On April 29, 2025, Shuijing Fang released its 2024 Annual Report and 2025 Quarterly Report.
Key investment points
Steady growth in performance, significant cost optimization
Performance was in line with expectations, with steady overall growth in Q1. Total revenue/net profit to mother in 2024 was 5.217/1.341 billion yuan, respectively, +5%/+6%; 2024Q4 was 1.429/0.216 billion yuan, respectively, +5%/-12%; and 2025Q1 was 0.959/0.19 billion yuan, respectively, +3%/+2%, respectively. Q1 Gross margin increased year-on-year, and overall profitability was stable. The gross margin/net margin in 2024 was 83%/26%, respectively, -0.4/+0.1 pcts year on year; 2025Q1 gross margin/net margin was 82%/20%, respectively, +1.5/-0.1 pcts year on year, respectively. Q1 The sales expense ratio has been clearly optimized, and the overall management expense ratio is stable. In 2024, sales/management expenses were 25%/8%, respectively, -1.3/+0.9pcts year-on-year, respectively. 2025Q1 sales/management expenses rates were 27%/9%, respectively, -7.6/-0.5pcts year-on-year, respectively. Q1 Net operating cash flow was under pressure, and sales repayments declined year over year. Net operating cash flow/sales payback in 2024 was 0.744/5.348 billion yuan, respectively, -57%/-5% year-on-year, respectively. 2025Q1 net operating cash flow/sales payback was -0.576/0.732 billion yuan, of which 2024Q1 net operating cash flow was -0.102 billion yuan, or -21% year-on-year sales. As of the end of 2025Q1, the company's contract debt was 0.936 billion yuan (-0.013 billion yuan month-on-month).
Mid-range alcohol grew rapidly throughout the year, and sales volume through new channels increased
By product, high-end and mid-range revenue in 2024 were 4.764/0.264 billion yuan, respectively, +2%/+29%, respectively; gross margin was 86%/63%, respectively, +0.85/-2.41 pcts. The main brand of “Shuijing Fang” focuses on the high-end price range of 300-800 yuan. “First Square” focuses on the high-end market above 800 yuan, and continues to lay out the terminal brand “Tianhao Chen”. 2025Q1's high-end and mid-tier revenue was 0.851/0.049 billion yuan respectively, +6.71%/-34.21%, respectively; gross margin was -1.91/-7.55pcts year-on-year, respectively. By channel, the revenue of new channels/wholesale agents in 2024 was 0.528/4.5 billion yuan, respectively, +10%/+2%, respectively; 2025Q1 new channel/ wholesale agent revenue was 0.286/0.614 billion yuan, respectively, +184.44%/-20.44%. By region, domestic and foreign revenue in 2024 was 4.97/0.058 billion yuan, +3%/+45%, respectively; 2025Q1 domestic/foreign revenue was 0.898/0.002 billion yuan, respectively, +4.3%/-84.35%.
Profit forecast
We are optimistic about the company's short-term growth, continue to promote high-end brand building in the long term, increase the cultivation of a new generation of Jingtai consumers, focus on the top eight core markets, and build one of the leading brands of strong flavored liquor. We expect EPS to be 2.90/3.16/3.50 yuan in 2025-2027, and the current stock price is 16/15/14 times PE, respectively, maintaining a “buy” investment rating.
Risk Alerts
Downside macroeconomic risks, the growth of the top eight major markets fell short of expectations, sales of Master Collector and Jingtai fell short of expectations, etc.
