Nomura initiates coverage on Bairun Investment Holding: RTD recovery underway, whisky still in cultivation stage

Overview

This report is Nomura's initiation coverage on Bairun Investment Holding. The report believes the company's RTD business remains the core revenue driver and is expected to resume revenue growth from 2026 onward, supported by expansion of the new product matrix, product mix upgrades, expansion into new channels such as discount snack retailers, and channel digitalization. Meanwhile, the company's whisky business is still at an early stage of commercialization, but with Laizhou Distillery's maturing cask reserves, production capacity, and channel synergies, it is expected to become a second growth curve.

Core views

The core views include: first, the RTD core business is expected to return to growth, supported by new product pricing above traditional RIO products, more segmented consumption scenarios, and channel diversification; second, China's new whisky standards in 2026 may raise industry entry barriers, benefiting leading players with advantages in capacity and maturing casks; third, whisky capacity expansion capex will bring payback-period and short-term profit pressure, but will strengthen first-mover advantages over the long term; fourth, the report uses a P/E valuation approach, with 28x 2026F P/E below the company's 10-year historical median P/E to reflect that RTD's high-growth phase has passed and whisky is still under early investment pressure.

Analysis framework

The report is based on forecasts by business segment, separately analyzing revenue growth, gross margin trends, and channel rollout for RTD, whisky, and flavors and fragrances, then comparing them with Wind consensus estimates, and deriving the target price by multiplying the target P/E by 2026F EPS.

Methodology notes

• Valuation methodsP/E valuation method

  The target price is derived by multiplying the target P/E by forecast EPS.

  The report uses 28x 2026F P/E and 2026F EPS of CNY0.70 to arrive at a target price of CNY19.63; the target multiple represents about a 40% discount to the company's 10-year historical median TTM P/E of 46x.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Bairun Investment Holding 002568.SZ

  Research target

  Strengths

  RIO holds a leading position in China's RTD market; RTD channels and product matrix continue to be optimized; Laizhou Distillery has first-mover advantages in maturing cask inventory and production capacity; cash generation and profitability have historically been relatively stable.

  Weaknesses

  Future profit growth from RTD is expected to be lower than in the previous high-growth phase; whisky is still in the early stage of commercialization, and depreciation, marketing investment, and capacity expansion projects may suppress short-term profits.

  Comparison

  The target P/E is 28x, about a 40% discount to the company's 10-year historical median TTM P/E of 46x; the current price corresponds to 20.4x 2026F P/E.

  Risks

  New product sales below expectations, whisky commercialization below expectations, weaker-than-expected demand recovery, raw material price fluctuations, and food safety risks.

Key data

• Target priceCNY19.63Based on 28x 2026F P/E and 2026F EPS of CNY0.70.
• Expected upside37.3%The report states that the target price implies 37.3% upside from the current price.
• 2026-2028F revenueCNY3,255mn/CNY3,575mn/CNY3,922mnCorresponding revenue CAGR is 10.0%.
• 2026-2028F net profitCNY730mn/CNY826mn/CNY935mnCorresponding net profit CAGR is 13.6%.
• 2026-2028F RTD revenueCNY2,638mn/CNY2,849mn/CNY3,049mnYear-on-year growth of 9%/8%/7%, with gross margin forecasts of 69.5%/70.0%/70.5%.
• 2026-2028F whisky revenueCNY229mn/CNY320mn/CNY448mnGross margin forecasts are 72.0%/73.0%/74.0%.
• 2026-2028F flavors and fragrances revenueCNY333mn/CNY343mn/CNY353mnGross margin is expected to remain at 71.0%.
• Relative to consensusRevenue 0.7%-1.6% lower, net profit 1.9%-3.0% lowerNomura's forecasts are below Wind consensus, mainly due to a more cautious view on the pace of macro consumption recovery and the RTD competitive landscape.

Impact & implications

If new RTD products and channel optimization deliver as expected, the company's revenue and profit are likely to resume moderate growth; if whisky retail coverage and brand awareness improve smoothly, the long-term valuation narrative may expand from a single RTD leader to a dual growth curve of RTD plus domestic whisky. However, in the early stage of whisky commercialization, depreciation, marketing investment, and maturing-capacity construction will suppress net profit in the short term.

Risks

• New product sales below expectations: if consumer acceptance of new products such as RIO Relax and jelly-type RTD is insufficient, channel sell-through conversion is weak, or they cannibalize legacy products, revenue contribution and marketing returns may be dragged down.
• Whisky commercialization below expectations: if end-market sell-through is weak or brand awareness improves slowly, whisky revenue contribution and returns on capital investment may fall short of expectations.
• Demand recovery weaker than expected: RTD and spirits consumption are related to consumer confidence and the macro cycle; if consumption recovery is slow or competition in low-alcohol beverages intensifies, RTD growth and whisky volume expansion may come under pressure.
• Raw material price fluctuations: raw and auxiliary materials such as oak casks, glass bottles, and aluminum cans are affected by supply-demand conditions, commodity prices, and exchange rates; rising prices would increase costs and compress gross margin and net profit.
• Food safety risks: if quality control problems arise in the production, storage, transportation, or sales of RTD and whisky, brand reputation may be damaged and market share could be lost.

What to watch

• Whether RTD revenue in 2Q-3Q26 exceeds expectations.
• The pace of expansion in whisky retail coverage and end-market sell-through performance.
• Consumer acceptance of new RIO products such as RIO Relax and jelly-type RTD, channel conversion, and their impact on legacy products.
• Changes in the industry competitive landscape after the implementation of China's new whisky standards in 2026.
• Capex for whisky capacity expansion projects, depreciation pressure, and investment payback period.
• The pace of macro consumption recovery and the intensity of competition in the low-alcohol beverage industry.