Key takeaway

In 2025, the company gradually completed channel inventory adjustments and the deployment of new businesses and new products, improving market health and driving high-single-digit revenue growth in 1Q26. In 2026, the pre-mixed cocktail business will continue to launch new zero-sugar versions, along with the Qingxiang and jelly cocktail lines, making revenue acceleration likely. After a year of market operations, the whisky business, affected by prohibition policies and other factors, is seeing a gradual improvement in channel sign-up rates. The company’s strategy is clear, and incremental contributions for the full year are expected. The flavor and fragrance business is expected to remain stable. For the full year, an overall recovery in revenue and profit performance is expected.

Event

The company released its 2025 annual report and 1Q26 quarterly report:

In 2025, the company achieved revenue ofRMB2.944bn, a YoY change of-3.43%; net profit attributable to shareholders of the parent company wasRMB637mn, a YoY change of-11.36%; and net profit attributable to shareholders of the parent company after deducting non-recurring items wasRMB604mn, a YoY change of-10.16%.

In 4Q25, the company achieved revenue ofRMB674mn, a YoY change of+1.85%; net profit attributable to shareholders of the parent company wasRMB88mn, a YoY change of-39.16%; and net profit attributable to shareholders of the parent company after deducting non-recurring items wasRMB87mn, a YoY change of-21.43%.

In 1Q26, the company achieved revenue ofRMB800mn, a YoY change of+8.54%; net profit attributable to shareholders of the parent company wasRMB216mn, a YoY change of+19.34%; and net profit attributable to shareholders of the parent company after deducting non-recurring items wasRMB209mn, a YoY change of+17.41%.

Quick Take

Whisky and new products drive gradual sales improvement.

In 2025, alcoholic beverage business revenue decreased by 3.89% YoY to RMB2.573bn, mainly due to prioritizing channel destocking in response to market demand trends to maintain channel health. Looking at quarterly performance, the company gradually returned to positive growth from 3Q25, with the launch of new products such as Qingxiang andWeixun jelly cocktails. In 2025, the whisky business was officially launched, with the two major brands, Lan Zhou and Bailide, launching new products to enrich the product matrix. In the first quarter, revenue growth is expected to have accelerated, driven by new products and whisky. In 2025, flavor and fragrance business revenue was RMB323mn, a YoY change of -3.91%.

Gross margin and expense ratios weighed on profitability in 2025, while margins improved in 1Q26

In 2025, the company’s gross margin changed YoY by-0.49pctsto69.18%, and net margin attributable to shareholders of the parent company changed YoY by-1.94pctsto21.65%. In 4Q25, the company’s gross margin changed YoY by-2.64pctsto65.45%, and net margin attributable to shareholders of the parent company changed YoY by-8.81pctsto13.07%. In 1Q26, the company’s gross margin changed YoY by+0.65pctsto70.31%, and net margin attributable to shareholders of the parent company changed YoY by+2.45pctsto27.06%. The decline in gross margin was mainly due to the new deployment of the whisky business and the promotion ofQingxiang and Weixun jelly cocktails. In 2025, the selling expense ratio was24.74%, a YoY change of+0.12pcts, and the administrative expense ratio was8.07%, a YoY change of+1.39pcts. In 1Q26, the selling expense ratio was 21.39%, up 0.12pcts YoY, while the administrative expense ratio was 7.11%, down 0.25pcts YoY. The administrative expense ratio increased significantly in 2025, mainly due to the commissioning of projects such as the whiskey experience center, which led to a substantial rise in depreciation expenses, as well as the recruitment of teams for new businesses.

Earnings forecast: Based on the company's financial performance, we estimate that from 2026 to 2028, the company will achieve revenue of RMB3.257bn, RMB3.600bn, and RMB3.949bn, and net profit attributable to shareholders of the parent company of RMB737mn, RMB860mn, and RMB1.004bn, corresponding to P/E multiples of 24.80x, 21.25x, and 18.20x.

Risks:

1. Food safety: Food safety is always the focus of consumers. Although the company has continuously improved production quality control levels, since it involves many links and enterprises, there are still food quality and safety risks.

2. Raw material price fluctuations: Raw materials account for the majority of production costs. Rising raw material prices will significantly reduce corporate profitability, and unexpected price hikes will make corporate profits fall short of expectations.

3. Intensified competition: the RTD sector is developing rapidly, and the market capacity is constantly expanding. More and more companies are venturing into the industry, making the competition increasingly fierce. The increase of competitive products may further intensify the competition in the domestic RTD market. As a result, the company's market share may be affected to a certain extent, its advertising, promotion and other marketing expenses may increase, weighing on the profitability of the company.