhenjiu became the fourth largest soy wine company in China, after Maotai, Xi Jiu, and Langjiu.
Compared to the performance report, the annual report released on the evening of the 23rd showed the growth code of Zhenjiu Li Du in a more comprehensive and three-dimensional manner.
The “Report” covers financial summaries, management discussions and analysis, board reports, corporate governance reports, and independent auditor reports, and discloses the company's consolidated profit and loss statements and other comprehensive income statements, consolidated financial position statements, consolidated equity changes statements, and consolidated cash flow statements.
In terms of management discussion and analysis, the company's business situation, product development, production base, sales channels, digital infrastructure, latest business developments, environmental policies and performance, and the use of funds raised in the IPO were described in detail.
In terms of corporate governance, the company's corporate governance practices are explained, including the composition of the board of directors, the appointment and re-election of directors, the independence mechanism of the board of directors, and director training.
(Screenshot of the announcement)
In terms of financial data, in addition to the 2023 performance data previously announced, the financial performance since 2020 was also shown in detail.
The “Report” shows that thanks to the steady increase in the company's non-current assets and current assets, the company's total assets increased from 4.646 billion yuan in 2020 to 17.578 billion yuan in 2023, with a growth rate of over 270%.
In terms of cash flow and debt management, in 2023, the cash inflow from the company's operating activities was 361 million yuan, showing a strong cash inflow. In terms of debt management, the company's total debt decreased from 14.874 billion yuan in 2022 to 4.902 billion yuan in 2023, and the company's total net asset value reached 12.675 billion yuan, showing Zhenjiu Lidu's outstanding ability in market expansion, asset appreciation and financial management.
Industry insiders pointed out that under the double challenge of slowing economic growth compounded by deep adjustments in the liquor industry, it is not easy for Zhenjiu Lidu to achieve high quality and rapid growth. While the public is rediscovering the potential of the liquor industry to cross the cycle, they are also more curious about the “growth code” behind Zhenjiu Li Du. The release of Zhenjiu Li Du's 2023 annual report comes at the right time.
2023 ESG Report: Practical Experience and Remarkable Results
As an investment philosophy and evaluation standard that focuses on corporate environmental, social, and governance performance rather than financial performance, ESG has gradually become the focus of attention, and ESG reports are also regarded as the “second financial report” of listed companies.
The “2023 Environmental, Social and Governance (ESG) Report” released by Zhenjiu Lidu focuses on the four dimensions of product, brand, society, and future, comprehensively and systematically showcases the practical experience and achievements of Zhenjiu Lidu in environmental governance, social governance, and corporate governance from the seven aspects of governance, responsible procurement, sustainable brewing, quality competition, good marketing, cultivating talents, and feeding back society.
(Zhenjiagou Zhaojiagou Ecological Winery Zone)
This is the second year in a row that Zhenjiu Li Du has published an ESG report. The “Report” shows that in 2023, Zhenjiu Li Du completed 152 ESG management improvement tasks and achieved the four established 2025 ESG strategic goals ahead of schedule. With excellent social responsibility practices, Zhenjiu Li Du was selected as the “2023 China Brand Innovation Case” by “People's Daily” and received Wande's ESG “AA” rating. It was selected as Wande's 2023 ESG Top 100 ESG Best Practices List, making it the only liquor company on the list. In the same year, the flagship brand Zhenjiu was selected as the “Outstanding Case for Social Responsibility of Chinese Private Enterprises (2023)” published by the All-China Federation of Industry and Commerce.
Specifically, in terms of environmental management, Zhenjiu Li Du actively participated in environmental protection, resource saving, and green and low-carbon actions. In terms of key indicators, the share of green electricity use increased to 10.6% in 2023, the greenhouse gas emission intensity of carbon emissions range 1 and 2 decreased by 22.2% year on year, the proportion of sustainable packaging materials used reached 97.5%, annual water intensity decreased 24.5% year on year, electricity intensity decreased 26.7% year on year, and energy consumption intensity decreased by 30.6% year on year. In 2023, the flagship brand Zhenjiu's practical achievements in green development were recognized at the national level and awarded the title of “National Green Factory” by the Ministry of Industry and Information Technology.
(National Treasure Lidu Wannian Rice Field Rice Field Rural Revitalization Launch Signing Ceremony)
In terms of social governance, the company relies on the advantages of the liquor industry spanning the first, second, and third industries to achieve value sharing with suppliers, employees, partners and society. Take Zhenjiu as an example. It planted 400,000 mu of sorghum in 12 districts and counties under Zunyi, driving more than 40,000 farmers to increase their income; it introduced 25 supporting packaging companies to enter Zunyi, boosting the local supply rate to over 90%. At the same time, in terms of employee care, the company has established an employee training and promotion mechanism to enhance employees' happiness and sense of belonging; in terms of rational drinking, it has always promoted the concept of “drink less and drink better” to promote rational drinking as a social consensus; in terms of spreading Chinese liquor culture, it invited more than 160,000 visitors to the factory area to experience traditional Chinese liquor brewing techniques and ingenuity.
In terms of corporate governance, efforts such as risk management, anti-corruption, and data security are continuously strengthened to ensure that the company's decision-making process is open and information disclosure is effective, and to consolidate the foundation for creating long-term value for customers and other stakeholders. In 2023, the company's customer service satisfaction reached 98%.
(Xiangjiao Liquor Factory Map)
Wu Xiangdong, Chairman of Zhenjiu Lidu Group, said, “Looking to the future, we will continue to explore the path of sustainable development, aim to 'become an ESG leader in the liquor industry', and unswervingly follow the path of ecological priority and green development, so that the Group's development takes into account ecological, social and economic benefits.”
According to the “Notice of Annual General Meeting of Shareholders” issued by Zhenjiu Li Du at the same time, the company will hold a shareholders' meeting in Zunyi, Guizhou on June 21 to discuss matters such as board elections, authorized share repurchases, amendments to the articles of association, and payment of final dividends.