2023H1 achieved an income of 6.21 billion yuan /-4.7%, and its net profit was about-81 million yuan (+ 42 million yuan in the same period last year). Both income and net profit were in the middle of the performance forecast range. Among them, the net profit of 2023Q2 is-410 million yuan, and that of 2022Q2 is-74 million yuan in the same period. Looking to the future, the real estate business is expected to accelerate divestiture, with the accelerated promotion of gold standard aging, the company as a whole is expected to achieve rapid restorative growth. Maintain a "buy" rating.
The net profit of 2023Q2 is-410 million yuan, which is under pressure. 2023H1 achieved operating income of 6.21 billion yuan /-4.7%, net profit of about-81 million yuan, and + 42 million yuan in the same period last year. Both income and net profit fell in the middle of the performance forecast range (58-6.6 billion yuan and-0.55 billion RMB110 million, respectively); of which 2023Q2 operating income was 2.120 billion yuan /-18.7%, net profit was-410 million yuan, and 2022Q2 was-74 million yuan in the same period.
The pressure on profits in the second quarter of this year is mainly due to: 1) the company's real estate project sales and payback are slow, and the taxes and fees generated from the sale of the assets of the two buildings in the Business Center and OneWorld Center have a greater impact on the net profit during the reporting period; 2) the average price of domestic pigs continues to be low, the company's pig farming and slaughtering business are under pressure, and the company's pork industry has suffered large losses.
Income side: the overall demand for liquor is under pressure, and the gold standard is continuously promoted throughout the country. 2023H1, the company's liquor business operating income of 4.55 billion yuan /-7.3%, mainly due to the liquor market is still in a weak recovery, superimposed consumption power decline, marketing drivers and other reasons, the company's market sales have slowed down. From the point of view of liquor product structure, the operating income of high-end liquor / middle-grade liquor / low-grade liquor realized 5.7 million yuan, 6.8 billion yuan, + 59.8%, 6.0%, 13.7%, respectively. Among them, the excellent performance of high-end liquor is expected to mainly benefit from the low base of Q2 Beijing market last year; the sales volume of Niulanshan aging (White Niu II) with 42 degrees 500ml reached 180,000 liters /-3.93%, and the demand was under pressure. 42.3 degree 500ml Niulanshan aged liquor (gold standard) sales volume of 4.1kL / + 86.6%, the national chemical store goods continue to promote. The business income of the pig industry is 1.346 billion yuan / + 17.5%, including 1.24 billion yuan / + 16.5% for slaughtering and 106 million yuan / + 9.3% for breeding. From a sub-regional point of view, the revenue of Beijing / Waifu market is 2.08 billion yuan and 4.1% respectively compared with the same period last year.
Profit side: benefit structure optimization and cost decline, liquor gross profit margin + 5.5Pcts increased significantly, the pig industry dragged down the overall profit. 2023H1, the company's liquor business tax surcharge rate 14.3%/-2.1Pcts, gross profit margin 46.4%/+5.5Pcts, high-end liquor / middle-grade liquor / low-grade liquor gross profit margin 74.3%, 49.1%, 41.0%, respectively + 3.4Pct/+2.3Pcts/+4.0Pcts, mainly benefited from the enhanced price increase and cost control of some products of the company, and the sales expense rate 11.0%/+3.7Pcts, mainly due to the increase in the promotion of new products. The pig industry business is dragged down by the decline in pig prices and the rising costs at the breeding end, with a gross profit margin of-12.42%, with a drop in 11.3Pcts. 2023H1, the company's sales expenses / administrative expenses are + 2.2% respectively compared with the same period last year. To sum up, the overall net profit of 2023H1 fell 120 million to-81 million yuan compared with the same period last year.
Real estate business accelerated divestiture, looking forward to the release of profit flexibility. Recently, the company announced that it intends to list 100% shares of Shunxin Jiayu at 3.098 billion yuan on the Beijing property Exchange. If there is no transaction during the public listing period, the group or related parties will participate in the delisting at a price of not less than 2.25 billion yuan. We believe that this listing and group delisting show that the company is determined, and it is expected that the follow-up real estate business is expected to be completely divested, reducing the drag on the net profit of listed companies. Looking to the future, with the recovery of the consumption scene, the company's basic Bai Niu er and Beijing stronghold market are expected to gradually pick up, superimposed and upgraded to lead the product gold standard aged liquor to speed up the promotion of the market, and the company's performance is expected to achieve rapid growth under a low base.
Risk factors: consumption recovery is not as expected; macroeconomic pressure; increased competition in the liquor industry; the company's real estate business divestiture progress is not as expected; the company's new product gold standard aging sales are not as expected.
Earnings forecast, valuation and rating: taking into account the lower-than-expected second-quarter results of the company and the potential impact of the future divestiture of the real estate business, adjust the company's annual EPS forecast for 2023-24-25 to 0.03cm 1.19max 1.42 yuan (the original forecast was 0.9amp 1.12max 1.39 yuan). The company focuses on liquor and pork business clearly, and liquor is the core source of the company's profits. we estimate that the revenue / net profit of the company's liquor business in 2024 will be about 10 billion 11 billion / 800-1 billion yuan. At present, the liquor industry (CITIC Liquor Index) corresponds to 23.2 times PE in 2024 (wind consensus expectations), looking to the future, the company's real estate business is expected to accelerate divestiture, with the accelerated promotion of gold standard aging, the company as a whole is expected to achieve rapid restorative growth, we give the company's liquor business 2024 PE valuation 25x, corresponding to the market capitalization of about 23 billion yuan, corresponding to the target price of 31 yuan, to maintain the "buy" rating.