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ZJLD Group Sees Robust Growth in the Sales End Promising Increase in Gross Profit Margin Expected to Drive Profitability

HONG KONG SAR - Media OutReach - 29 June 2023 - ZJLD Group Inc. ("ZJLD Group" or the "Company", together with the Company's subsidiaries, collectively the "Group") (SEHK stock code: 06979.

HK), the fourth largest private baijiu enterprise in China that specializes in high-quality sauce-aroma, of which products are served as one of the four Chinese baijiu brands at the country's state banquets, is pleased to announce that the Company has successfully held its first annual general meeting ("AGM") on June 28th.

The first annual general meeting of ZJLD Group Inc. was successfully held.
The first annual general meeting of ZJLD Group Inc. was successfully held.

As the largest IPO (Initial Public Offering) in Hong Kong this year, ZJLD raised approximately HK$5.31 billion (before the exercise of the over-allotment option). The Company has attracted global capital and recognition from investors due to its sound fundamentals and growth potential. This successful landing in an international capital market also marks a significant milestone in the history of China's Baijiu IPOs. The total revenues of the Company for three consecutive years from 2020 to 2022 were RMB 2.399 billion, RMB 5.102 billion, and RMB 5.856 billion, respectively; adjusted net profits for the same periods were about RMB 520 million, RMB 1.071 billion, and RMB 1.197 billion, demonstrating a solid upward trend.

ZJLD Group, as the first and only baijiu stock listed in Hong Kong, has earned itself wide recognition with its overall competitiveness in the industry, such as brand image, product quality, production capacity, and sales network coverage. In 2022, the Company's production capacity reached 35,000 tons, ranking third among all sauce-aroma baijiu enterprises in Guizhou Province and fourth in China. To cope with the rapid business development, the Group has started to expand its three existing production facilities and construct new ones, planning to increase overall base liquor production capacity by 26,000 tons before 2024, with 16,600 tons being sauce-aroma base liquor. The Group holds firm confidence in the long-term development of the sauce-aroma baijiu category. It is committed to focusing on mid-to-high and sub-high-end products and enlarging its offline sales channels nationwide in the future. In fact, since March this year, the Company's monthly sales volume has been on a healthy increasing trend, which is believed to be the practical result of the refined channel operation.

The Company has actively fostered its online marketing and digital system in recent years. Its digital marketing strategy is mainly based on data feedback, for example, information collected by analyzing data such as the opening rate of red envelopes and the scanning rate of QR codes, which in turn guides adjusting inventory and promoting volume in real-time. Moreover, a third-party professional team has been hired for digital deployment. Currently, online sales of baijiu in China only account for less than 7% of total sales, with general online consumption of a single alcohol item below RMB 300. The Group plans to adopt an omnichannel sales strategy combining both online and offline marketing.

Goldman Sachs recently released a research report on ZJLD Group, maintaining a "Buy" rating and suggesting a target price of HK$16.1 based on an expected price-earnings(P/E) ratio of 18 for 2026. Goldman Sach's distributor channel survey also indicated a double-digit growth in the Company's trade receipt in the first quarter to date, with a month-on-month improvement. The Group is expected to continue expanding its market share across the country. The increase in gross profit margin, coupled with a reduction in selling and administrative expense, are expected to drive profitability rise.

Mr. Paul Ng, Executive Director of ZJLD Group, commented, "Our successful listing marks the Group's official entry onto the international capital stage. This provides us with extensive and stable financial fundamentals and has important strategic significance for our future development. The capital raised from the listing will be well used to strengthen our brewing and distilling capacity and R&D, which shall continuously improve our competitive advantages, enhance our industry visibility and corporate image, as well as expand our market share and brand influence. It is worth mentioning that the Group has been ranked third on the sauce-aroma baijiu list of China's 500 Most Valuable Brands in 2023, which fully illustrates that our growth potential is still recognized by industry evaluations and authoritative institutions. We will bring in more professionals, improve corporate governance, continuously consolidate product and service quality to better contribute to our consumers, and lay a solid foundation for the long-term development of the Group."

Hashtag: #ZJLDGroup

The issuer is solely responsible for the content of this announcement.

ZJLD Group Inc.

Zhenjiu was established in 1975 in Zunyi, Guizhou, China's primary production area of sauce-aroma baijiu. In 1988, it was honored with the Silver Award of the National Quality Award at the 5th National Wine Appreciation Conference. It is one of the "Three Great Sauce Flavor Brands in Guizhou", along with Moutai and Xijiu. Additionally, in the same year, it was approved by the Protocol Department of the Ministry of Foreign Affairs, the Communication Department of the Ministry of Economy and Trade, and the Great Hall of the People Management Bureau to become one of the four baijiu brands served at state banquets.

ZJLD Group Inc. is a Chinese baijiu group specializing in sub-high-end baijiu products with sauce-aroma as its core. In 2021, the company was deemed the fourth-largest private baijiu company in China by revenue and ranked third among baijiu companies with three or more flavor types, according to Frost & Sullivan statistics. The Company operates four baijiu brands in China, including Zhenjiu, Lidu, and two leading regional names, Xiangjiao and Kaikaixiao. With solid brewing experience and industry recognition, ZJLD is committed to developing a rich variety of aromatic and mellow baijiu products to meet the diverse preferences of consumers, seize broader market opportunities, and promote traditional Chinese baijiu culture.

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