Company Reports

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into well-known regional brands.

Chinese baijiu sales have deteriorated since the second half of 2024, and the sector has lagged the broader market. An aging population and falling per capita drinking rates point to a shrinking pool of buyers, prompting us to reassess competitive strength across our coverage.

Following a tough 2025, Zhenjiu Lidu delivered 2% year-on-year revenue growth and a 1% increase in net profit in the first half of 2026.

Despite persistent demand headwinds across the baijiu sector, Zhenjiu Lidu, or ZJLD, targets 15% revenue growth and CNY 800 million net profit in 2026, implying a nearly 50% bottom-line rebound from its 2025 trough.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Zhenjiu Lidu, or ZJLD, posted a 48% decline in 2025 revenue and a 59% drop in net profit, with second-half revenue falling a steeper 61% year on year and net profit swinging to a loss of CNY 36 million. The company declared a final dividend of HKD 0.07 per share, representing a 38% payout ratio.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Our channel checks continue to indicate persistent weakness in baijiu demand, with the sector facing double-digit revenue declines ahead of the Lunar New Year holiday. However, performance varies across segments—premium baijiu, led by Moutai, is showing signs of modest demand improvement.

Our channel checks continue to indicate persistent weakness in China's consumer sentiment and elevated inventory levels for Baijiu. Golden Week sales for the sector declined by 20%-30% year on year, and inventory levels have increased by about one month.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Zhenjiu Lidu reported first-half 2025 results, with revenue and net profit declining by 40% and 24% year on year, respectively, driven by persistent macroeconomic challenges and newly implemented alcohol restrictions, which have exacerbated demand headwinds.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Zhenjiu Lidu has issued a profit warning for its 2025 first-half preliminary results, with revenue and recurring net profit expected to decline by 38%-42% and 39%-40% year over year, respectively.

Zhenjiu Lidu ended 2024 with revenue and recurring net profit rising 0.5% and 3.3% year over year to CNY 7.1 billion and CNY 1.7 billion, respectively. It raised the dividend 17% to HKD 0.21 per share from HKD 0.18 in the prior year.

Zhenjiu Lidu has differentiated itself from other China baijiu distillers by operating three distilleries under four brands, with aromas ranging across jiang, rich, and mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding have also bolstered its competitiveness.

Amid China's macroeconomic and consumption headwinds, our baijiu coverage trailed the broader market in 2024, falling 19% on average, compared with a 13% rise in the Shanghai Composite Index.

Despite slower economic growth and still-sluggish consumer sentiment in China, narrow-moat Zhenjiu Lidu, or ZJLD, posted strong first-half results, with revenue and adjusted net profit rising 18% and 27% year over year, respectively. The robust growth was within our expectations, which we think is helped by the expanding sales of its core products into national markets, as well as accelerating product mix upgrade. This, along with improving cost efficiency, has further boosted margins and adjusted net profit growth.

We initiate coverage of Zhenjiu Lidu, or ZJLD, with a narrow moat rating and a fair value estimate of HKD 12.20 per share, which implies price/earnings of 20 times, and enterprise value/EBITDA of 12 times, based on our 2024 estimates. We think the shares are currently undervalued, but our preferred picks in the sector are wide-moat Wuliangye and Luzhou Laojiao, as we believe these companies will be resilient despite economic swings, underpinned by their strong brand heritage, supreme product quality, and extensive distribution networks.

Zhenjiu Lidu, or ZJLD, has differentiated itself from other China baijiu distillers by operating three distilleries under four different brands, with aromas ranging across Jiang, Rich, and Mixed flavors. It acquired the distilleries of Xiang Jiao, Li Du, and Zhen Jiu during 2003-08. Through heavy investment, ZJLD successfully built Zhen Jiu, Li Du, Xiang Jiao, and Kai Kou Xiao into leading national and regional brands, providing the group with pricing power. Expanding distribution penetration and continuing investment in marketing and branding, have also fortressed its competitiveness.