Event: on August 2, the company released its semi-annual report of 2022. During the reporting period, the company realized operating income of 57.617 billion yuan, an increase of 17.38% over the same period last year, and a net profit of 29.794 billion yuan, an increase of 20.85% over the same period last year. Among them, Q2 achieved operating income of 25.321 billion yuan, an increase of 16.07% over the same period last year, and its net profit was 12.549 billion yuan, an increase of 17.28% over the same period last year, which was basically in line with the performance forecast, laying a solid foundation for achieving the revenue growth target of 15% for the whole year.

Main points of investment:

Both volume and price have risen, and the half-year performance is eye-catching. In the first half of the year, the income of Maotai and series of liquors reached 49.965 billion yuan and 7.598 billion yuan respectively, up 16.34% and 25.38% respectively over the same period last year. In the second quarter alone, the growth rate of Maotai and series of liquors was 14.97% and 22.03%, both achieving double-digit growth. The increase in revenue is mainly due to an increase in sales. The company's new development and launch of the year of the Tiger Maotai, treasures Moutai on the high-end liquor matrix expansion, Maotai 1935 is to fill the series of thousands of yuan blank price belt, through product structure upgrading to promote the unit price rise, while 100ml Feitian Moutai directly to 3.99yuan / ML unit price increased the original 2.99yuan / ML official guidance price. At the same time, from a marginal point of view, the price of a batch of Maotai has gradually stabilized, with prices for bulk bottles and a whole case at about 2800 yuan and 3200 yuan, respectively. In the third quarter, with the relief of the epidemic and the arrival of the peak season of traditional liquor consumption, it is expected that sales and prices still have room and power to rise.

The reform has been deepened, and the growth points of performance have been gradually enriched. From the product point of view, the income proportion of Maotai liquor and series liquor is 87% and 13% respectively, and the proportion of series liquor has increased for two consecutive years. From the perspective of channels, direct sales income and wholesale agency income are 20.949 billion yuan and 36.614 billion yuan respectively, up 120.42% and 7.32% respectively over the same period last year. Direct sales revenue is growing rapidly, and the proportion of direct sales income has also increased from 19% to 36%. Among them, the biggest highlight is the "I Maotai" digital marketing platform. As of August 1, "I Maotai" APP has been online for 123 days, with a total of more than 19 million registered users and more than 4 million daily active users. Since its launch, although they are all non-standard products, it still achieves 4.416 billion yuan in liquor tax-free income, accounting for 21% of the direct operation, which will become the core of the Maotai direct operation system in the future, so that Maotai can directly reach consumers. Better achieve the balance of quantity and price, and strengthen the coordination between channels. From the brand point of view, Maotai has made great efforts to create IP images such as "Xiaomao" and "Mao Xiaoling", developed derivative products such as "Maotai Ice Cream", expanded brand influence in a younger and diversified way, and made the brand closer to the new generation of young consumers. At the same time, it unveiled the third generation Maotai store to create high-end cultural communication space, strengthen experience and services, and strengthen the connotation and extension construction of the brand. In the future, the management's "Wuhe Marketing Law" will continue to be deeply implemented to further promote the high-quality development of the enterprise.

Steady cash, profitability continues to improve. In the first half of the year, the company's gross profit margin was 92.11%, an increase of 0.73pct over the same period last year, and a net profit margin of 51.71%, an increase of 1.49pct over the same period last year. In terms of expenses, business tax and surcharge accounted for 15.12% of revenue, an increase of 0.95 pct over the same period last year. In the second quarter alone, business tax and surcharge accounted for 17.28%, which is expected to be mainly affected by the increase in price and sales volume under direct sales optimization. Sales expense rate increased by-0.01 pct year-on-year, and management expense rate increased by-0.8 pct year-on-year. By the end of the second quarter, the contract liability was 9.669 billion yuan, an increase of 4.6% over the same period last year, and the sales income was 29.669 billion yuan, an increase of 6.08% over the same period last year. In the first half of the year, the company completed the output of 42500 tons of Maotai base liquor and 17000 tons of series base liquor, an increase of 12.43% and 36% respectively over last year, and the production volume of base liquor is obvious. in the follow-up, the technical renovation project of 30,000 tons of Maotai-flavor series liquor and 15 liquor depots in China will be carried out in an orderly manner to continuously expand investment and construction and enhance product supply.

There are bright spots in the total structure, and the annual target is expected to be achieved. We expect the company to achieve revenue of 1266.85, 1480.95 and 169.716 billion yuan from 2022 to 2024, an increase of 19.3%, 16.9%, 14.6%, and a net profit of 605.86, 710.63, and 80.984 billion yuan, respectively, an increase of 15.49%, 17.29%, 13.96%, and a corresponding EPS of 48.23, 56.57, 64.47 yuan. We give the company a corresponding target price of 2093.38 yuan in 2022. Give a rating of "cautious recommendation".

Risk hint: recurrent epidemic situation at home and abroad, market systemic risk