Marking the Fourth Consecutive Year of Sustainable High-quality Growth Agile Channel Structure and Geographic Diversification Bolster Resilience Amid Industry Downturns

HONG KONG SAR - Media OutReach Newswire - 21 August 2024 - The first baijiu company listed on the Hong Kong Stock Exchange and the second Chinese sauce-aroma baijiu stock being publicly listed, ZJLD Group Inc. ("ZJLD", the "Group" or the "Company", SEHK stock code: 06979. HK), is pleased to announce its interim results for the six months ended June 30, 2024 ("FY2024 1H" or the "Period"). The key financial and business highlights are as follows:

FY 2024 1H(for the six months ended June 30, 2024)(RMB'000)	FY 2023 1H (for the six months ended June 30, 2023) (RMB'000)	Increased by
Revenue	4,133,191	3,518,957	17.5%
Gross profit	2,428,682	2,037,148	19.2%
Gross profit margin	58.8%	57.9%	0.9 percentage points
Adjusted net profit (non-IFRS measure)	1,018,123	802,519	26.9%
Adjusted net profit margin (non-IFRS measure)	24.6%	22.8%	1.8 percentage points

• The flagship brand, Zhen Jiu, stands as the main growth driver, its revenue increased by 17.2% from RMB2,305.9 million to RMB2,702.2 million during the Period. It contributed around 65.4% of the overall revenue during the Period, primarily driven by the growth of premium and above price range products, namely, the Zhen 15 Series, Zhen 30 Series, and deluxe package-free series.
• The gross profit increase was primarily due to the Group's further focus on increasing the revenue contribution of products in the premium and above price range while steadily improving the overall gross margin by strategically optimizing the sales of mid-range and below product portfolios with low gross margins, and gradually replacing third-party produced base liquor with in-house production, which has lower associated costs, thereby bolstering profitability.
• As of May 2024, Zhen Jiu's high-quality base liquor reserve reached 90,000 tons, and its production capacity surpassed 41,000 tons. This places Zhen Jiu among the top three Guizhou sauce-aroma baijiu companies, marking the brand's entry into the "Mao-Xi-Zhen" era.

Resilient Performance Amid Sluggish Baijiu Market Recovery During the Period, the baijiu industry grappled with economic pressures and evolving consumption patterns, resulting in a sluggish market recovery. However, ZJLD has been earmarked for outperformance amid market headwinds through its strategic agility. Underpinned by its proactive implementation of Zhen Jiu's dual-channel growth strategy, the Group vigorously expanded its emerging sales channels and high-end customer base. It continued to enhance the distribution network and strengthen the market competitiveness of its sales channels. Additionally, the Group invested in expanding its storage capacity for premium baijiu while optimizing the allocation of resources across production costs and marketing expenditures. The Group also elevated its tasting events and distillery tours, creating the iconic and high-end "State Banquet * Zhen" (國之珍宴) experience that seamlessly integrates baijiu with culinary offerings, thereby stimulating growth in baijiu consumption. Elevating the Premium Proposition and Diversifying the Brand Portfolio for Sustained Growth The Group has demonstrated resilience by focusing on its premium and above-price-range baijiu products, with the revenue generated from the premium and above-price-range baijiu offerings increased from RMB2,193.6 million to RMB2,772.2 million, with its percentage share in the overall revenue rising from 62.3% to 67.1%. Since Q4 of 2023, Zhen Jiu has implemented a dual-channel growth strategy, recognizing the distinct characteristics of traditional and emerging channels. This approach involves tailoring product portfolios, pricing mechanisms, and channel networks to the specific needs of each channel, maximizing the effectiveness and efficiency of developing distributor groups. This strategy has yielded both short-term growth and the cultivation of high-potential distributor groups in emerging channels for long-term benefits. Complementing this, ZJLD's expansion through its "6+8+N" geographic strategy, well-managed channel inventory levels, and products with higher margins compared to its peers have contributed to the Company's resilient demand in many targeted provinces with rising consumption of sauce-aroma baijiu. The Group's long-term growth will undoubtedly be backed by its multi-brand portfolio and sufficient production capacity. Consumer-Centric Distribution Network Backed by Expanding Production Capacity and Elevating Brand Experience ZJLD Group has continued to work on building a consumer-centric distribution network that operates on a flat structure with nationwide...