Event: when the company released its semi-annual report of 2023, 2023H1 achieved a total operating income of 660 million yuan, a year-on-year + 11.0%, a net profit of 97 million yuan, a year-on-year net profit of 260 million yuan, and a year-on-year net profit of 19 million yuan, turning losses into profits, and the performance was in line with market expectations.

Tamp the development inside and outside the province and continuously optimize the channel structure. 1. In 2023, high-end wine (retail price ≥ 60 yuan / 500ml) and ordinary wine (retail price < 100yuan / 500ml) achieved revenue of 430 million yuan (+ 3.1%) and 170 million yuan (+ 39.5%) respectively, and the product structure was slightly under pressure. 2. From a regional point of view, revenue within the province is 470 million yuan (+ 12.7%), and revenue outside the province is 180 million yuan (+ 11.2%). The pace of development outside the province continues. 3. From a sub-channel point of view, the revenue of channel distribution is 530 million yuan (+ 9.6%), that of direct sales by manufacturers is 70 million yuan (+ 13.5%), and the proportion of direct sales is further increased.

The product structure is low in front and high in back, and the inflection point of gross profit margin is upward. 1. In the first half of the year, consumption scenarios such as banquets and visits to relatives and friends were the first to recover, the recovery of business consumption lagged behind, and the recovery of mobile sales of high-priced products was slightly delayed. 23Q1 gross profit margin fell 4.5% year-on-year, 23Q2 gross profit margin increased 2.0% year-on-year, and gross profit margin fell 2.8% to 63.0% in the first half of the year. 2. The company comprehensively launched the "C" end strategy, tilted the marketing policy investment to the consumer side, and increased the investment of resources, focusing on the creation of human virtue star products, and the increase in advertising and market expenses increased the sales expense rate by 1.0% to 19.7%. 3. We will continue to promote management work such as increasing revenue and increasing efficiency, "increasing revenue and reducing expenditure, reducing cost and increasing efficiency", and improving organizational execution. Management costs have been slightly reduced and superimposed scale effects, and the rate of management expenses has been reduced by 1.3 percentage points to 10.6%. The comprehensive expense rate of 23H1 remained stable to 29.7%. 4. To sum up, the net interest rate of 23Q1 sales fell 6.4% year-on-year to 19.5%. The net sales rate of 23Q2 increased by 12.6% to 6.4% compared with the same period last year, with an inflection point of profitability. The net cash flow of 23H1 was 65 million yuan, an increase of 63 million yuan over the same period last year, and the quality of operation improved significantly.

The rhythm of deep adjustment is remarkable, and the motivation is full of motivation. The company focuses on upgrading the product structure, continuously promoting marketing transformation and optimizing the incentive model, with a significant in-depth adjustment rhythm: 1. Focus on the virtue of heaven, the virtue of the country, the morality of people, export-oriented and star-rated products, and the active layout of human morality seizes the price of 150-200 yuan. Qinghai fully introduces the real year products of Guode, and the upgrading rhythm of product layout structure is obvious. 2. Innovate the "1x 3N" marketing model, dig deeply the group purchase resources of dealers, focus on promoting the transformation of dealers, focus on superior resources to develop the markets of Shanxi, Shaanxi and Henan, and actively expand the growth space. 3. The company launched the equity incentive plan with a grant price of 7.12 yuan, and the revenue assessment targets for 2023-2025 were 1.176 billion yuan, 1.372 billion yuan and 1.568 billion yuan respectively. The incentive is in place, the operating potential is strong, and the company's long-term growth ability is optimistic.

Profit forecast and investment advice. It is estimated that the EPS from 2023 to 2025 is 0.30,0.49,0.65 yuan respectively, and the corresponding PE is 46 times, 29 times and 21 times respectively. The company benefits from the upgrading of consumption in the province and the development of markets outside the province, is optimistic about the company's long-term growth ability, and maintains a "buy" rating.

Risk hint: the risk of a sharp downturn in the economy, and the recovery in consumption is not as high as expected.