Events. In 23 years, H1 Company achieved operating income of 790 million yuan, an increase of 0.5% over the same period last year; net profit of 90 million yuan, an increase of 0.1% over the same period last year; and net profit of 90 million yuan, an increase of 4.7% over the same period last year. 2Q23 achieved an operating income of 280 million yuan, an increase of 25.3% over the same period last year, a net profit of 30 million yuan, an increase of 49.0% over the same period last year, and a net profit of 30 million yuan, an increase of 77.2% over the same period last year.

Focus on the core strategic items and lead the upgrading of yellow rice wine categories. In 23, the revenue of mid-range high-end liquor / ordinary wine of H1 company reached 540.21 billion yuan, with + 2.2% Universe 2.5%, mainly due to the base pressure after the price increase of Q1 in 22 years, and was still briefly disturbed by the epidemic. Q2 scene is fully open, the company focuses on core strategic products, actively carry out consumer training work, mid-range high-end wine / ordinary wine revenue year-on-year + 54.7% Universe 9.0%. In the second half of the year, the company will continue to create a strategic product "only this sapphire", set up a yellow rice wine category benchmark, and strive to achieve the sales target of 40,000 cases. The company continues to expand the Great North, enter the Southwest, and plough the mature market. From the perspective of the H1 sub-region in 23 years, Shanghai / Zhejiang / Jiangsu / other regions / international sales revenue year-on-year + 0.2% Cure 4.5% Universe 0.3% Universe 5.5% Plus 8.6%, revenue ratio-0.1pct/-1.7pct/ is flat / + 1.7pct/+0.2pct, continue to improve the nationalized sales network.

Actively promote "more wine in the world" to enhance consumer stickiness and brand value. Thanks to the upgrading of the product structure, the proportion of medium and high-grade wines represented by national brew, blue and white drunken and storage series in the first half of the year increased by 1.1pct to 68.9% compared with the same period last year, and the overall gross profit margin increased by 1.1pct to 37.3%. During the reporting period, the company set up new product appraisal pavilions in Nanning, Zhuhai, Yiwu, Taiyuan and Hefei to create an immersive experience. The "more Wine in the World" event went to many cities in Japan and South Korea, and appeared at the Zhejiang Agricultural Expo, the new annual meeting of the China-Japan Friendship Association, and the spring sugar and wine festival. the sales expense rate increased to 12.9% compared with the same period last year, the management expense rate decreased to 6.3%, and the net profit margin decreased by 0.1pct to 11.4% compared with the same period. In terms of channel investment, the company reasonably grasped the progress of investment promotion, completed investment promotion in 11 peripheral markets in the first half of the year, optimized the existing dealer structure, and increased the number of dealers by 3 to 1911 compared with the same period last year.

At the right time for the strategic layout of the "four modernizations", the management increased its support to demonstrate its confidence. As the leader of the yellow rice wine industry, the company adheres to the "four modernizations" strategy as the guide, adjusts the product structure, enhances the brand connotation, actively embraces the young consumer groups, and promotes the return of the brand value of yellow rice wine. On June 13, a number of management and core backbones concentrated to increase their holdings of 1.633 million shares, with a total amount of 15.894 million yuan, demonstrating the company's high-level confidence in the growth of the main business. In the aspect of internal assessment and incentive, the company further refines the assessment mechanism and disassembles the sales target in each link of production, supply and sales to achieve management optimization. In the second half of the year, as the official designated yellow rice wine for the Hangzhou Asian Games, cultural communication and brand exposure are expected to be further strengthened.

Investment advice and profit forecast. We estimate that the company's 23-25 revenue of 18.2 shock 20.6 / 2.28 billion yuan (before 23-24) is 1.8212 billion yuan, and the net profit of return to the mother is 2.2 million pound 270,000,000 yuan (the previous value is 270,000 million yuan). The predicted value of BVPS in 23 years is 6.2yuan, referring to the average PB of comparable company 4.7x. Considering that the company is in a short-term performance recovery period, and the category value of yellow rice wine is still seriously undervalued, Guyue Longshan is given a 23-year 2x PB (unchanged) with a target price of 12.4yuan, maintaining a "better than the market" rating.

Risk hint: intensified competition in the industry, epidemic situation affecting demand, cost control risk