Core ideas
As a leading rice wine company, Huijishan proposed a clear position for high-end brands, increased investment in marketing transformation, optimized the recruitment of talents, accelerated the development of direct sales group purchases, and gradually achieved results. 2025Q1's revenue grew steadily by 10.10%, and the growth rate of mid-to-high-end products of 12.07% led to a sharp increase of 7.10pct in gross margin. The company strengthened marketing investment, improved internal management efficiency, and deducted non-return net profit of 0.093 billion yuan, an increase of 12.72% over the previous year.
25Q1 The company's contract debt increased 77.21% year on year, and the cash flow situation is good. It continues to be optimistic about the company's layout in the high-end production of rice wine.
occurrences
The company released its 2025 quarterly report
25Q1 revenue was 0.481 billion yuan, up 10.10% year on year; net profit to mother was 0.094 billion yuan, up 1.70% year on year; net profit after deducting non-return to mother was 0.093 billion yuan, up 12.72% year on year.
Brief review
Q1 Revenue grew steadily, leading the growth rate of high-end rice wine
2025Q1 achieved steady double-digit revenue growth, and the product structure continued to be optimized.
Among them, revenue from high-end rice wine was 0.336 billion yuan, up 12.07% year on year; revenue from ordinary rice wine was 0.105 billion yuan, up 0.55% year on year. The revenue growth rate of middle and high-end products far exceeded average, and high-end production was very effective. 25Q1 gross profit margin was 60.71%, up 7.10pct year over year. Looking at the subregion, the revenue of the Zhejiang region in 25Q1 was 0.286 billion yuan, up 17.11% year on year, while revenue from the Jiangsu and Shanghai regions decreased by 6.91% and 8.91% year on year. By channel, direct sales (including group purchases) revenue was 94.38 million yuan, a year-on-year growth rate of 86.12%, and wholesale agency revenue decreased 2.58% year-on-year. 25Q1 contract debt was 0.099 billion yuan, up 77.21% year over year.
The sales expense ratio has increased dramatically, and heavy investment has boosted high-end potential
The 25Q1 sales expense ratio was 22.10%, up 6.74 pcts year on year. Sales expenses were 0.106 billion yuan, up 58.43% year on year. Expenses were increased due to the expansion of the company's sales team in 2024, and high-end promotion also required large investment. The R&D cost rate was 3.39%, up 1.09 pct year on year; the management cost ratio was 5.06%, down 2.19 pct year on year. The company's investment in product quality improvement and product promotion increased, and internal management efficiency led to an effective reduction in the management cost ratio. As the scale expands and the management of the superimposed sales team is strengthened, it is expected that the increase in the sales expense ratio will be effectively controlled throughout the year.
Profit forecast: The company is expected to achieve revenue of 1889.45, 2215.16, and 2600.2 million yuan in 2025-2027, and achieve net profit to mother of 248.97, 320, and 420.3 million yuan, maintaining an “increase in holdings” rating.
Risk warning:
1) Increased market competition: Although the rice wine industry has a long history and cultural heritage, it has faced fierce competition from other alcoholic products such as liquor and beer in recent years. As a regional brand, Huijishan Rice Liquor's market share is mainly concentrated in the Jiangsu, Zhejiang and Shanghai regions, and nationwide expansion is facing great challenges. As consumer tastes diversify, market demand growth for rice wine may be limited, putting pressure on the company's performance. In addition, other rice wine companies in the industry are also continuously increasing their marketing efforts, further intensifying market competition and may affect Huijishan's profitability.
2) Risk of fluctuations in raw material prices: The main raw materials of rice wine are agricultural products such as glutinous rice and wheat, and their prices are greatly affected by factors such as climate, natural disasters, market supply and demand. In recent years, global climate change has been frequent, and extreme weather events have increased, which may increase price fluctuations in agricultural products. If the price of raw materials rises sharply, production costs in Huijishan will rise accordingly, thereby reducing profit margins. Although the company may pass on cost pressure through price increases, price increases may lead to a decline in sales and further affect the company's revenue and profits.
3) Brand aging and consumer group limitations: Traditional consumers of rice wine are mainly concentrated among middle-aged and elderly people, and young consumers are relatively less receptive to rice wine. As a traditional brand, Huijishan Rice Liquor faces the risk of brand aging and limited consumer groups. If the company is unable to effectively carry out brand rejuvenation transformation and attract more young consumers, future market growth space will be limited. Furthermore, with the spread of the concept of healthy consumption, low-alcohol alcohol and healthy alcohol products are gradually being favored. If rice wine does not adapt to this trend in a timely manner, it may miss out on market opportunities.
