Recently, with the release of the 2024 mid-year performance of the 22 baijiu listed companies, the baijiu industry has ushered in an annual feast.

The data shows that the revenue of 22 liquor companies in the first half of the year was 24.6396 billion yuan, a year-on-year increase of 13.21%, net income was 9.6279 billion yuan, a year-on-year increase of 13.82%. Overall, although the revenue and net income of the 22 liquor companies have increased year-on-year, the industry differentiation has further intensified. Leading liquor companies and well-known brands have shown a strong ability to respond to industry adjustments, while liquor companies lacking brand influence have started to fall behind.

Among them, Jiangsu High Hope International Group Corp., Ltd. (6979.HK) stood out with a remarkable performance of a 17.5% year-on-year growth in revenue and a 26.9% year-on-year growth in adjusted net income, not only demonstrating its strong driving force as a "growth stock," but also revealing the profound value as a "value stock."

Significant growth and potential coexist in the characteristics of "growth stocks".

In the investment community, growth stocks are always eye-catching. They often have high growth potential and can continuously break through themselves. Through active market deployment, they continuously expand market share and maintain strong competitiveness.

The data shows that in the first half of the year, 5 out of 22 listed baijiu companies experienced a year-on-year decline in revenue and 5 experienced a year-on-year decline in net income. Only 11 out of the 22 companies achieved double-digit growth in revenue and adjusted net income, with Jiangsu High Hope International Group Corp., Ltd. being one of them.

Caption: Shunxin Agriculture and Huarun Jinsa have not announced the net profit of the liquor sector.

Specifically, Zhenjiu Lidu's revenue ranks 9th among listed Chinese liquor companies, with revenue growth ranking 7th; adjusted net profit ranks 9th, with growth ranking 4th. In addition, Zhenjiu Lidu's gross margin is 58.8% (calculated according to A-share accounting standards as 75.5%), and the adjusted net profit margin is 24.6%, an increase of 0.9% and 1.8% respectively compared to the same period last year, demonstrating continuously enhanced profitability and significant growth potential.

Caption: Some liquor companies have missing data for 2023.

From 2020 to 2023, Zhenjiu Lidu's compound annual growth rate of revenue is 43.1%, and the adjusted net profit compound annual growth rate is 46.1%, higher than the industry average.

Industry observers pointed out that it is not easy for Zhenjiu Lidu to maintain high-speed growth in the context of the overall industry slowdown, which is also related to its leader Wu Xiangdong's rich industry experience.

It is reported that Wu Xiangdong, as an industry veteran, has a firm grasp on both production and distribution channels, can accurately grasp market trends, and make quick strategic adjustments. In the first half of the year, Zhenjiu Lidu was able to thrive by upgrading its "dual-channel" strategy and experiential marketing, optimizing distribution networks and product portfolios, continuously enhancing product, channel, and experiential appeal, and accelerating market expansion against the trend.

The above-mentioned observers stated that whether based on Zhenjiu Lidu's internal dynamic advantages or the overall challenging market environment, its strong and resilient operating performance conforms to the growth logic of growth stocks.

"Value stocks" have a deep foundation and are still undervalued by the market.

The high performance of Zhenjiu Lidu has attracted attention in the industry. However, the charm of Zhenjiu Lidu goes beyond that; it also has the characteristics of a "value stock".

A "value stock" generally refers to a company that has a relatively mature market and product, and has established a certain competitive position, but its stock price is undervalued due to macroeconomic factors or changes in market sentiment.

Zhenjiu Lidu has three subsidiary companies.

As the only listed liquor company in the industry in the past 8 years, Zhenjiu Lidu has four major brands: Zhenjiu, Lidu, Xiangjiao, and Kaikou Xiao, covering all price segments. In 2023, the company's revenue reached 7.03 billion yuan, making it the third largest private liquor company in China and the ninth largest listed liquor company in China.

In the first half of this year, Zhenjiu Lidu continued to maintain substantial growth in a high base, with greatly improved cash flow, positive growth in advance payments, and continuously increasing competitiveness, further enhancing its industry leadership.

According to the financial report, Zhenjiu Lidu's net cash flow from operating activities reached nearly 0.575 billion yuan, a year-on-year increase of 166%, driving the end-of-period cash and cash equivalents balance to increase to 6.01 billion yuan. At the same time, the balance of advance payments for the company reached nearly 1.79 billion yuan, continuing to grow positively compared to the same period last year's 1.777 billion yuan.

This series of data changes not only demonstrates the good financial health of Zhenjiu Laidu, but also reflects its strong competitiveness and attractiveness in the market.

After high growth, Zhenjiu Laidu is still undervalued. Currently, the average P/E ratio of A-share liquor companies is around 16 times, while the P/E ratio of Zhenjiu Laidu is only 11 times.

Zhenjiu Laidu's partial product image

In the view of the internationally renowned investment bank Morgan Stanley, Zhenjiu Laidu is undoubtedly an investment gem with great value. On August 14, it first gave Zhenjiu Laidu a "shareholding" rating, believing that during the industry adjustment period, Zhenjiu Laidu has obvious advantages, and predicts that its compound annual growth rate of revenue from 2023 to 2025 will be 17%, and the compound annual growth rate of profit will be 18%, and it is expected to reach a market size of 20 billion yuan in the future.

Data from Choice also shows that after Zhenjiu Laidu's mid-term performance announcement, 20 well-known brokerages including China Securities, Sinolink Securities, China Merchants Securities, Huachuang Securities, GTJA Securities, and Founder Securities all believe that Zhenjiu Laidu's mid-term performance meets expectations and give positive ratings such as shareholding and buying.

Many investors are curious as to why Zhenjiu Laidu can combine the characteristics of "growth stock" and "value stock", which starts with Zhenjiu Laidu's long-termism.

In recent years, Zhenjiu Laidu has continuously focused on key factors such as production capacity, brand, channels, and team, striving to consolidate and enhance its competitive advantages. While maintaining high-speed growth, it also pays attention to risk control and value creation, ensuring the sustainability and stability of its performance.

This core advantage is the moat for the continuous development of Zhenjiu Lidu, the solid cornerstone of resilient growth, and the strong engine for its future leap.

Currently, facing macro changes and new industry trends, many enterprises are exploring feasible paths for high-quality growth. Zhenjiu Lidu, which combines the characteristics of growth stocks and value stocks, provides a beneficial model for the healthy development of the industry.