Equity Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>Many China consumer stocks, including <a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a>, have been sold off heavily in the past 6 months, primarily driven by a fear of deflation and weak consumer sentiment. </li>
<li>ZJLD Group is one of the exceptions, with fundamentals intact while share price heavily sold off. </li>
<li>Shares look attractive vs. its high growth rate and strong management team, and especially with the return of Southbound connect post holidays. </li>
</ul>


Many China consumer stocks, including ZJLD Group (6979 HK), have been sold off heavily in the past 6 months, primarily driven by a fear of deflation and weak consumer sentiment. 
ZJLD Group is one of the exceptions, with fundamentals intact while share price heavily sold off. 
Shares look attractive vs. its high growth rate and strong management team, and especially with the return of Southbound connect post holidays. 


ZJLD Group (6979 HK):  Fundamentals Intact; Share Price Wrongfully Punished

<ul>
<li>Late last night (near mid-night), <a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. </li>
<li>The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. </li>
<li>Moutai's Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting <a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a>.</li>
</ul>


Late last night (near mid-night), Kweichow Moutai (600519 CH) shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. 
The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. 
Moutai's Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting ZJLD Group (6979 HK).


ZJLD Group (6979 HK):  Direct Beneficiary Of Moutai Raising Ex-Factory Price

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>In Apr 2023, <a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a> raised around US$676m in its HK IPO. While it initially had a turbulent listing, the shares are now trading above its IPO price.</li>
<li>ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu. </li>
<li>In this note, we will talk about the company’s past performance and future prospects.</li>
</ul>


In Apr 2023, ZJLD Group (6979 HK) raised around US$676m in its HK IPO. While it initially had a turbulent listing, the shares are now trading above its IPO price.
ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu. 
In this note, we will talk about the company’s past performance and future prospects.


2024 High Conviction - ZJLD - Buoyed by a Premiumisation Shift

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a> raised US$676m in its Hong Kong IPO in April 2023. Its six-month lockup will expire on 26th Oct 2023.</li>
<li>ZJLD is a Chinese liquor company producing baijiu. As per F&amp;S, the firm ranked third among all baijiu companies with three or more aroma types in terms of FY21 sales.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



ZJLD Group (6979 HK) raised US$676m in its Hong Kong IPO in April 2023. Its six-month lockup will expire on 26th Oct 2023.
ZJLD is a Chinese liquor company producing baijiu. As per F&amp;S, the firm ranked third among all baijiu companies with three or more aroma types in terms of FY21 sales.
In this note, we will talk about the lock-up dynamics and updates since our last note.


ZJLD Lock-Up - KKR’s US$680m Stake to Be Unlocked, Although the PE Could Opt to Wait

<ul>
<li>Since the inclusion in the Southbound Stock Connect 7 trading days ago, <a href="https://www.smartkarma.com/entities/zjld-group-inc" target="_blank" data-smartkarma-citation="entities:36734:1" rel="noopener">ZJLD Group (6979 HK)</a>’s stock price is up 16%, suggesting strong interest from the southbound investors.</li>
<li>ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.</li>
<li>Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.     </li>
</ul>


Since the inclusion in the Southbound Stock Connect 7 trading days ago, ZJLD Group (6979 HK)’s stock price is up 16%, suggesting strong interest from the southbound investors.
ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.
Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.     


ZJLD Group (6979 HK):  More Near-Term Upside Expected

China

ZJLD Group Inc offers premium baijiu products featuring sauce aroma profile. The Company operates four major baijiu brands including flagship brand Zhen Jiu, thriving brand Li Du, as well as two regional leading brands Xiang Jiao and Kai Kou Xiao. ZJLD Group markets its products in China.

ZJLD Group (6979 HK)