Revenue performance surpassed previous earnings forecasts and ended 23 years on a solid footing. In 2023, the company achieved operating revenue/net profit of 147.694/734 billion yuan, +19.01%/+19.16% year-on-year, exceeding the previous performance forecast. 2023Q4, the company achieved operating revenue/net profit of 444.25/ 21.588 billion yuan, +20.26%/+19.33% year-on-year. Contract debt at the end of Q4 was $14.126 billion, -8.70% YoY.
The increase in the volume of Maotai liquor reached the highest level in the past five years. The increase in the series of wines contributed to price increases driven by structural upgrades. In 2023, the company's Maotai Liquor/ Series achieved revenue of 126.589/20.630 billion yuan respectively, +17.39%/+29.43% year-on-year respectively, maintaining a steady structural state of Maotai Liquor and rapid growth in series wine. 2023Q4, the company's Maotai liquor/series achieved revenue of 393.20 billion yuan, respectively, +17.60%/+48.19% year-on-year, respectively. The high growth in the fourth quarter was the main reason why Q4 revenue performance exceeded expectations. Looking at volume and price breakdown, the sales volume/tonnage price of Maotai liquor in 2023 was +11.1%/+5.7%, respectively, the highest increase in volume in the past five years. We estimate that the sales volume/tonnage price of 100ml wine increased significantly; the sales/tonnage price of the series wine was +2.9%/+25.7%, respectively. The growth of the series wine series was mainly contributed by the increase in the tonnage price. We expect the increase in the internal structure of the series wine series was relatively rapid.
i Maotai took over e-commerce and KA, driving the share of direct sales to continue to increase. In 2023, the company's wholesale agents/direct sales channels achieved revenue of 799.86/67.233 billion yuan respectively, +7.52%/+36.16% year over year, accounting for 54.2%/45.5% of revenue respectively, and the share of direct sales increased by 5.7 pcts compared to 2022. Among them, in 2023, i Maotai contributed 22.374 billion yuan in revenue, +88.29% year on year, accounting for 15.1% of revenue, and +5.6 pcts year on year. The direct sales portion excluding i Maotai achieved revenue of 44.859 billion yuan, +19.64% year over year. Growth is gradually steady, and the increase in the share of direct sales channels mainly depended on i Maotai. At the end of 2023, the number of domestic/foreign dealers was 2080/106, a decrease of 4 or an increase of 1 compared to the end of 2022, and the overall distribution system was stable.
Profitability is stable, and sales expenses have increased slightly. This is expected to be due to increased efforts to market wine series. In 2023, the company's gross margin/net margin was 91.96%/50.60%, respectively, +0.10pct/+0.06pct, respectively. Profitability remained stable, and the total tax additional rate+period expense ratio was -0.13pct year over year. Among them, the sales expenses rate was slightly +0.49pct year over year. We speculate that this is due to the company's increased market-based actions for wine series, such as promotion and tasting.
Investment advice: According to the annual report, the 2024 operating target is to achieve a year-on-year increase in total revenue of about 15%. We believe that with Maotai's industry position and market control ability, the probability of active or passive deceleration is small in the current competitive environment, maintaining a judgment on the company's compound annual growth rate of 15% or more. We expect 2024-2026 to achieve revenue of 1740.73/2010.77/232,656 billion yuan, achieving net profit of 860.78/999.79/116.217 billion yuan. The current stock price corresponds to PE 25.0x/21.5x/18.5x, maintaining a “buy” rating.
Risk warning: Consumption tax implementation, wine series promotion falls short of expectations, demand recovery falls short of expectations