A bright new star is quietly rising in the capital market.

On April 27, 2023, Zhenjiu Li Du broke the 7-year silence of listing in the industry and entered the Hong Kong stock market as the first stock of Hong Kong stock liquor and the second share of Chinese sauce-flavored liquor, starting a voyage in the capital market.

(The scene where Zhenjiu Li Du went on sale)

In the challenging year of 2023, Zhenjiu Li Du bucked the trend and achieved operating income of 7.030 billion yuan, an increase of 20.10% year on year; adjusted net profit of 1,623 billion yuan, an increase of 35.50% year on year. However, judging from the results announced by listed Chinese liquor companies in 2023, Zhenjiu Lidu's revenue scale is expected to rank among the top ten listed liquor companies.

On the occasion of the first anniversary of its launch, let's take a closer look at how Zhenjiu Li Du sailed against headwinds this year and complete this high-score questionnaire.

The legend of liquor that bucked the trend

In 2023, Zhenjiu Li Du submitted a prospectus on January 13, passed a hearing on March 26, began global sales on April 17, and went public on April 27. The path to listing was steady and confident.

During the IPO period, in the face of market changes, Zhenjiu Li Du boldly abandoned cornerstone investment and chose market-based distribution. With its high scarcity, high stability and high growth, it successfully attracted the attention of domestic and foreign capital. With a fund-raising scale of HK$5.31 billion, it became the largest IPO in the Hong Kong stock market and the global consumer industry in 2023.

Zhenjiu Li Du's capital market trip was amazing. Less than 4 months after listing, it was included in the “Hong Kong Stock Connect” and the S&P Global BMI Index. Less than 8 months after listing, it was included in the four major indices of the FTSE Global Stock Index series.

(Zhenjiu Li Du is included in “Hong Kong Stock Connect” and the S&P Global BMI Index)

As a result, Zhenjiu Li Du continues to welcome a wider range of investors, further increasing its popularity and recognition in domestic and foreign capital markets.

According to incomplete statistics, since Zhenjiu Lidu went public, more than 30 well-known domestic and foreign brokerage agencies, including Goldman Sachs, CICC, Haitong International, Huachuang, and China Merchants, have published more than 100 copies of research reports, giving Zhenjiu Li Du positive ratings such as “increasing holdings”, “buying” and “highly recommended.”

Zhenjiu Li Du's performance in the capital market did not disappoint. Since the release of the 2023 performance report, its stock price has remained above HK$10, and the market has recognized its tenacity in intrinsic value.

In contrast, the trend of the Hong Kong stock market in 2023 was influenced by the Federal Reserve's continuous interest rate hikes and macroeconomic recovery falling short of expectations. The Hang Seng Index rose steadily to 22,700 points at the beginning of the year, and fell to a low of 15,972 points in December. Looking at the full year, the Hang Seng Index fell 13.8% for the whole year.

Since its listing, the liquidity and trading activity of Zhenjiu Li Du's stock has continued to increase, with a turnover of HK$13.28 billion in 2023, which is particularly interesting against the backdrop of continued tightening liquidity in Hong Kong stocks.

The scarce nature of Zhenjiu Li Du also continues to attract southbound capital into the market, and continues to expand its share of holdings and transactions. According to Wind data, as of the close of trading on April 26, Zhenjiu Lidu had received Southbound capital to hold a total of 229 million shares, accounting for 6.76% of the company's issued common shares.

In just one year, Zhenjiu Li Du interpreted “time is liquor's best friend” with practical actions, and was also highly recognized by the market. It can be said that the year Zhenjiu Li Du went public not only left a strong mark on the stock market, but also added a wonderful chapter to the internationalization process of Chinese liquor.

Precise strategies lay the foundation for development

The story of Zhenjiu Li Du is the best interpretation of the company's growth in adversity. It is also a microcosm of the internationalization and modernization transformation of Chinese liquor companies, yet its success is not an accident; it is an inevitable result of precise strategies.

(Guizhou Zhenjiu Shizipu factory area)

After listing, Zhenjiu Li Du not only achieved an international layout at the capital level, but also showed a global vision in terms of brand culture and marketing strategy. From the “Seven Proverbs” to the “Four Carriages” (brand, production capacity, channel, team) strategy, the company built a unique set of strategic chess games to tell the world the story of Chinese liquor.

In terms of brand building, Zhenjiu Li Du used experiential marketing to accurately reach core consumers through immersive experiential activities such as tastings and trips back to the factory, drawing a picture of the brand that is deeply rooted in the hearts of the people, making the beauty of liquor deeply rooted in the hearts of the people. According to statistics, in 2023, Zhenjiu Li Du held more than 120,000 tastings and received more than 160,000 visitors back to the factory. Take rare wine as an example. Using its unique and rich brand connotations, we are continuously polishing the “Two Major National Banquet Soy Liquors” gold sign, and work hard to create the ultimate tasting wine, provide immersive experience services, and promote innovative brands.

In terms of capacity expansion, Zhenjiu Li Du carefully “brewing” production capacity, with an annual production capacity of over 50,000 tons and 110,000 tons of base wine storage, has provided sufficient “ammunition” for future market competition and built an insurmountable competitive barrier. In particular, the flagship brand Zhenjiu will start production of 40,000 tons in 2023, store 65,000 tons of high-quality base wine, and rank among the top three soy wine companies in Guizhou in terms of production capacity.

In terms of channel layout, by implementing a dual-channel growth strategy, a flat, consumer-side distribution channel covering the whole country has been created, and differentiated strategies have been formulated in terms of product portfolio, pricing mechanism, and channel network, and efficient channel operation has been achieved. In 2023, the number of Zhenjiu Lidu dealers reached 7,261, an increase of 643 over 2022.

In terms of team building, the equity incentive plan introduced basically covers most core members of functional departments and is linked to the company's performance goals. It is conducive to attracting and retaining the company's core management, technical and business talents, and further stimulating enterprise motivation and vitality. Currently, the product development team has a total of 233 people, including 8 national liquor judges and 33 provincial liquor judges. At the same time, school-enterprise cooperation mechanisms have been established with Jiangnan University, Guizhou University, etc., to continuously introduce and cultivate innovative talents.

(Jiangxi Lidu Yuan Dynasty Soju Workshop Ruins)

From brand building to capacity layout, from channel optimization to team building, every step reflects Zhenjiu Li Du's deep insight into industry trends and forward-looking layout.

In terms of ESG, in 2023, Zhenjiu Li Du completed more than 150 ESG management and promotion tasks, achieved the four strategic goals set for 2025 two years ahead of schedule, and received Wande ESG's “AA” rating, and was selected in the “2023 Top 100 ESG Best Practices for Listed Companies in China” list. The flagship brand Zhenjiu was also awarded the title of “National Green Factory” and became one of the five liquor companies selected in 2023.

The sea of stars by Jinshu Ridu

In the midst of China's capital market, every company's ups and downs carry rich history and future expectations.

At Zhenjiu Lidu's 2023 annual results investor briefing held on March 26, Wu Xiangdong, chairman of Zhenjiu Lidu Group, summed up the work and achievements of 2023 with the keyword “fitness” and revealed that he will continue to deploy 2024 and longer cycle of work with “fitness” to continue to build a solid foundation and seize the market opportunities brought about by the dominance of the industry.

(Hunan Xiangjiao Liquor Factory Map)

It is undeniable that the liquor industry is currently in a critical period of deep adjustment, transformation and upgrading, and the challenges and opportunities it faces coexist. On the one hand, competition within the industry has intensified, especially in the high-end and sub-high-end markets. Brand concentration continues to increase, the leading effect is remarkable, and the living space for small and medium-sized enterprises is being squeezed.

On the other hand, the consumer market tends to be rational, and consumer requirements for the quality, cultural content, and health attributes of liquor are increasing, which places higher demands on the brand building, product innovation and marketing strategies of liquor companies. Furthermore, the uncertainty of the industry's external environment, such as macroeconomic fluctuations, policy and regulation adjustments, etc., has also added many variables to the development of the liquor industry.

In this industry context, Zhenjiu Li Du has shown a significant competitive advantage.

First, Zhenjiu Li Du relies on its deep brand heritage and excellent product quality. Through fine management and brand differentiation strategies, it has firmly grasped the pulse of industry development, and its brand influence continues to grow. In 2023, the revenue of Zhenjiu Lidu's high-end products increased by 33.2% year-on-year. Core products such as the Zhenjiu Real Vintage Collection, Zhenjiao 30, Li Du 1308, and Xiang Jiao Jiao Jiang have taken a place in the high-end and ultra-high-end markets.

(Zhenjiu Li Duguang bottled wine series products)

Second, successfully entering the Hong Kong stock market not only brought sufficient financial support to the company, but also enhanced its brand image and international popularity, and laid a solid foundation for subsequent market expansion and brand upgrading. At the same time, as an important member of the Chinese soy wine industry, Zhenjiu Lidu not only has unique advantages in production areas, but also has advantages in production capacity and brand, which will bring it unprecedented opportunities for development. According to Frost & Sullivan data, in terms of revenue in 2023, Zhenjiu Li Du has become the third largest private wine company in China, and Zhenjiu has become the fourth largest soy wine company in China, after Maotai, Xi Jiu, and Langjiu, ranking at the top of the soy wine industry.

Finally, Zhenjiu Li Du focuses on “fitness”, that is, continuous efforts in capacity expansion, quality improvement, channel optimization, and brand building. This not only strengthens its leading position in the industry, but also provides greater resilience in dealing with future market uncertainty.

Wise men say nothing; light does not shine. For Zhenjiu Li Du, the first year of listing was a year of exploration and growth, as well as a year of laying the foundation for future development. With a forward-looking strategic vision, solid internal skills, and accurate grasp of market trends, there will be many, many more stories in the capital market.