Main points of investment

According to the Shunxin Agriculture report, 23H1 achieved a total operating income of 6.211 billion yuan,-4.72% year-on-year, and a net profit of-81 million yuan,-302.54%, compared with the same period last year. 23Q2 achieved a total operating income of 2.124 billion yuan,-18.70% compared with the same period last year, and a net profit of-409 million yuan,-535.78%, compared with the same period last year. The performance of 23Q2 is in line with the previous performance forecast (revenue fell 34.4% compared with the same period last year and net profit loss was 3.8-440 million yuan). The loss was mainly affected by the decline in liquor business income + pork business loss + real estate taxes and fees.

Liquor business: the proportion of medium and high-grade spirits has increased, and the gross profit margin has risen steadily. ① 23H1's liquor business income is 4.553 billion yuan (- 7.26%), of which the sales income of high-end liquor / middle-grade liquor / low-grade liquor is 570 million yuan (+ 59.78%) / 688 million yuan (- 6.03%) / 3.296 billion yuan (- 13.75%) respectively. The proportion of income is 12.51% (+ 5.25pct) / 15.11% (+ 0.20pct) / 72.38% (- 5.45pct) respectively. Bai Niu er still contributes the main income, and the core product "Golden Standard Aging" market is introduced smoothly, increasing the proportion of mid-range wine income.

② 23H1's gross profit margin of high-end liquor / middle-grade liquor / low-grade liquor is + 3.40pct/+2.30pct/+3.99pct, respectively, and the overall gross profit margin of liquor + 5.46pct to 46.42%. This year, the company aims to "stabilize the market and adjust the structure". In the second half of the year, the company will continue to vigorously promote the national distribution of "Jinbiao aging" and speed up the cultivation of consumers. Jinbiao is expected to achieve the target of 5 million boxes for the whole year, supporting the company's overall performance growth.

Pork business: the low price of live pigs is a drag on the short-term profit side, which shows that the income of the pork industry sector of ① 23H1 Company is 1.346 billion yuan (+ 15.93%), and the sales income of slaughtering business / breeding industry is 1.24 billion yuan (+ 16.54%) / 106 million yuan (+ 9.28%) respectively, which is mainly affected by the cyclical fluctuation of pig prices.

The profit side of ② is expected to lose a large amount, and the overall gross profit margin of pork business is-11.31pct to-12.42%, mainly due to the low price of live pigs. The current industry capacity is slowly eliminated. As of 23H1, sows and pig stocks have increased by 0.5% and 1.1% compared with the same period last year.

Real estate business: the sale of property taxes and fees dragged down the Q2 performance, and after the divestiture, ① 23H1 realized a net profit of 332 million yuan / income of 1.226 billion yuan (including the recognized income of 994 million yuan from the sale of two buildings in Shunxin Jiayu and Oneworld Center, and the income from the sale of assets and profits and losses were combined to offset in the consolidated statement). We expect that the taxes and fees arising from the sale of the assets of the two buildings will have a greater impact on profits. According to the financial statements of Shunxin Jiayu from January to May: ① income tax 120 million yuan; ② tax and additional total 65.73 million yuan; ③ tax payable 11.51 million yuan (including land value-added tax, etc.). The company firmly promoted the divestiture of the real estate business, revealing the transfer reserve price of 3.098 billion yuan on August 18, speeding up the divestiture progress. Throughout the year, even if it is finally backed up by Shunxin holding Group related party transactions, the impact on the company is only an one-time impairment (393 million yuan).

Waifu market continues to expand and promote the cultivation of key markets

From the perspective of different channels, the direct sales / distribution income of 23H1's liquor business is 11 million yuan (- 24.45%) / 4.542 billion yuan (- 7.21%) respectively. The total sales income of the top five distribution customers is 790 million yuan, accounting for 17.35% (+ 1.28pct). The number of dealers inside and outside Beijing is + 5 /-2 to 74 / 371. From a sub-market point of view, while ploughing the Beijing market, the company's Niulanshan winery continues to open up the Waifu market and promote the cultivation of key markets, and the pork business also continues to develop the sales market. 23H1's main business in Beijing / Waifu achieved income of 2.078 billion yuan (- 5.84%) / 4.134 billion yuan (- 4.15%) respectively, accounting for 33.45% (- 0.40pct) / 66.55% (+ 0.40pct).

Short-term upward increase in sales expenses and increase in income tax expenses

In terms of expenses, the sales expense rate / management expense rate / financial expense rate / income tax expense rate of 23Q2 Company are + 6.18pct/+1.51pct/-0.10pct/+4.73pct to 11.45% 7.28%, 1.90% and 7.37% respectively, which mainly comes from the increase in the promotion fees and sales service fees of liquor business and the taxes and fees arising from the sale of two building assets by the company.

Profit forecast and valuation

The company's overall performance is under pressure in the first half of the year under the influence of the off-season of liquor + pork business and real estate taxes and fees, but considering the accelerated divestiture of the company's real estate business, the liquor industry is about to enter the peak season, and the loss range of pork business may narrow in the second half of the year. Optimistic about the follow-up profit elasticity of the company. After focusing on the main liquor business in the future, we are still optimistic about the medium-and long-term development of the company. We expect the company's revenue from 2023 to 2025 to be 12.183 billion yuan, 13.903 billion yuan and 16.332 billion yuan, with revenue growth rates of 4.32%, 14.11% and 17.47%, respectively; net profit of-388 million yuan, 901 million yuan and 1.636 billion yuan respectively; and EPS of-0.52 yuan, 1.22 yuan and 2.21 yuan respectively.

Catalyst: the moving sales performance of Jinbiao's new products exceeded expectations; the recovery of Bai Niu er exceeded expectations; the national accelerated expansion exceeded expectations; the speed of real estate business divestiture exceeded expectations.

Risk tips: 1, the overall liquor sales recovery is not as expected; 2, the gold standard development is not as expected; 3, the recovery of Bai Niu II is not as expected; 4, the business divestiture is not as expected.