Events:

The company released its semi-annual report in 2023, with revenue of 6.211 billion yuan in the first half of the year, a year-on-year growth rate of-4.72%, and a net profit loss of 81 million yuan, a decrease of 121 million yuan compared with the profit of 40 million yuan in the same period. Deducting the non-return net profit loss of 81 million yuan, a decrease of 123 million yuan compared with the same period profit of 42 million yuan. Of this total, Q2 revenue was 2.124 billion yuan, a year-on-year growth rate of-18.70%, a net profit of-409 million yuan, a decrease of 345 million yuan over the same period, and a deduction of non-net profit of-409 million yuan, a decrease of 346 million yuan over the same period.

Investment Summary:

Liquor sales fell slightly in the first half of the year, with net losses in real estate and pork businesses dragging down performance. Due to the macroeconomic drag, the consumption capacity has declined, and the dynamic sales of the company's products have slowed down. The revenue of liquor in the first half of the year was 4.553 billion yuan,-7.26% compared with the same period last year. The revenue of the real estate sector is 1.226 billion yuan. After deducting the income of 994 million yuan from the sale of the business center and the world center, the real estate sales contribute 232 million yuan to the statement end income of the listed company. The net profit at the end of the real estate statement is 332 million yuan. After deducting the 507 million yuan gain from the sale of assets obtained from the debt-to-equity increase of the parent company in the first half of the year, the actual contribution to the net profit of the listed company is-175 million yuan. Under the influence of superimposed taxes and fees, real estate continues to drag on the company's profits. The revenue of pork business in the first half of the year was 1.346 billion yuan, including 1.24 billion yuan from slaughtering business, + 16.55% from the same period last year, and 106 million yuan from breeding. The gross profit margin of the pork business was-11.31% to-12.42% compared with the same period last year, and the loss was further magnified, mainly due to the slow elimination of production capacity in the industry and the oversupply of the market.

The gross profit margin of liquor business has improved, the profit of high-end liquor has rebounded, and the proportion of mid-range liquor income has increased. In the first half of the year, the revenue of high-end wine / middle-grade wine / low-grade wine was 5.70% 6.88max 3.296 billion yuan, + 59.78% + 59.78%, + 59.78%, 6.03%, 13.75%, 12.5%, 15.1%, 72.4% and + 5.2/0.2/-5.4pct, respectively, with a gross profit margin of 74.32%, 49.31%, 41.00%, and + 3.40/+2.30/+3.99pct, respectively. The gross profit margin of liquor business is + 5.46% to 46.42% compared with the same period last year. The sales expenses were 501 million yuan, + 39.96% compared with the same period last year, of which the promotion fee was 304 million yuan, + 146.63% over the same period last year. The recovery of high-end liquor increased under the low base in the same period, and returned to 71.6% of 796 million yuan in the same period of 21 years. In the first half of the year, Niulanshan aging sales were 20.15 million liters,-3.4% compared with the same period last year, and gold standard aging sales were 4140.98 kiloliters, + 86.6 percent year-on-year.

Niulanshan aging is gradually digested after the price rise at the beginning of the year. At present, the channel inventory is reasonable, and the product competitiveness and mobile sales are still relatively stable. Under the continuous cultivation of catering and circulation channels, the return rate of Jinbiao has gradually increased, and the product power has the potential of a large single product. According to the 23 mid-year report, the gross profit margin of mid-grade wine exceeds that of low-grade wine 8.31pct, and the cultivation and sales of gold standard will significantly increase the overall profitability of the company. In the first half of the year, the company's light bottle wine was affected by the underoperation of the construction site and factory, and the upgrading trend of light bottle wine remained unchanged. At present, Jinbiao is still the core focus of the company's marketing system, the strategic determination is higher than the previous upgraded products, the channel policy is generous, and the thrust is strong. Aging in the first half of the year to straighten out channel prices, continue to remove inventory in parallel, there is still a large room for shipment in the second half of the year, recovery to accelerate annual growth is expected.

The real estate business speeds up the sale process and the uncertainty of the company is gradually cleared. The company's revenue growth in the second quarter was under pressure, and its net profit loss was mainly affected by the slow sales and repayment of real estate projects, and the taxes and fees arising from the sale of two building assets in the Business Center and the World Center. as well as the domestic pig average price continues to be low operation, the company pig breeding and slaughtering business both ends of the pressure loss is a big drag. In the previous announcement of the company, the real estate subsidiary Shunxin Jiayu transferred 100% of its shares to withdraw from the real estate business after an increase in debt and equity. After the evaluation and determination of the listing price, it has now been listed on the Beijing property Exchange, and the real estate transfer will reduce the uncertainty of the company's fundamentals and drive the company to return to the logic of consumer goods valuation.

The company's light bottle wine operation system still has a comparative advantage, looking forward to the follow-up performance repair. The operation of light bottle wine requires extensive terminal coverage, channel thrust given by high channel profits, and low cost marketing system guaranteed by large commercial system. By the end of August 2022, covering 2.5341 million registered active terminals is far more than the general wine enterprises, the above marketing model has been verified, the construction of the marketing system moat is difficult to have competitors in the short term. After the landing of the China News, the uncertainty of the company is expected to be cleared gradually, and the recovery of consumption in the second half of the year is expected, which is optimistic about the follow-up performance of the company.

Investment suggestion: the operating income for 23-25 is expected to be 118.36 yuan, 129.54 yuan and 14.031 billion yuan respectively, and the net profit attributable to the shareholders of the listed company is 30 million yuan, 773 million yuan and 842 million yuan respectively, and the earnings per share is reduced to 0.04,1.04 yuan and 1.14 yuan, corresponding to PE of 622.78 X, 24.45X and 22.43X respectively. Maintain a "buy" rating.

Risk tips: light bottle recovery is not as expected, product cultivation is not as expected, and the decline in non-liquor business and uncertainty are a drag on the company's earnings.