We recently participated in the Golden Seed Liquor Stock Exchange Roadshow Center performance exchange meeting and the company's 2023 shareholders' meeting. The company exchanged views on various topics such as the 23-year business situation and 24-year development strategy. The core feedback is as follows:

In the first year of the 23 reform, multi-dimensional adjustments were made, and reform dividends were gradually released. Looking back at 2023, the company carried out reforms and adjustments in various aspects such as organizational structure, digital transformation, lean management, brand reshaping, and channel transformation. Personnel changes and marketing center structure adjustments have been completed; the “two wings in one” core brand layout has been established at the product level, and the brand strategy has gradually been clarified for Fuhexiang series product upgrades; at the channel level, the layout of bottled wine, boxed wine, and Fuhexiang in the province has been completed, further strengthened through China Resources channels.

Established the “6+3+2” core strategy in '24, and continued to explore new ways to combine beer and white. Facing 24 years, the company formulated the “6+3+2” core development strategy. One is to focus on 6 major products, namely Fuhexiang Series Fuhexiang Series Fu7, Fu9, Light Bottle Wine Series No. 1 Seed+Tegon, and the chassis box focuses on soft and gold 6, using channel scale and channel quality as starting points; second, it focuses on 3 battles throughout the year, namely offensive battles (in-depth cooperation with 10,000 TOP Tobacco Hotels), position battles (in-depth cooperation with 60,000 popular restaurants), and blasting battles (the Soft Series competes to become the number one mainstream product in Anhui); The third is to focus on two major actions to promote the signing of core tobacco hotel packages and the seizure of banquets. We believe that as the company continues to focus on channel optimization and product system adjustment, and the brand strategy is gradually clarified, the results of the reform are expected to be further unleashed.

Focusing on the construction of the Fuyang base base, the cultivation and upgrading of Fuhexiang continues to advance. The company currently clearly revolves around the “one, two wings” brand system with Fuhexiang as the center, seeds under 100 yuan plus high-end Zui Sanqiu as the two wings. Fuhexiang continues to promote Wandian cooperation and quality upgrading. Currently, Wanjiayan Hotel has completed in-depth cooperation with about 8,000 companies. Sales, price management, and promotional design have all received good market feedback. This year, it is expected to increase the overall structure share and total sales volume. Fuyang, as the company's core base, will continue to focus on deepening the market, while penetrating into regions with large market space such as Hefei, and continuing to deepen channel development on the premise of expanding outlets.

Investment advice: Since China Resources joined, China Resources has actively promoted adjustments in organizational and personnel adjustments, channel reform, product reshaping, marketing innovation, etc., and is poised to improve the path of profitable management recovery. We expect the company to achieve total revenue of 1,886/2,502 billion yuan in 24-25, and a net profit of 0.98/268 million yuan to maintain the “recommended” rating.

Risk warning: New product cultivation falls short of expectations; macroeconomic decline; internal management adjustments fall short of expectations; increased market competition, etc.