Investment positives

We resume coverage with a HOLD rating and a target price ofRmb13.20, implying3.3x 2017e P/B.

Why a HOLD rating

The time for yellow rice wine consumption hascome. In 2015, the sales volume of Shaoxing wine （aunique low-alcohol Chinese rice wine containing nutrients）rose 10%.

No.1 Shanghai-style yellow-rice wine leader with a50% market share. Its major brands include Shikumen,He and Golden Age, contributing around the same portionto revenue.

Innovative taste, packaging; differs from traditionalyellow rice wine.

Existing brands lack growth momentum due tooverreliance on local market. Jinfeng's existing brandsfocus mainly on the Shanghai market, whichcontributes >90% of its revenue. Growth is weighed downby declines in low-end liquors. M&A and other wineproducts are also unlikely to make visiblecontributions to earnings in the near term.

How do we differ from the market1） The G&Aexpense ratio should directly benefit from fallingwarehousing expenses; 2） M&A should produce a limitedboost to overall growth.

Potential catalysts: 1） Quanxing （a liquor brand） injected intoJinfeng; 2） acquisitions of other yellow rice wine companies.

Financials and valuation

EPS is expected to be Rmb0.151/0.156/0.171 in 2016——2018, aCAGR of4.4%.Its 2017e TP should be Rmb13.2, implying3.3x 2017e P/B; resume coverage with a HOLD rating.

Risks

Other brands strengthen their presence in Shanghai, leading tofiercer competition.