ZJLD Group Recorded Revenue of more than RMB7 Billion for FY2023 Annual Results

HONG KONG SAR – Media OutReach Newswire – March 26, 2024 –
ZJLD Group Inc. (“ZJLD” or the “Company”, together with the Company’s subsidiaries, collectively the “Group”) (SEHK stock code: 06979. HK), an outstanding representative of China’s baijiu industry and the first baijiu company listed on the Hong Kong Stock Exchange. Exchange, is pleased to announce its annual results for the financial year ended December 31, 2023 (“FY2023” or “the year”).

The main financial and commercial highlights are as follows:

• The Group’s flagship brand, Zhen Jiu, in the baijiu flavor sauce category, ranks fourth among baijiu flavor sauce brands in China, with the fastest growth rate in 2023.[1] income. Zhen Jiu contributed approximately 65.2% to the Group’s total revenue during the year, representing a year-on-year increase of 19.9%. This growth can be attributed to the overall increase in revenues in various price segments of products under the Zhenjiu brand. Additionally, the quality of the distribution network has been significantly improved, leading to increased contribution from distribution partners and retailers.

• The increase in gross margin is mainly explained by the strategic optimization of the Group’s product portfolio. This effectively increased the revenue contribution of luxury baijiu products and products with higher gross profit margins in the same price range. As production capacity expanded, the Group gradually replaced third-party purchases with self-produced base liquors, thereby significantly reducing unit costs.

• To express its gratitude for the overwhelming support of our shareholders, the Board of Directors proposes the distribution of a final dividend of HK$0.18 per ordinary share, amounting to approximately HK$610 million in total.

Seize transformation and upgrading opportunities in the Baijiu Flavor Sauce market to achieve high-quality sustainable growth

Over the year, consolidation has further increased in the competitive landscape of the baijiu industry. To cope with the transition from steady growth to high-quality growth in the high-end flavor and sauce baijiu sector, the Group has fully grasped the market opportunities brought by the market integration trend in the high-end segment of the baijiu market. The Group has formulated a clear strategy focused on the four essential elements of the baijiu market: brand, production capacity, distribution channels and talent. It has gone through the cycle and achieved sustainable and quality growth. In this regard, the Group continued to optimize its product structure, expanding its product portfolio from luxury levels to premium levels and above and increasing the revenue contribution of premium baijiu products with higher gross profit margins in the same price range. At the same time, the Group further optimized the development of mid-price baijiu products to meet the market demand for affordable and quality baijiu products.

The Group’s baijiu research and development team collaborates with professional institutions to develop iconic formulas by implementing strict control measures in the base liquor brewing process and improving brewing techniques to activate the ultimate flavors of its baijiu products. Regarding production capacity, the Group has actively invested in strengthening its base liquor production capacity and improving its premium base liquor storage capabilities. During the year, the Group devoted more resources to promoting sell-through and sell-out. This includes using an immersive promotional strategy, developing a multi-channel sales network, maintaining healthy stock levels at the distributor and closely monitoring sales performance to ensure optimal distribution and sales efficiency . As a result, the Group recorded an increase of approximately RMB 840 million in gross profit from sales of baijiu products during the year, with an improvement in gross profit margin of approximately 2.7 percentage points over to the corresponding period in 2022.

ESG achievement recognized by the industry and committed to pioneering the Baijiu industry

Environmental, social and governance (ESG) issues have received increasing attention in recent years across various sectors. As an early adopter of ESG initiatives, the Group has established its governance frameworks and guidance internally and formulated a standardized ESG management and assessment system. Since 2022, the Group has identified four main strategic objectives and more than 300 ESG improvement plans, covering energy and water saving, eco-friendly packaging, quality and safety, employee care and rural revitalization . The Group had completed more than 150 ESG management and improvement initiatives by the end of 2023, exceeding its strategic environmental governance goals ahead of schedule and winning recognition from all walks of life in the community.

In December 2023, the Group received the “AA” ESG rating from Wind, a leading financial information data provider in mainland China. The Group was also recognized as one of the “ESG Top 100 Practices” among all listed companies in Greater China for 2023, being the only baijiu company from the Greater China region to make the list. In addition, the Group’s brand Zhenjiu was rated a national green factory and was selected as one of five baijiu companies in the “Outstanding Corporate Social Responsibility Cases of Chinese Private Enterprises (2023)” and presented by the People’s Daily. for its ESG practices on several occasions. The Group’s significant achievements in various ESG initiatives will be further enhanced by strengthening its ESG-related risk monitoring and control capabilities, aiming to consolidate its position as a pioneer of ESG practices within the Baijiu industry.

Create a new brand image to consolidate development potential and enrich visibility

The baijiu industry is shifting its growth model from vast and explosive expansion to focused, high-quality development, with market segmentation concentrated around leading brands. Branding is at the heart of distinction and differentiation in this competitive landscape. Throughout the year, the Group made significant investments in brand promotion. The Group’s brand, Zhenjiu, combined the visualization of baijiu products with the intangible cultural heritage of “Tian-tsui” (點翠 or “studded with kingfishers”) and launched a new strategy to promote the image of brand. The brand was highlighted in major airports, high-speed rail stations and city LED screens through a comprehensive, three-dimensional communication approach. Additionally, the brand’s advertisements were broadcast during prime time on China Central Television (“CCTV”), creating a brand-specific symbol with the unique characteristics of “Zhen”. During the year, Zhenjiu was selected as one of the “2023 China Brand Innovation Cases”, becoming a model for brand development. Leveraging its vigorous brand strength, Zhenjiu ranked higher in the “Hurun Most Valuable Chinese Brands” rankings for two consecutive years, climbing 31 places with a 20% increase in brand value. brand.

Mr. Wu Xiangdong, Founder and Chairman of ZJLD Group, said: “In 2023, despite the difficult macroeconomic and capital market conditions, ZJLD Group was successfully listed on the Hong Kong Stock Exchange on April 27 and achieved the largest IPO of the year in Hong Kong. It is also the first baijiu company to be listed on the stock exchange in almost eight years. Over the years, the Group has always adhered to seven principles: brewing refined baijiu without reservation; carefully perfected products; anchoring ourselves in culture to build brands; develop channels with sincerity; carefully orchestrate immersive experiences; truly and thoroughly operate the business; and courageously assume responsibilities to prosper. It is through these principles that we have been able to gain a firm foothold and make steady progress in the extremely competitive baijiu industry. Looking ahead to 2024, we will continue to make sufficient efforts in brand development, product competence, channel management, regional expansion and organizational structure to be well prepared to meet various challenges , fully commit to our work and strive to repay the trust and support of our investors.