FAST NEWS: Strong liquor sales add kick to ZJLD Group profit

The Latest: Traditional spirits producer ZJLD Group Inc. (6979.HK) announced Wednesday its non-GAAP adjusted net profit rose 26.9% to 1.02 billion yuan ($143 million) in the first half of this year.

Looking Up: The company’s revenue grew by 17.5% to 4.13 billion yuan, mainly on strong sales for its two major brands, Zhen Jiu and Li Du, which increased by 17.2% and 37.9%, respectively. Its gross margin also increased by 0.9 percentage points year-on-year, mainly due to a higher revenue contribution from its higher-priced products.

Take Note: The company’s net profit fell by 52.6% to 752 million yuan, mainly due to changes in fair value of financial instruments issued to an investor recognized last year, which were one-off and non-cash in nature, and equity-settled share-based payment expenses incurred in 2024.

Digging Deeper: ZJLD traces its roots back to 2003, when Wu Xiangdong, its majority shareholder with a pre-IPO stake of more than 81%, first acquired the Xiang Jiao and Kai Kou Xiao liquor brands from Hunan province. Six years later it added the Zhen Jiu brand from Guizhou province and Li Du from Jiangxi province, as the company expanded and targeted higher-end liquor markets. The company listed in Hong Kong in April last year, raising HK$5.3 billion ($680 million), becoming the city’s biggest IPO of the year.

Market Reaction: ZJLD’s shares fell on Thursday, closing down 3% to HK$7.18 at the midday break. The stock now trades 33.6% lower than last year’s IPO price of HK$10.82.

Translation by A. Au

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