Luzhou Laojiao Investment Quality Review (000568.SZ)
Data timestamp: 2026-07-24 22:04 UTC
Quality score: 77/100
Valuation position: current price/base fair value (FV) 1.35
Final signal: WATCHLIST
Core Conclusion
Luzhou Laojiao remains on the WATCHLIST. It is a good company watch candidate, but the current price is above both conservative and base FV, so the case does not have enough margin of safety.
- Quality: 77/100. The five-year record still shows strong ROE, decent FCF, and a cash-rich balance sheet, but disclosure depth and FCF normalization keep the score below excellent.
- Price: current price is CNY83.01 and market value is about CNY122.18 billion. Conservative/base FV is CNY61.68/CNY61.68 per share.
Business Breakdown
Consolidated main-business revenue moved from CNY20.64 billion in 2021 to CNY25.73 billion in 2025, after peaking at CNY31.20 billion in 2024. The five-year CAGR was 5.7%. Segment margin/profit was not disclosed in the structured source. Latest annual FCF was CNY5.19 billion.
Management outlook was not quantified in the structured data. Follow-up should verify annual reports, results meetings, and IR disclosures, especially whether the 2025 revenue decline is temporary or structural.
Quality Gate
The score is 77/100: business model 7/10, moat 13/20, cash flow 14/20, capital return 15/15, balance sheet 10/10, growth quality 7/10, and management/accounting 11.4/15. Five-year average FCF/Net Income was 0.81 and OCF/Net Income was 0.95. Five-year average ROE was 30.5% and ROIC was 24.6%.
Management/accounting is 76/100, converted to 11.4/15. The framework keeps shareholder alignment, capital allocation, incentive dilution, accounting quality, and related-party checks under observation.
Financial Audit
The valuation uses fiscal 2025-2021, all in CNY. 2025 revenue/net profit/OCF/capex/FCF were CNY25.73/CNY10.83/CNY7.12/CNY1.93/CNY5.19 billion. FCF/Revenue was 20.2% and FCF/Net Income was 0.48. Five-year FCF was CNY5.19, CNY17.99, CNY9.15, CNY7.23, and CNY5.72 billion.
Latest cash was CNY27.34 billion, debt was CNY6.72 billion, and net cash was CNY20.62 billion. The report flags goodwill, receivables, and financial-asset composition as ongoing filing checks.
Valuation
CNY 10Y government yield was 1.7% from ChinaBond on 2026-07-24. The model uses normalized FCF, sustainable growth, a 10% required return, quality haircuts, and a separate balance-sheet bridge.
| Scenario | Core Assumption | Multiple Basis | Fair Market Value | FV/Share | Price/FV | Weight | Next Check |
|---|---|---|---|---|---|---|---|
| Conservative | Normalized FCF CNY9.06bn with heavier haircut | g -1.0%, 8.0x | CNY90.78bn | CNY61.68 | 1.35 | 30% | FCF durability |
| Base | Five-year FCF and current state continue | g 0.0%, 8.0x | CNY90.78bn | CNY61.68 | 1.35 | 50% | Revenue and ROIC trend |
| Optimistic | Quality rerating without exceeding cap | g 1.5%, 11.0x | CNY117.82bn | CNY80.05 | 1.04 | 20% | Competition and capital allocation |
Balance-sheet adjustment is CNY18.34 billion: cash CNY24.61 billion, current financial assets CNY0.28 billion, non-current financial assets CNY0.17 billion, and debt minus CNY6.72 billion. Price/base FV of 1.35 fails the 2x gate.
Buy And Monitor
Current action is watch only. Upgrade requires price/base FV below 0.70, quality score at least 75, and stronger mispricing evidence. Track revenue, FCF/Net Income, ROIC, net cash/debt, dividends, buybacks, and governance disclosure.
Risks
FCF quality passes but the latest FCF/Net Income of 0.48 needs follow-up. Balance sheet passes. Accounting/governance and shareholder returns remain watch items. Two periods below 0.60 FCF/Net Income, a material net-debt increase, financial-asset impairment, or dilutive capital allocation would require downgrading normalized FCF and signal.
Research only. Not personalized investment advice.
Sources
Public quote and financial platforms supplied current price, market value, share count, and the five-year financial baseline. Official disclosure venues and company IR remain required for annual reports, dividends, buybacks, governance, incentives, related parties, and risks. Risk-free rate source: ChinaBond, 2026-07-24.