Bairun Investment Holding (002568) Report Interpretation

Overview

This earnings review assesses Bairun Investment Holding’s 1H26 results, the outlook for its RTD, flavor and fragrance, and whisky businesses, and the resulting earnings and valuation changes. Nomura maintains Buy and raises its target price to CNY23.28.

Core views

Bairun reported 1H26 revenue of CNY1.66bn and net profit of CNY480mn, up 11.3% and 23.1% year-on-year. In 2Q26, revenue and net profit growth accelerated to 14.1% and 26.3%, respectively. Nomura views revenue as in line with expectations and profit as slightly ahead, as gross margin rose 0.3 percentage points year-on-year to 70.7% and net margin rose 2.8 percentage points to 28.9%. The report attributes the stronger margin mainly to a lower effective tax rate rather than a broad change in revenue assumptions. The flavor business has received a 15% preferential tax rate since 2025, whereas tax was provisionally accrued at 25% in 1H25, creating a favourable comparison base. Its share of group gross profit also increased to 12.0% in 1H26, further reducing the group effective tax rate. Flavor and fragrance revenue rose 15.7% year-on-year to CNY195mn, while alcoholic-beverage revenue, including RTD and whisky, rose 10.2% to CNY1.43bn. RTD remains the core business. Nomura points to new-product launches, expansion into emerging channels such as snack-discount stores, and continued channel digitalisation. Digital retail represented 11.4% of 1H26 sales, versus 10.4% in 2025, and distributor count increased to 2,523 at end-June 2026 from 2,391 at end-2025. Following a pilot, the company is rolling out channel digitalisation nationally; Nomura expects this to optimise channel spending and marketing efficiency. The selling-expense ratio fell 7.9 percentage points in 1H26 versus 2H25. Whisky is identified as a potential second long-term growth driver, although it remains in early commercialisation. Laizhou Distillery had filled more than 600,000 casks by end-June 2026 and continues to expand distilling capacity and cask inventory. Nomura considers the business’s early-mover advantage supportive, but also notes that depreciation, marketing spending and cask-maturation capacity expansion are likely to weigh on near-term earnings. With RTD expansion and whisky ramp-up progressing in line with expectations, Nomura leaves its 2026-28F revenue forecasts unchanged at CNY3.26bn, CNY3.58bn and CNY3.92bn. It lowers projected selling-expense ratios by 1.0, 1.2 and 1.5 percentage points for 2026F, 2027F and 2028F, respectively, and raises net-profit forecasts from CNY730mn/CNY826mn/CNY935mn to CNY756mn/CNY860mn/CNY981mn. The revised forecasts imply fully diluted normalised EPS of CNY0.70, CNY0.83 and CNY0.94 for 2026F-28F. Nomura switches its valuation base year to 2027F and applies a maintained 28x target P/E to 2027F EPS of CNY0.83, producing a CNY23.28 target price versus the previous CNY19.63, and implying 18.8% upside from the CNY19.59 closing price on 11 August 2026. The 28x multiple is below Bairun’s 10-year historical P/E median because Nomura expects slower earnings growth than in the RTD market’s earlier high-growth phase and recognises the near-term investment burden of whisky. The stock was trading at 23.7x 2027F P/E.

Analysis framework

Nomura reviews the 1H26 revenue, profit and margin outcome, separates operating drivers by RTD, flavor and fragrance, and whisky, then revises expense and net-profit forecasts. It values the company by applying a target P/E multiple to forecast 2027 earnings, with the multiple benchmarked below the company’s historical P/E median.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Target P/E valuation

  Nomura derives the CNY23.28 target price by applying a 28x target P/E multiple to 2027F EPS of CNY0.83; the multiple is set below the 10-year historical P/E median to reflect slower growth and whisky investment pressure.

• Industry AnalysisVolume-price decomposition

  Segment and channel-driver analysis

  The report assesses growth through separate revenue contributions from alcoholic beverages and flavor and fragrance, together with RTD channel expansion, digital retail penetration, distributor growth and whisky capacity build-out.

Asset mapping & comparison

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

• Bairun Investment Holding (002568.SZ)

  The primary covered company; Nomura expects RTD channel expansion and whisky development to support earnings.

  Strengths

  RTD new-product and channel expansion, rising digital retail mix, growing distributor network, favorable flavor-business tax rate, and early-mover positioning in whisky.

  Weaknesses

  Whisky remains at an early commercialisation stage and related depreciation, marketing and capacity investment may pressure near-term earnings.

  Comparison

  The 28x target P/E is below the company’s 10-year historical P/E median because expected growth is slower than in the RTD business’s prior high-growth cycle.

  Risks

  Weaker new-product sales, weaker whisky commercialisation, weaker demand recovery, raw-material price volatility and food-safety issues.

Key data

• 1H26 revenueCNY1.66bnUp 11.3% year-on-year; in line with Nomura's forecast.
• 1H26 net profitCNY480mnUp 23.1% year-on-year; slightly ahead of forecast.
• 1H26 gross margin70.7%Up 0.3 percentage points year-on-year.
• 1H26 net margin28.9%Up 2.8 percentage points year-on-year, aided by a lower effective tax rate.
• Digital retail sales mix11.4%Up from 10.4% in 2025.
• Distributor count2,523At end-June 2026, versus 2,391 at end-2025.
• 2026F-28F net profitCNY756mn / CNY860mn / CNY981mnRaised from CNY730mn / CNY826mn / CNY935mn.
• Target priceCNY23.28Raised from CNY19.63 using 28x 2027F P/E and CNY0.83 2027F EPS.

Impact & implications

Nomura believes tax-related margin support, more efficient RTD channel spending and continued whisky capacity development support higher earnings forecasts. Its Buy rating and raised target price reflect this view, while the below-history valuation multiple incorporates slower expected growth and continuing whisky investment.

Risks

• New-product sales may be weaker than expected.
• Whisky commercialisation may be weaker than expected.
• Demand recovery may be weaker than expected.
• Raw-material prices may be volatile.
• Food-safety issues may occur.