ZJLD (06979): ZJLD’s holiday sell-through met expectations, supported by channel expansion despite regional divergence.

Overview

Goldman Sachs summarizes management’s Mid-Autumn and Golden Week update for ZJLD. Holiday sell-through was broadly in line with expectations, but regional performance and brand momentum remained uneven; management continues to prioritize sustainable channel expansion and its approximately 15% FY26 revenue-growth target.

Core views

Management said Mid-Autumn sell-through was broadly within expectations, although policy effects created meaningful regional divergence. Zhenjiu’s September sell-through grew about 15% year on year, compared with shipment growth of more than 20%; management attributed part of the gap to channel replenishment and pre-holiday stocking. Zhenjiu’s September shipment growth also improved sharply from a 10% decline in 1H26. Lidu maintained shipment growth above 30%, while Xiangjiao grew at a single-digit rate amid more intense competition in Hunan. Third-quarter shipment growth exceeded September growth because July and August 2025 had an unusually low base following anti-graft effects. Management emphasized sustainable sales growth rather than accelerating shipments, and noted some stabilization in wholesale prices for competing brands including Jiaocang 1988 and Honghualang. The report identifies continued distribution and channel expansion as the principal source of Zhenjiu’s idiosyncratic growth and share gains against sauce-flavor and strong-flavor competitors. Management is expanding points of sale, recruiting new and non-liquor distributors, and developing corporate and group-purchase distributors for higher-end products, while seeking price discipline and better distributor profitability. Inventory remained about 25% of annual sales, or around three months, and was lower at approximately 20% for Dazhen and Zhen 15. Management maintained its approximately 15% FY26 revenue-growth target and sees possible upside to non-GAAP adjusted earnings if channel-expense ratios remain below expectations and Zhen 15 continues recovering after the 2H25 channel-inventory buy-back. Product-level recovery remains uneven. Zhen 15 sales grew about 30% year to date, while Dazhen is targeting approximately Rmb0.9-1bn of gross sales including VAT, with expansion paced in a controlled manner after rapid distributor recruitment in 2H25. Wanshang Alliance targets around 5,000 transacting distributors by end-2026, 7,000 in 2027 and 10,000 in 2028. Its replenishment ratio was about 80%, while its sell-through ratio from June 2025 to June 2026 was about 70%. Management aims for further recovery in Zhen10 and Laozhenjiu in 4Q26-2027. Lidu is expected to maintain roughly 30% growth in 2026, driven primarily by national expansion into underpenetrated markets. More than half of Lidu sales are already from outside Jiangxi and those markets are growing somewhat faster than its home market; its Rmb200-400 price-band strategy supports this expansion. Management continues to target Rmb5bn of medium-term Lidu sales, with at least half of incremental growth expected from Jiangxi; Shandong is expected to exceed Rmb200mn this year and Hebei, Henan and Hunan are each targeted to reach about Rmb100mn. By contrast, Xiangjiao remains in a channel-adjustment phase, with management expecting flattish to slightly positive 2026 growth and another one to two years for adjustment. Goldman Sachs remains Neutral on ZJLD. Its 12-month HK$7.7 target price is based on 19.3x 2027E P/E, discounted back to mid-2027E using an 8.2% cost of equity.

Analysis framework

The report synthesizes management commentary from a holiday call with brand-level shipment and sell-through trends, channel inventory, distributor metrics, regional expansion plans and competitive conditions. It then applies a forward P/E multiple, discounted using cost of equity, to derive its target price.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation discounted to mid-2027E using cost of equity

  Goldman Sachs values ZJLD at 19.3x projected 2027 earnings and discounts that value back using an 8.2% cost of equity to establish the 12-month target price.

Asset mapping & comparison

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

• ZJLD (6979.HK)

  Primary covered company; holiday demand and channel expansion underpin management’s FY26 growth target.

  Strengths

  Resilient Zhenjiu demand, continued distribution expansion, Zhen 15 recovery and Lidu’s national growth opportunity.

  Weaknesses

  Regional divergence, a shipment-to-sell-through gap and Xiangjiao’s adjustment phase.

  Comparison

  Management cited share gains against sauce-flavor and strong-flavor brands and stabilization in certain competing brands’ wholesale prices.

  Risks

  More intense upper-mid-end competition, policy effects on banquet consumption, and uncertainty around product launches and cultivation.

Key data

• Zhenjiu September sell-through growthc.15% yoyBelow c.20%+ shipment growth, partly reflecting replenishment and pre-holiday stocking.
• Zhenjiu September shipment growthc.20%+ yoyCompared with a 10% decline in 1H26.
• Lidu shipment growthc.30%+ yoyManagement expects around 30% growth in 2026.
• Xiangjiao shipment growthc.SD% yoyAffected by intensified competition in Hunan.
• Channel inventoryc.25% of annual sales / c.3 monthsDazhen and Zhen 15 were at c.20% of full-year sales.
• Zhen 15 sales growthc.30% YTDRecovery followed the 2H25 channel-inventory buy-back.
• FY26 revenue-growth targetc.15%Maintained by management.
• Target priceHK$7.7Based on 19.3x 2027E P/E discounted using an 8.2% cost of equity.

Impact & implications

The report indicates that channel expansion, geographic penetration and Zhen 15 recovery could support growth, but shipment momentum must translate into sustainable sell-through as regional divergence, competition and policy effects persist. Lidu is positioned as the key national-expansion growth engine, while Xiangjiao requires further channel adjustment.

Risks

• Competition in the upper-mid-end segment could become more or less intense.
• Policy impacts on banquet consumption could prove shorter or more prolonged than expected.
• Product launch and cultivation could perform better or worse than expected.
• Xiangjiao faces a competitive Hunan market and may require another one to two years of channel adjustment.

What to watch

• Whether Zhenjiu shipment growth converts into sustainable sell-through after holiday stocking.
• Progress in Zhen 15 recovery and recovery of Zhen10 and Laozhenjiu in 4Q26-2027.
• Dazhen’s progress toward approximately Rmb0.9-1bn gross sales and Wanshang Alliance distributor targets.
• Lidu’s national-expansion performance, including sales targets in Shandong, Hebei, Henan and Hunan.
• The duration of policy effects on banquet consumption and competitive conditions in key regions.