Key takeaway

The company released its semi-annual earnings forecast, with 1H26 net profit attributable to shareholders of the parent company growth of+19.51%-25.94%, accelerating from 1Q26. After a year of adjustment, market inventory is healthy, the Qiangshuang RMB2 rebate promotion has received positive feedback, the zero-sugar RIO is gradually expanding distribution, and Qingxiang and jelly cocktails are contributing incremental revenue. We expect revenue growth to accelerate. In whiskey, Bailide small bottles have entered RIO's distribution channels, broadening channel reach. The company announced a private placement plan, and senior management increased their shareholdings, further reinforcing confidence in the company's development. For the full year, an overall recovery in revenue and profit performance is expected.

Event

The company announced its 2026 semi-annual earnings forecast:

1H26 net profit attributable to shareholders of the parent company is expected to be RMB465mn-490mn, up 19.51%-25.94% YoY; recurring net profit is expected to be RMB438mn-460mn, up 22.99%-29.17% YoY.

2Q26 net profit attributable to shareholders of the parent company is expected to be RMB249mn-274mn, up 19.67%-31.70% YoY; recurring net profit is expected to be RMB229mn-251mn, up 28.54%-40.88% YoY.

Quick Take

Revenue expected to accelerate in 2Q, 1H profit beat expectations

The company's profit accelerated notably in 2Q. In addition to a low base in the prior-year period, the pre-mixed cocktail and whiskey businesses are expected to have rebounded, driving faster revenue growth. In 2Q, the company's RMB2 rebate promotion for Qiangshuang, continued expansion of zero-sugar pre-mixed cocktail distribution, and Qingxiang and jelly cocktails contributed incremental revenue. Pre-mixed cocktail growth is expected to accelerate to double digits. In whiskey, distributor signings have gradually recovered since 4Q25. Bailide was integrated into the pre-mixed cocktail business division, and the small bottles have received good feedback after entering RIO's distribution channels. The company's digital transformation is gradually being implemented, and channel management is becoming more refined. Current product channel inventory is around 1.5 months, which is at a healthy level.

Private placement planned for whiskey business expansion, senior management increased shareholdings to demonstrate confidence

The company plans a non-public offering of RMB1.35bn, of which RMB1.14bn is planned for the malt whiskey barrel aging capacity expansion project, with plans to purchase 200,000 oak barrels, bolstering the company's domestic whiskey reserves. Additionally, three senior executives, Ma Liang, Liu Jiarui, and Yu Chen, announced share purchase plans, intending to increase their holdings in the company within six months, with a total purchase amount of RMB25mn to RMB50mn, demonstrating confidence in the company's future development.

Earnings forecast: Based on the company's financial performance, we estimate that from 2026 to 2028, the company will achieve revenue of RMB3.360bn, RMB3.715bn, and RMB4.076bn, and net profit attributable to shareholders of the parent company of RMB757mn, RMB885mn, and RMB1.034bn, corresponding to P/E multiples of 21.64x, 18.50x, and 15.85x.

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.