Report highlights
occurrences
The company announced its 2023 annual report. In 2023, the company achieved total revenue of 14.815 billion yuan (+5.53%), net profit attributable to mother of 1,337 billion yuan (+5.78%), and net profit not attributable to mother of 1,314 billion yuan (+6.45%). In the 23Q4 quarter, the company achieved total revenue of 1,786 billion yuan (-3.76%), net profit to mother of 0.07 billion yuan (-109.23%), and net profit of non-return to mother of -13 million yuan (-117.73%). The company plans to pay a cash dividend of 2.80 yuan (tax included) per share, with a dividend rate of 101.39%.
The volume and price of beer products continued to rise sharply, and the Southern District maintained a relatively rapid growth rate
1) The volume and price of the company's beer products continued to rise sharply. In 2023, the total sales volume of the company's beer was 2.9975 million kiloliters, +4.93% year on year. The estimated average unit price was 4.82 yuan, +0.48% year over year.
2) Sales of all grades of beer are growing steadily, and the unit price of premium beer continues to rise. In 2023, the company's high-end (consumer price 8 yuan +), mainstream (consumer price 4-8 yuan), and economy (consumer price below 4 yuan) beer revenue was 88.55, 52.97, and 290 million yuan, respectively, +5.18%, +5.64%, and +10.06%; in terms of volume price, sales of high-end, mainstream, and economy beer were +3.98%, +5.97%, and +6.03%, respectively.
3) The unit price of international and domestic brands of beer continues to rise. In 2023, the company's international and domestic brand beer revenue was 52.78 billion yuan and 9.164 billion yuan respectively, +8.30% and +3.86% year over year; in terms of volume price, international and domestic brand beer sales were +7.93% and +3.82% year over year, and unit price was +0.34% and +0.04% year over year.
4) The Southern District leads in revenue growth. In 2023, the company's central, southern and northwest regions had revenue of 60.84, 43.34 billion yuan, and 4,023 billion yuan respectively, with the southern region leading the growth rate. By the end of '23, the number of dealers in the central region, southern region and northwest region was 1391, 561, and 1117, respectively, +4.67%, +17.36%, and -10.50%. The number of dealers in the southern region grew rapidly.
Refined management, reduction in management and R&D expenses
1) Raw material costs have increased, and gross margin has declined. In 2023, the company's gross margin was 49.15%, -1.33pct year on year, mainly due to an increase in raw material costs, etc. (raw material cost/revenue +1.57pct to 32.58% year over year); among them, the gross margins of high-grade, mainstream, and economic beers were 55.01%, 42.96%, and 12.92%, respectively, -1.57, -0.88, and +0.78 pcts year-on-year.
2) Refined management, reduction in management and R&D expenses. In 2023, the company's net profit margin was 18.30%, -0.12pct year-on-year. In 2023, the company's sales, management, R&D, and financial expenses rates were 17.10%, 3.34%, 0.18%, and -0.41%, respectively, compared with +0.53, -0.47, -0.61, and -0.01pct. The management and R&D expenses rate declined, and the increase in sales expenses was mainly due to the company's increased market investment. In 23Q4, the company's net interest rate was 0.15%, -9.86pct year on year, and -0.42% year-on-year, -4.80pct year on year, mainly due to a decrease in gross margin (gross margin -6.80pct to 48.79% year over year) and an increase in sales expenses ratio (sales expense ratio +4.88pct to 33.10% year over year).
Reduced costs have led to improved profits. Major cities plan to enter the eastern market 1) Raw material prices have declined, and cost pressure is gradually being released. The price of barley, the main brewing material for beer companies, has gradually declined since the beginning of 2023. The average imported barley price in February 2024 fell by nearly 32% compared to the beginning of 23. As raw material inventory costs gradually decline, the company's profitability is expected to gradually improve.
2) “Fast Sailing” to continue to promote high-quality development. In 2024, the company's “Sailing 27” strategy entered a new stage of development - “Fast Sailing”. In terms of products, the company will enhance the growth of high-end products and accelerate the growth of categories other than beer; regionally, accelerate growth in growth markets and promote profit growth in base markets; and continue to promote digital transformation, improve supply chain efficiency, and continue to focus on costs.
Investment advice
We expect the company's net profit to be 14.32/15.30/1,613 billion yuan respectively, with a growth rate of 7.16%/6.85%/5.36%, corresponding to PE 22/20/19X (market value of 31.2 billion yuan) on March 29, respectively, maintaining the “buy” rating.
Risk warning
The risk of fluctuations in consumption scenarios, the risk of sales of large single products falling short of expectations, and the risk of large fluctuations in raw material prices.