Golden Faith Financial News | Tianfeng Securities issued research reports, believing that ZJLD (06979) core advantages are: 1. For ZJLD, the baijiu has entered the brand development stage, ZJLD brand has deep cultural heritage, focusing on building the market base in 5 major provinces, expected to grow into a leading enterprise in the baijiu sector; 2. For Lidu, the national treasure cellar shapes the high-end genes, replicates classic designs to create high-end bottle benchmarks, immersive marketing experience innovative channel model, with potential for national expansion; 3. For Xiang Jiao & Kaikou Xiao, Xiang jiu leader has a solid foundation in local consumer market, outstanding brand & channel advantages, Hunan baijiu is gaining popularity, Xiang Jiao & Kaikou Xiao is strategically positioning in the baijiu sector, expected to continue increasing market share in the Hunan baijiu market.

The bank further pointed out that in 2023, ZJLD contributed 65% of the company's sales revenue, forming the company's performance foundation. After the company acquired ZJLD in 2009, it continued to invest resources to promote expansion, reshape product matrix, and rebuild sales network. After a rapid growth since 2015, ZJLD has transformed into a national baijiu leader brand mainly selling high-end products at and above second-tier prices. From 2020 to 2023, ZJLD's brand revenue increased from 1.346 billion yuan to 4.583 billion yuan, with a CAGR of 50.46%. By 2023, ZJLD has grown into the fourth largest baijiu brand in the country.

The bank predicts that in 2024-2026, the company will achieve revenues of 8.532, 10.228, 12.038 billion yuan, and achieve net income attributable to the parent company of 1.897, 2.533, 3.351 billion yuan. The corresponding PEs (2024-10-14) are 12.9, 9.6, 7.3X. The bank uses the P/E method to value the company. Due to the lack of comparable companies in Hong Kong focusing on baijiu production and sales, the bank selected 15 A-share listed baijiu companies with similar profits as comparable companies across markets. Referencing the average PE of 15 comparable companies in 2024, the bank gives the company a target PE valuation of 19.5X for 2024, with a corresponding target market cap of 37 billion yuan, target stock price of 10.93 yuan/share (12.01 Hong Kong dollars/share), initiating coverage with a "buy" rating.