Two recent “time windows” have brought renewed attention to the core value logic of “the first stock of liquor in Hong Kong stock” Zhenjiu Li Du.

First, coinciding with the intensive disclosure of financial reports during the performance period, the market focus has returned to verification fundamentals. Liquor sector reports can highlight business resilience. As a unique industry sample, Zhenjiu Lidu's investment appeal has once again been catalytically enhanced; second, Zhenjiu Lidu just ushered in its first year of listing, and once again stood at a new starting point for value creation under the spotlight of many parties.

Here, the author first puts forward a central point: Zhenjiu Li Du is a capital market rookie, and also a potential “star of tomorrow.”

Specifically, it can be interpreted by following three clues.

1) Market leadership

Market leadership is an intuitive reflection of an enterprise's market position. From the perspective of the capital market, it has the ability to start the market first and follow the trend to drive an increase in sector and even market activity.

In 2023, Hong Kong stocks were affected by multiple internal and external factors. The overall trend was weak, and the chill spread from the secondary market to the IPO market. In this context, Zhenjiu Li Du is still being sought after for capital. Not only did it win the 2023 Hong Kong Stock IPO fundraising championship, but its stock price performance also continued to outperform the market, playing a significant leading role.

Among them, since February, Zhenjiu Li Du has increased by 31.78%, far exceeding the Hang Seng Index (13.99%) and Hang Seng Consumption Index (22.51%) during the same period. Specifically, when it comes to the food and beverage sector of Hong Kong stocks, this performance also ranks high. If a market value of 10 billion dollars is used as the standard, Zhenjiu Li Du can rank in the top three, and its driving strength can be seen.

2) Performance support

As mentioned earlier, in the future, the capital market will eventually return to fundamental verification, that is, based on performance support. At that time, the market leadership of Zhenjiu Li Du is also expected to further increase.

Looking back at 2023, Zhenjiu Li Du achieved another excellent result in the context of industry adjustments, achieving revenue of 7.030 billion yuan, an increase of 20.10% over the previous year; adjusted net profit of 1,623 billion yuan, an increase of 35.50% over the previous year; net profit and gross margin both increased, and cash flow improved significantly.

At the same time,The four major brands under Zhenjiu Lidu all achieved double-digit year-on-year growth. High-end results were remarkable. Revenue from related products increased by 33.2% year over year, showing a high quality of performance growth.

Compared to peers, this performance is still impressive. In 2023, Zhenjiu Lidu's revenue scale was almost comparable to that of Shede Liquor, surpassing Yingjiagongjiu; the net profit growth rate was at the forefront of the industry, the fastest among companies with revenue of 5 billion or more. Compared with companies of similar size (Shede Liquor, Shui Jing Fang, Yingjiagong Liquor), Zhenjiu Lidu showed a faster overall performance growth rate, especially on the profit side.

Looking forward to the future, the relevant strategic dividends behind Zhenjiu Lidu's outstanding performance will continue to be released, includingThe effectiveness brought about by increased brand awareness, healthy channel order, strong management team leadership and execution, and efficient management helps them achieve results.

Taking the channel side as an example, Zhenjiu Li Du strives to promote refined operation. By establishing a healthy channel order and price system to improve channel turnover and terminal sales, achieve mutual benefit and mutual growth with dealers, and promote high-quality expansion.

Combined with financial analysis, in 2023, the number of Zhenjiu Lidu dealers increased by less than 10%, but revenue increased by about 20%, and the “manpower ratio” increased significantly.

3) Growth attributes

Zhenjiu Li Du's business model is sustainable and expandable, which determines its long-term growth attributes and has the ability to “make a big difference” in the capital market.

Starting with the core points, this is inseparable from its capacity advantage and ability to expand.

Base wine production capacity is essential for liquor brands, especially high-end soy wine brands. It can establish competitive barriers for brands, thereby transforming them into a huge competitive advantage on the product side. It is equivalent to a “moat” for the core business of wine companies.

In recent years, Zhenjiu Li Du has invested more than 10 billion dollars to continue to increase production capacity. The total production capacity is expected to exceed 56,000 tons in 2024, of which the sauce-flavored type will account for 45,000 tons. Among them, in 2023, Zhenjiu has stored 65,000 tons of high-quality base wine and put into operation 40,000 tons, ranking among the top three soy wine companies in Guizhou in terms of production capacity.

At the same time, the production area of Zhenjiu Lidu is located in the three provinces of Guizhou, Hunan, and Jiangxi. Zhenjiu has also successively started construction projects in the Shizipu factory area, the Zhaojia Ecological Valley winery estate, the Qingxigou winemaking base, the Shuanglong Village winemaking base in Maotai Town, and the Renxigou winemaking base, relying on the advantages of the production area.

In addition, market expansion and promotion strategies in leading industries have also brought incremental opportunities for Zhenjiu Lidu.

Zhenjiu Li Du has driven the rapid expansion of the scale of the national market with channel reforms and other measures, and is targeting the international market. At the beginning of the year, fine wine products were listed on China Free's global duty-free channel. In addition to consolidating channels and products, Zhenjiu Li Du is also implementing innovative marketing and adopting an immersive experiential promotion strategy to enable liquor products to establish and strengthen interaction with consumers and enhance consumers' familiarity and recognition of the brand.

Despite the continuous changes in capital market trends, the underlying factors are still concentrated on the above three aspects.It's only a matter of time before the refined sake Reidu becomes the “Star of Tomorrow.”

At that time, the capital market's imagination for Zhenjiu Li Du will also be fully opened.

In the future, by analogy with the significance of Maotai and Wuliangye for the A-share liquor sector, the food and beverage sector, and the entire market, Zhenjiu Li Du is expected to play a similar leading role in Hong Kong stocks, showing great value. At the same time, there are too many institutional investors in the Hong Kong stock market, and foreign investors are the main ones. Foreign investors have always favored leading liquor stocks. As the only liquor brand in the Hong Kong stock market, Zhenjiu Li Du is also more likely to win a vote of confidence from related funds.

Looking at reality, the market performance of Zhenjiu Li Du has yet to fully match its position in the industry, and is clearly underestimated.

The price-earnings ratio of A-share liquor leaders generally exceeds 20 times, while the price-earnings ratio of Zhenjiu Li Du is only 13.69 times. This figure is also lower than that of all similarly sized companies, which are in a value depression.

Of course, this also has something to do with the lack of liquidity in the Hong Kong stock market in the past. Many Hong Kong stock listed companies have experienced liquidity discounts. Looking at it a little further, this situation is expected to usher in an opportunity to reverse: on the policy side, the Securities Regulatory Commission recently announced 5 capital market cooperation measures with Hong Kong, aimed at promoting the integration process of the two markets.

In this context, it is believed that Zhenjiu Li Du will eventually usher in a real revaluation to achieve the leading premium it deserves.