Soochow Securities has released a research report maintaining its "Buy" rating on ZJLD (06979), stating that the company's distribution model innovation has already been validated and its future performance is expected to accelerate recovery.

The brokerage maintained its previous earnings forecasts, projecting non-IFRS net profit attributable to shareholders of RMB 880 million, RMB 1.06 billion, and RMB 1.20 billion for 2026 to 2028, corresponding to non-IFRS PE ratios of 25.8x, 21.6x, and 18.9x for the same period, taking into account the strong sustainability of the company's growth after emerging from its adjustment period.

The key views from Soochow Securities are as follows.

Reviewing Lidu: A Rare Premium Baijiu Brand Achieving Counter-Cyclical Growth

Amid weakening demand in the baijiu industry, premium baijiu companies that accumulated substantial inventory during the upcycle are generally facing strategic dilemmas. Under existing financial performance constraints, if they choose to trade price for volume, distributors may face significant impairment losses on inventory and could opt to give up their distribution rights in the long run. If they insist on holding prices, slower sell-through at high price points would passively extend the inventory destocking cycle, leading to ever-growing stockpiles and declining brand market share.

As a result, premium baijiu companies generally either actively or passively abandoned their financial performance requirements during the downturn. Unlike other premium baijiu players, the Lidu brand has achieved counter-cyclical growth, with 1H26 revenue reaching a record high and its revenue contribution within the group rising from 15% in 2020 to 31% in 1H26.

The Strong Growth of the Lidu Brand Reflects the Company's Powerful Operational Capabilities

Looking back at history, the Lidu brand, under the leadership of key figure Mr. Tang Xiangyang, pioneered an experiential marketing model for baijiu to break through, and in recent years has anchored its strategy on "national expansion plus premium positioning."

(1) On the product front, the brand has built a differentiated high-end light bottle product image and created a sense of scarcity through brand narratives such as "liquid antique" and "drink one bottle, one less available." In terms of resource allocation, it follows a "high-end drives lower-end" approach, prioritizing the high-end price segment to capture circle-of-influence mindshare, and in recent years has extended downward in price segments, entering a period of brand momentum release through differentiated positioning.

(2) On the distribution front, the company has built a "head helm-branch helm-small helm" interactive experience architecture, focusing on cultivating C-end opinion leaders. High-end products use a quota system to ensure scarcity, while circulation products emphasize supply-demand balance and low-inventory operations to protect distributor interests.

(3) On the regional front, the brand has established strong momentum within Jiangxi province and is gradually expanding nationwide.

Resonance of New and Old Models Positions the Company for a New Growth Cycle

The brokerage believes that: (1) With brand momentum being released, the Lidu brand still has substantial room for growth. Within the province, if benchmarked against other regional baijiu companies, Lidu still has considerable room to increase its market share. Outside the province, referencing the brand cultivation paths of regional baijiu brands, Lidu is expected to rapidly break through the RMB 1 billion scale.

(2) ZJLD's "Ten Thousand Merchants Alliance" model is expected to accelerate its spread across all price segments: cross-industry distributors, who are "both merchants and customers," naturally help products spread within consumer circles when using their own distributed products for social activities. Combined with the company's strong operational capabilities, this is expected to drive distributor expectations continuously upward.

Meanwhile, the market also underestimates Chairman Wu's personal IP value: WeChat Channels is inherently addictive and prioritizes videos liked by friends. With high view counts on the chairman's IP videos, brand value propositions can quickly achieve circle-of-influence dissemination through likes from distributors and KOLs.

Risk factors include macroeconomic recovery falling short of expectations, intensified competition in premium price segments and expenses, and channel inventory digestion falling short of expectations.