On April 28, 2025, Huijishan released its report for the first quarter of 2025. The 2025Q1 revenue was 0.481 billion yuan (same increase of 10%), net profit to mother was 0.094 billion yuan (same increase of 2%), and net profit not attributable to mother was 0.093 billion yuan (same increase of 13%).
Key investment points
Product structure optimization increases gross profit and increases terminal cost investment
The gross margin of 2025Q1 increased by 7 pct to 60.71%, mainly due to the accelerated revenue growth rate of medium and high-end rice wine. The sales/management expenses ratio was +7 pct/-2pct to 22.10%/5.06%, respectively. The main reason was that the company increased the amount of terminal promotion expenses, increased the frequency of tasting sessions, and the net margin decreased by 2 pct to 19.46%.
The product structure continues to be optimized, and the base market is further consolidated
By product, the revenue of 2025Q1 medium and high-end rice wine was 0.336/0.105 billion yuan respectively, with an increase of 12%/1% respectively. The revenue growth of middle and high-end rice wine led to continuous optimization of the product structure. The company built high-end brand awareness through circle marketing and intensive cultivation, and gradually cultivated long-term customers in the business banquet scene. At the same time, the company adheres to the strategy of rejuvenation and develops new products such as lemon flavor, can cans, and champagne crafts to reach consumers' minds and cultivate consumption habits through innovative rice wine. Looking at the subregion, 2025Q1 Zhejiang's revenue was 0.286 billion yuan (up 17% from the same period). The province continues to cultivate Lanting's gift-giving attributes, further encrypt the dealer network, and explore market space.
Profit forecast
The company insists on upgrading consumption in the mature Yangtze River Delta market and cultivating mass consumption in weak markets. We are optimistic that the company's Lanting high-end will advance steadily, and that the new online channel will drive the rice wine category to break the circle. As the brand's potential increases, the scale effect is expected to continue to unleash. According to the 2025 quarterly report, we adjusted the 2025-2027 EPS to 0.50/0.60/0.71 (previous value was 0.48/0.55/0.62), respectively, and the PE corresponding to the current stock price is 29/24/21 times, respectively, maintaining a “buy” investment rating.
Risk Alerts
Macroeconomic downside risks, bubble rice wine growth falls short of expectations, Lanting's growth falls short of expectations, and market competition intensifies risks.
