We recently attended ZJLD's 2024 shareholders' meeting and exchanged views with management on the company's 25-year development plan and recent business conditions. The core findings are as follows:
Starting at 24H2, we will take the initiative to slow down and relieve pressure, and put healthy management first. In 24 years, the company continued to prioritize price stability, decelerated pressure from 24H2, and multiple brands actively adjusted: the main brand Zhenjiu adhered to the dual-channel development model, Zhen30 prioritized price stabilization in the process of adjusting distribution channels, and 24H2 actively reduced the pace of market expansion and reduced Zhen15 and Zhen30 branch products to prioritize stable operation quality and price stability; Lidu Regional Outreach and Price Band Expansion jointly drive long-term development, expanding the coverage of sub-high-end and mid-tier price bands in an orderly manner to support long-term scale expansion; Xiangxinjiao focuses on long-term scale expansion; Xiangxinjiao focuses on long-term scale expansion Craftsman series, actively cut under the influence of the downturn in the wedding market Some low-margin products have optimized product structures to drive higher tonnage prices. In 24 years, the company actively adjusted to adapt to changes in the consumer situation (reduction of low-margin product lines, orderly expansion of product ranges of various brands, priority and active control of core products, etc.), demonstrating the company's steady operation and commitment to brand potential.
After 25 years of trying to break the game with resilience, there was sufficient strategic strength and active adjustments in the style of play under the industry adjustment cycle. Judging from the recent operating situation in the 25H1 liquor industry, demand in the 25H1 liquor industry is still weak. We expect that the company's reporting side will still be under pressure under high 24H1 base. Li Du will maintain relatively excellent brand performance, and the Zhenjiu Premium Liquor Division, e-commerce department, etc. are expected to continue growing driven by a differentiated experiential marketing model. Looking ahead to the full year, the company rationally and pragmatically adjusts its 25-year goals, striving for stability first, and continuing to actively adjust the product system and channel layout: 1) The Zhenjiu Premium Liquor Division continues to penetrate the circle, lengthen the Zhen30 cultivation cycle, and launch a new Zhen50 product in line with the 50th anniversary of the establishment of the factory. In the future, it is expected that the 500-600 yuan price band will continue to be encrypted, giving full play to the advantages of energy storage capacity of its base wine, and launch additional products with high quality and cost ratio. 2) Li Du continued the two-wheel drive strategy of regional expansion+product matrix expansion. The market outside the province increased by more than 50 million, focusing on the successive penetration of provincial capitals, and pilot projects within the province such as Li Duwang, and extending to the next high-end and mid-tier price bands.
3) Xiangjiao laughed and focused on the market in Hunan Province. Consumer awareness of the Xiangjiao Falilongjiang Soy Sauce series gradually increased.
There are many operating cards, strong resilience based on production capacity, and they are optimistic about the long-term logic of the company going through the cycle and steady increase in market share. We believe that the company's advantage is that it has sufficient operating license for multi-brand operations, rich management and team experience in the wine industry, and better team system and flexibility in response to adjustments. In the deep adjustment cycle of the industry, the company is based on sufficient production capacity layout to find breakthrough growth through successive product sequence additions, scenario extensions, and differentiated experiential marketing transformation. It is expected that it will consolidate its business foundation in the industry adjustment cycle and show greater flexibility as demand improves.
Profit forecast and investment advice: We believe that the company's clear positioning of the brand, its strategic determination is long-term and firm, that it focuses on the space for optimizing the pattern of leading soy wine brands, and that the collaborative development of multiple brands is more resistant to risk. We expect the company's 2025-2026 revenue to be 7.103/7.582 billion yuan, up 0.5%/6.7% year on year, respectively. We expect adjusted net profit to mother of 1.644/1.814 billion yuan under 2025-2026 Non-Gaap, respectively, -1.9%/+10.3% year over year, respectively, maintaining the “Highly Recommended” rating.
Risk warning: Terminal inventories fall short of expectations; consumer consumption recovery falls short of expectations; industry competition intensifies; macroeconomic downside risks, etc.
