Incident: On April 29, 2025, Shuijing Fang announced that in 2024, revenue was 5.217 billion yuan, up 5.32% year on year; net profit to mother was 1.341 billion yuan, up 5.69% year on year.
25Q1 achieved revenue of 0.959 billion yuan, a year-on-year increase of 2.74%; net profit to mother of 0.19 billion yuan, an increase of 2.15% year-on-year.
High-end wines are growing steadily, while mid-range wines continue to gain strength. In 2024, alcohol achieved revenue of 5.028 billion yuan, +3.13% year-on-year, of which high-end and mid-range achieved revenue of 4.764/0.264 billion yuan respectively, +1.99%/29.14%. High-end wines are mainly Shuijingfang brand series, while mid-range wines are mainly Tianhao Chen and series wines. The company continues to focus on the two core products of the Zhenjiang No. 8 and Jingtai series, while increasing investment in the Tianhao Chen series and exploring the market potential in the 150-300 yuan price range. The rapid release of Tianhao Chen has become a new growth point for the company. The company proposed that in the future, it will establish a dual brand system of “Shuijing Square” (focusing on the sub-high-end) and “First Square” (focusing on the high-end), and implement the “Gemini” product strategy to create the second star product in the 300-800 yuan price range.
Continuing to deepen channel construction, opening more than 10,000 new stores. In 2024, new channels/wholesale agents achieved revenue of 0.528/4.5 billion yuan, +9.97%/2.38% YoY; 25Q1 new channel/wholesale agents achieved revenue of 0.286/0.614 billion yuan respectively, +184.44%/-20.44% YoY. The company continues to digitally empower, improve marketing efficiency and resource investment efficiency, and has built an e-commerce channel matrix combining traditional e-commerce, interest e-commerce, and O2O new retail. Continuously optimize channel management, divide the national market into three categories: bastion, pioneer, and potential, and adopt city-specific policies. In 2024, the company actively promoted the expansion of the store network, and the number of new stores opened exceeded 10,000.
Accurate cost allocation and improved operational efficiency. The gross margin/net margin for 2024 was 82.76%/25.71%, -0.4/+0.09pct; the period expense ratio was 33.61%, -0.34pct year on year, and the sales/management/R&D/finance expense ratios were 25.06%/8.2%/0.72%/-0.37%, respectively, with year-on-year changes of -1.34/0.89/-0.04/0.15pct, respectively. The decrease in the sales expense ratio is expected to be more accurate and effective. The increase in the management cost ratio is mainly due to increased depreciation, operation and personnel costs brought about by the transformation of the Qionglai industrial production base project. 25Q1 gross margin/net margin was 81.97%/19.84%, +1.5/-0.12pct; the period expense ratio was 36.61%, -7.77pct year on year, and the sales/management/R&D/finance expense ratios were 27.5%/8.98%/0.81%/-0.69%, respectively, with year-on-year changes of -7.56/-0.49/0.17/0.11pct, respectively.
The company continues to shape brand value, and channel measures are excellent and efficient. The company will establish a dual brand system of “Shuijing Fang” and “First Square”. The main brand, Shuijingfang, will focus on the 300-800 yuan high-end price range to create a second obvious product complementing the No. 8 series, while continuing to lay out the terminal brand Tianhao Chen to meet consumers' cost-effective needs and consolidate the core market foundation; First Square will focus on the high-end market above 800 yuan to meet consumers' scarcity and individualized pursuit of high-end categories. The channel side will be managed more finely, dividing the national local and municipal markets into three categories: bastions, pioneers, and potential, and adopting city-specific policies and strategies to improve resource utilization efficiency. At the same time, optimize profit distribution in the value chain, strengthen the binding of interests with dealers, achieve a win-win situation, and promote healthy market development. Due to changes in the structure of consumption scenarios, government and business demand has weakened, and social and family gathering scenarios have increased, becoming the main driving force for the growth of liquor consumption. The company will focus on key consumption scenarios and strengthen emotional links with consumers.
Profit forecast: Optimistic that the company will continue to build brand value, achieve long-term sustainable and healthy development, and expand market influence and coverage through continuous optimization of the product structure. We expect the company to achieve revenue of 5.665/6.37/7.427 billion yuan in 25-27, net profit of 1.479/1.697/2.017 billion yuan, corresponding PE of 14.96/13.04/10.97x, respectively, to maintain a “highly recommended” rating.
Risk warning: macroeconomic downside risk, industry demand falling short of expectations, rising costs exceeding expectations
