Key investment points

Incident: On November 19, 2024, the “Creating and Feeling New Life with the World” Laizhou Night and Press Conference was held at the Sichuan Laizhou Distillery. The brand “Laizhou” and Laizhou Single Malt Whiskey Genesis Edition, the brand “Bailide”, and the original version of Ballard Single Blended Whiskey were officially launched.

The two whiskey brands complement each other, and are the first to win in innovation. The two new products unveiled this time, Laizhou Single Malt Whisky Genesis Edition (700ml, 46 degrees) and Baileys Single Blended Whiskey Genesis Edition (700ml, 43%), all sold at an official price of 399 yuan. As the company's three-year pioneering work, limited to 10,000 bottles, limited to 2 bottles per person, the sales channels are mainly from Shanghai Laizhou Bar, Guangzhou Laizhou Bar, and Chengdu Laizhou Spirits Culture Experience Center. Adhering to the original intention of “being China's own whiskey”, the company is committed to exploring the fusion of Chinese specialty flavors and local culture: 1) The first product has a unique Chinese style in terms of barrel type and design, and the price is comparable to the medium to high-end prices of international brands, showing a good brand tone; 2. It is a limited sale form of Laizhou Bar, which highlights the scarce texture of the product, and also vividly promotes the C-side promotion and interaction of the company's whiskey products through the traditional bar consumption culture of whiskey. 2) This new product is an unconventional sales edition. The distribution product lines under the two major brands will be released one after another starting 25Q1 to cover more diverse consumption scenarios and consumer needs of the public. It is expected that RTD dealers and spirit/liquor dealers will be selected to operate in the future, giving priority to catering, retail, and group buying channels. Nightclub channels are mainly natural penetration, and focus on regions with good alcohol consumption habits such as Guangdong and Fujian. With the improvement of the product matrix, the expansion of online and offline channels, and the improvement of brand power, it is worth looking forward to the results of the company's three-year goal of the whiskey business.

Whiskey production capacity has a first-mover advantage, and localized operations continue to deepen. The company plans to enter the whiskey industry in 2016. With the vision of “creating more possibilities for whiskey”, the company pursues “the possibility of diverse flavors”, and is based on Qionglai, a characteristic wine production area in the world, to embark on a journey towards an international spirits circuit. The company's Laizhou Distillery is currently a modern distillery with the largest whiskey production capacity and the most complete product line in China. The barrel aging capacity has reached 0.4 million barrels, laying a good foundation for the company's whiskey business development. In addition, the company attaches importance to localized operation. 1 is to hire a professional team to increase research and development. In addition to traditional whiskey barrels, the company has innovatively launched Chinese flavor barrel types such as rice wine barrels and Mongolian oak barrels; 2. The marketing method takes into account consumer needs and communication channel characteristics. In addition to increasing exposure through film and television marketing, the company will also actively plan experiential marketing to enhance consumer interaction and enhance brand identity. We believe that the company's strong marketing strength and achievements in the past in the pre-blending business are obvious to all, and its successful experience is expected to continue to be replicated in the whiskey business.

Profit forecast and investment rating: Looking ahead to the whole year, the pre-blending business: The company continues to cultivate and consolidate its strength around the 358-degree product matrix. Slightly drinking/refreshing drives volume through flavor promotion, packaging upgrades, and enhanced distribution. Pre-blending revenue is expected to remain relatively stable at a high base. Spirits business:

At present, the new products are on sale. It is expected that this year's work will mainly focus on building and improving sales channels and team personnel. Whiskey distribution products will be officially launched on the market in '25, and sales feedback is worth looking forward to.

Based on the company's plan and the performance of the first three quarters, we slightly adjusted 2024-2026 revenue to 3.24/3.71/4.18 billion yuan (previous value 3.27, 3.74, 4.16 billion yuan), -1%, +14% year-on-year; net profit to mother of 0.78, 0.9, 1.02 billion yuan (previous value 0.79, 0.91, 1.05 billion yuan), -4%, +15%, 14%, corresponding to PE 32, 28, and 25 times. Maintain a “buy” rating.

Risk warning: Pre-mixed wine sales fall short of expectations, whiskey releases fall short of expectations, food safety issues