The Premiumization Strategy Saw Outstanding Results, and Brand Reputation Steadily Escalated

HONG KONG SAR - Media OutReach Newswire - 26 March 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 in the Chinese baijiu industry and the first baijiu company listed in Hong Kong Stock Exchange, is pleased to announce its annual results for the fiscal year ended December 31, 2023 ("FY2023" or the "Year"). The key financial and business highlights are as follows:

FY 2023 (for the year ended December 31, 2023)(RMB'000)	FY 2022 (for the year ended December 31, 2022) (RMB'000)	Increased by
Revenue	7,030,467	5,855,917	20.1%
Revenue of the flagship brand, Zhen Jiu	4,583,208	3,822,696	19.9%
Gross profit	4,079,948	3,238,930	26.0%
Gross profit margin	58.0%	55.3%	2.7 percentage points
Adjusted net profit (non-IFRS measure)	1,622,602	1,197,289	35.5%
Adjusted net profit margin (non-IFRS measure)	23.1%	20.4%	2.7 percentage points
Final dividend per ordinary share (HK$)	0.18	-	N/A

• The flagship brand of the Group, Zhen Jiu, in the sauce-aroma baijiu category, ranks as the fourth-largest sauce-aroma baijiu brand in China, with the fastest growth rate in terms of its 2023[1] revenue. Zhen Jiu contributed around 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 revenue across various product price segments under the Zhenjiu brand. Additionally, the quality of the distribution network has been significantly enhanced, leading to increased contributions from distributor partners and retailers.
• The increase in gross profit margin was primarily due to the strategic optimization of the Group’s product portfolio. This has effectively boosted the revenue contribution of deluxe baijiu products and products with higher gross profit margins in the same price range. As the production capacity expanded, the Group gradually replaced third-party procurement with self-produced base liquor, significantly reducing unit costs.
• To express appreciation for the extensive support from our shareholders, the Board of Directors proposes a distribution of a final dividend of HK$0.18 per ordinary share, amounting to approximately HK$610 million in total.

Grasping the Opportunities to Transform and Upgrade in the Sauce-aroma Baijiu Market to Achieve Sustainable High-quality Growth During the Year, the consolidation further increased in the competitive landscape of the baijiu industry. To cope with the transition from steady growth to high-quality growth in the premium sauce-aroma baijiu industry, the Group has fully embraced the market opportunities brought by the trend of market integration in the premium segment of the baijiu market. The Group formulated a clear strategy focusing on the four critical elements of the baijiu market: brand, production capacity, distribution channels, and talent. It has traversed the cycle and achieved sustainable, high-quality growth. In this regard, the Group has continued to optimize its product structure, expanding its product portfolio from deluxe to premium and above tiers and increasing the revenue contribution from premium baijiu products with higher gross profit margins within the same price range. At the same time, the Group further optimized the development of mid-priced 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 enhancing its base liquor production capacity and further improving its storage capabilities for premium base liquor. During the Year, the Group allocated more resources to promote sell-through and sell-out. This includes utilizing an immersive promotional strategy, advancing a multichannel sales network, maintaining healthy inventory levels at the distributor end, and keeping a close eye on sales performance to ensure optimal...