Dongwu Securities: Upgraded to an Overweight rating for Huiji Mountain

Soochow Securities Co., Ltd. Su Cheng, Guo Xiaodong recently conducted research on Kuaiji Mountain and released a research report titled “2025 Annual Report Review: Premiumization Continues to Deliver, Profit Growth Exceeds Expectations,” assigning a “Buy” rating to Kuaiji Mountain.

Kuaiji Mountain (601579)

Investment Highlights

Event: In 2025, revenue was RMB 1.822 billion, YoY +11.68%; net profit attributable to shareholders was RMB 245 million, YoY +24.70%; after excluding non-recurring items, net profit attributable to shareholders was RMB 235 million, YoY +32.06%. Among them, Q4 2025 revenue was RMB 610 million, YoY +7.14%; net profit attributable to shareholders was RMB 128 million, YoY +53.64%; after excluding non-recurring items, net profit attributable to shareholders was RMB 127 million, YoY +62.53%.

Q4 revenue growth narrowed, premiumization continues to be realized. In 2025, liquor revenue was RMB 1.77 billion, YoY +11.8%. Liquor revenues for 25Q1, 25Q2, 25Q3, and 25Q4 were YoY +8.0%, +10.9%, +27.3%, and +6.7%, respectively. In Q4, revenue growth narrowed; besides pressure from consumption scenarios inertia, it is also related to the proactive de-stocking and inventory reduction of premium products such as Lanting. For 2025 full-year mid-to-high-end Shaoxing huangjiu revenue was YoY +7.3% to RMB 1.14 billion, accounting for 64.6% of total revenue. We expect authentic five-year to remain stable, with Lanting and 1743 continuing to grow at a high rate. Revenue from ordinary Shaoxing huangjiu and other liquors was YoY +21.0% to RMB 630 million, accounting for 35.4% of total revenue, mainly driven by the “billion-level” single product Shuangjiu series.

Zhejiang base remains steady; national expansion accelerates. In 2025, revenue in Zhejiang, Jiangsu, Shanghai, and other regions was RMB 1.04, 0.14, 0.31, and 0.27 billion respectively, YoY +6%, -14%, +17%, and +63%, respectively. Their respective shares of total revenue were 59%, 8%, 17%, and 15%. The Zhejiang base delivered steady growth, and the revenue share of regions outside Jiangsu-Zhejiang-Shanghai increased by 5 pct YoY, with national recruitment somewhat accelerating. In 2025, Xitang, Wuvimao, Kuaiji Mountain e-commerce, and Kuaiji Mountain Liquor achieved revenues of RMB 130, 250, 210, and 1,020 million respectively, YoY +15%, +2%, +85%, and +112%, respectively. The company has laid out the e-commerce track in an all-around manner, with online revenue growing rapidly.

Tax incentives materialize; profit growth exceeds expectations. In Q4 2025, net sales margin improved significantly by 6.2 pct YoY to 21.1%. This was mainly due to improvement in gross sales margin, a decline in management and R&D expense ratios, and the centralized reversal of income tax rate. In addition, for full-year 2025, net sales margin increased by 1.4 pct YoY to 13.5%. Of this, gross margin on sales rose by 4.6 pct YoY to 56.7%, while period expense ratio increased by 1.5 pct YoY to 33.7% (including selling expense ratio +5.6 pct, management expense ratio -2.8 pct, and R&D expense ratio -1.9 pct). Profitability continued to improve steadily.

Earnings forecast and investment rating: For 2026, the company aims for double-digit growth in liquor sales. Driven by the “premiumization and youthfulness” strategy, we expect the growth momentum of Shuangjiu, 1743, and Lanting to continue, and industry trends will keep being realized. Based on the company’s operating cadence, we estimate that 2026–2027 net profit attributable to shareholders will be RMB 295 million and RMB 342 million (previous expectations were RMB 264 million and RMB 312 million), and that newly added 2028 net profit attributable to shareholders will be RMB 388 million. Corresponding to the current PE, they are 27, 23, and 21X respectively. We maintain the “Buy” rating.

Risk Warning: Macroeconomic conditions worse than expected; food safety issues; new product rollout worse than expected; intensifying competition.

The latest earnings forecast details are as follows:

Within the past 90 days, 2 institutions have provided ratings for this stock, including 2 buy ratings; within the past 90 days, the institutions’ target price average is 27.28.

The above content has been compiled from publicly available information by Securities Star and generated by an AI algorithm (Cybersecurity Record No. 310104345710301240019), and does not constitute investment advice.