CITIC Securities: Maintains "Strong Buy" rating on ZJLD, expecting Da Zhen to become a new rising brand in the sub-premium sauce liquor market

According to Zhitong Finance APP, China Merchants Securities released a research report maintaining a "strong buy" rating for ZJLD (06979), stating that the model innovation has begun and is optimistic about long-term development. In the first half of 2025, the company's financial statements are starting to clear up, and the company has launched Da Zhen to respond to changes in the industry. Looking ahead to the second half of 2025, Da Zhen is expected to contribute significant incremental growth, with a focus on the company's pricing and channel management capabilities. If well managed, Da Zhen is likely to become a new rising brand in the mid-to-high-end sauce liquor segment. The firm maintains adjusted net profit estimates for 2025-2027 at RMB 1.41 billion, RMB 1.54 billion, and RMB 1.88 billion, respectively, with a corresponding PE of 26.8 times for 2025. The company announced an equity payment plan for alliance merchants, which does not involve the issuance of new shares. Most of the funding will come from the controlling shareholder's voluntary donations, with a small portion purchased through the secondary market, totaling no more than 5.0% of the total issued shares (the board may adjust this at its discretion). The announcement fully demonstrates the high strategic positioning of Da Zhen, with Mr. Wu Xiangdong providing substantial support in cash and integrating resources from multiple companies under his umbrella to fully support Da Zhen. If the company can seize this opportunity, it is expected to achieve an industry upgrade, with further tracking of the company's pricing management measures and consumer feedback on products. Long-term prospects for the expansion of the Da Zhen model are optimistic. The announcement comprehensively shows the high strategic positioning of Da Zhen, and its unique model is expected to help the company achieve an upgrade. This equity payment announcement fully reflects the high strategic positioning of Da Zhen products, with the company's controlling shareholder providing cash support for the development of the Wan Shang Alliance through voluntary donations. Coupled with Mr. Wu Xiangdong's integration of resources from Jin Liufu, Huazhi, and others to fully support Da Zhen, it further demonstrates his firm determination to establish the Da Zhen model as an industry benchmark. The firm believes that the Da Zhen model effectively addresses current channel pain points, and its innovative model possesses unique characteristics in the industry. If the company seizes this opportunity, it is also expected to achieve an industry upgrade. The industry adjustment period is precisely an important development phase for enterprises, and the stock returns of the first batch of alliance merchants have already begun to materialize, which is expected to have a positive impact on the subsequent expansion of alliance merchants. Further observation of the company's pricing management measures and consumer feedback on products is needed, with a long-term view being optimistic about the expansion of the Da Zhen model