Marketing holds high standards and builds a foundation for high-end technology. Since its establishment, the Shuijingfang brand has been known for its high-end image. The marketing strategy has been exalted, and the sales expense ratio has remained high in the industry (it has remained above 26% in recent years). Using sports and cultural marketing and C-end marketing as breakthroughs: binding high-end sports events to accurately connect high-end consumers; around the “Aesthetics in Wine” symbol, the brand value is expressed on a high platform, high frequency, and figurative manner to continuously enhance the brand tone; by the end of 2023, more than 60 aesthetic centers and more than 500 liquor school events have been built to cultivate the high-end community through C-side experiential marketing.
The product layout is medium to high prices, and high-end empowers the lower echelons. The sub-high-end market continues to expand, with a market size of more than 100 billion yuan in 2022. The company's product matrix implements the concept of high-end, focusing on large single products with medium to high price bands. Demand for high-end products is currently under pressure, and the company is still increasing high-end investment. The core logic is to drive the growth of lower-tier products with high bands and low bands. By product: 1) Jingtai stuck to the sub-high-end position and upgraded and reshaped value in 2022; 2) The collection led the 1,000 yuan high-end to break the game and set up a franchise company to operate independently.
3) Benefiting from current mass consumption dividends, Zhenjiang8 has grown into the core of revenue as a 300 yuan+ product. It will maintain double-digit growth in 2023. In the future, it will double its investment in resources, promote the “double hundred” strategy to expand channels and markets, and continue to drive the company's growth. 4) Tianhao Display is close to the mass market, focuses on active investment in key regions, and has potential for expansion on a small scale.
Channels and regional strategies adapt to the company's development stage. The company's current revenue volume (about 5 billion yuan) is relatively small compared to leading wine companies, and the channel regional strategy focuses more on combining efficiency and refinement. The channel model uses a complex model where new and old general generations are parallel, retaining the high efficiency of the general generation model in channel network coordination, and maintaining the company's ability to control the channel and perceive market changes by strengthening front-end management. The regional strategy uses a multi-point “mushroom tactic” to form a “5+3” echelon market matrix, which is more targeted in consolidating dominant markets and expanding emerging markets, and forming national synergy.
Investment advice: In the short term, Zhenjiang8 is expected to drive steady growth; with high medium- to long-term brand investment, there is still potential to unleash the potential saved by high-end product lines. The company is expected to achieve net profit of 1.37/1.52/1.71 billion yuan in 2024-2026, an increase of 7.8%/11.5%/12.0% year-on-year; the corresponding PE is 12.9/11.6/10.4 times. Covered for the first time, a “gain” rating was given.
Risk warning: risk that the recovery of consumption scenarios falls short of expectations; risk of food safety; risk of blocking the high-end process.