CICC has maintained its target price of HK$11.2 for ZJLD, which corresponds to adjusted net profit P/E ratios of 62x and 49x for 2026 and 2027, respectively. The current share price implies P/E multiples of 52x and 41x for the same periods, suggesting a potential upside of 19.8%. The outperform industry rating has been reaffirmed.

The company reported its 2025 results, with revenue reaching RMB 3.65 billion, down 48.3% year-on-year. Net profit attributable to shareholders was RMB 538 million, a decrease of 59.3% compared to the previous year. Adjusted net profit stood at RMB 523 million, declining 68.8% year-on-year, which aligned with market expectations.

Currently, the consumption environment for the sub-premium segment remains subdued and requires further recovery. Throughout the year, the company has focused on strengthening its market foundation. CICC has revised its forecast for ZJLD's 2026 adjusted net profit downward by 58% to RMB 600 million, while introducing a 2027 adjusted net profit estimate of RMB 760 million.

Considering the company's proactive and substantial efforts to reduce inventory, actual sales performance has been better than reflected in the financial statements. Significant earnings recovery elasticity is anticipated from 2027 onward.