Core views
In 2023, Kweichow Moutai continued its strong growth momentum, actively increasing Moutai's market investment (+11.10%) and improving the wine series structure (gross margin +2.54pcts). Online iMoutai sales reached 22.374 billion yuan (+88.29%), revenue from other online platforms was 1,831 billion yuan, total annual revenue increased 18.04% year on year, and net profit margin increased 0.47 pct to 49.64% year on year. The performance exceeded expectations. In addition, in 2023, Maotai optimized its marketing strategy, strengthened core consumer cultivation and consumer interaction, and increased the sales expenses ratio by 0.50pcts to 3.09%, further consolidating the Maotai brand foundation. Looking ahead to 2024, the company has set a positive target of 15% year-on-year increase in total revenue. Considering that Flying Moutai has completed price increases and optimized structures for non-standard and series wine products, it is expected that high-quality growth will continue throughout the year.
occurrences
The company released its 2023 annual report.
In 2023, the company achieved total revenue of 15.560 billion yuan, a year-on-year increase of 18.04%, net profit to mother of 74.734 billion yuan, an increase of 19.16% year-on-year, and net profit after deducting non-return net profit of 74.753 billion yuan, an increase of 19.05% over the previous year;
Among them, in the fourth quarter, we achieved operating income of 45.244 billion yuan, a year-on-year increase of 19.80%, and realized net profit of 21.888 billion yuan, an increase of 19.33% over the previous year, and realized net profit without deduction of 21.937 billion yuan, an increase of 19.22% over the previous year.
Brief review
Structural optimization+channel reform potential, 23-year performance exceeded expectations
The company's alcohol business revenue in '23 was 147.219 billion yuan, an increase of 18.94% over the previous year. Looking at Q4 alone, alcohol revenue was 44.355 billion yuan, up 20.43% year on year. Annual performance exceeded expectations, and Maotai's growth resilience was highlighted.
By product, for the full year of '23, Maotai contributed 126.589 billion yuan to revenue, up 17.39% year on year. Series wine contributed 20.630 billion yuan to revenue, up 29.43% year on year; of these, 23Q4 Maotai contributed 39.320 billion yuan, up 17.60% year on year, and series wine contributed 5 billion yuan to revenue, up 48.19% year on year. In 2023, the company continued to optimize the product structure and increase the volume of high-value non-standard products. The price market-based reform targeted Fei Moutai; the series wine series, Maotai 1935, continued to perform well and surpassed 10 billion yuan after two years of listing. The single revenue of Maotai Prince Liquor exceeded 4 billion yuan, and the single product revenue of Han Sauce, Guizhou Daqu, and Lai Mao each exceeded 1 billion yuan, forming a trend of multiple single products.
In terms of volume and price breakdown, Maotai liquor achieved a sharp rise in volume and price in 2023, and structural upgrades and channel optimization jointly promoted an increase in tonnage prices. The annual sales performance of Maotai liquor increased by 11.10% to 42,000 tons, and the tonnage price increased 5.66% to 3.06 million yuan/ton; for series wine, the sharp increase in tonnage prices led to a sharp increase of 25.74% to 662,000 yuan/ton, and sales increased by 2.94% to 312,000 tons. The sales performance of Maotai 1935 was mainly driven by excellent sales performance of the large single product Maotai in 1935.
By channel, in '23, the company continued to release channel reform dividends. Direct sales contributed 67.233 billion yuan, up 36.16% year on year, and direct sales increased 5.77pcts to 45.67%. Among them, in '23, I Maotai contributed 22.374 billion yuan in revenue, up 88.29% year on year, contributing 58.76% of direct sales revenue growth, which is an important driving force for the increase in direct sales; in addition, other online platforms also contributed 1,831 billion yuan in revenue. Looking at Q4 alone, direct sales channels accounted for 47.40%, which was basically the same as the previous year (-0.10pct).
Increased gross margins+cost optimization, continuous improvement in profitability
In 2023, the company's gross profit margin was 92.12%, +0.03 pcts year on year, 49.64% year on year, +0.47 pcts year on year; of these, 23Q4 gross profit margin was 92.7%, year on year +0.67 pcts year on year, net profit margin 48.31% year on year, -0.19 pcts year on year; see details:
① Increased gross margin, mainly due to the optimization of the wine series structure. By product, the gross margins of Maotai Liquor and other wine series in 2023 were 94.12% and 79.76%, respectively, -0.07pcts and +2.54 pcts year-on-year, respectively. By channel, the gross margins of wholesale agents and direct sales in 2023 were 89.29% and 95.46%, respectively, +0.07pcts and -0.74pcts year-on-year, respectively. Looking at online platforms, iMaotai's gross profit margin was 96.09% in 2023, +0.83pcts compared to the previous year. The gross margin of other online platforms reached a high level of 95.95%.
② In 2023, the company's sales expense ratio was 3.09%, +0.50pcts; of these, in 2023Q4, the sales expense ratio was 3.51%, +1.14pcts year over year.
Throughout the year, Maotai increased its investment in marketing expenses, and strengthened consumer cultivation efforts for strategic single products such as precious products, vintage wine, and Maotai 1935. Activities such as “Maofen Carnival”, “Delicious Food Night”, and “Maotai 1935 · Seek China” strengthened interaction with consumers. By segment, advertising and market development expenses reached $3,641 billion in '23, an increase of 26.07% over the previous year.
③ In 2023, the management fee rate was 6.46%, -0.6 pcts year on year; of these, 23Q4 management fee rate was 8.83%, -0.29 pcts year on year. Major Maotai's revenue scale continued to rise, and the scale effect was evident.
By deepening market-based reforms, Maotai can be expected to grow at high quality in 2024.
In 2023, Maotai Liquor continued to deepen market-based reforms. In November, the factory price of the 53° Flying Sky was raised by 20%. Currently, the transaction price in the Flying Moutai market is around 2,800 yuan. The channel profit is rich, and the winery's price increase is relatively smooth. In terms of channels, innovations such as iMaotai, Xunfeng Platform, and third-generation specialty stores contributed significantly to the optimization of the company's channel structure. On the product side, non-standard products such as seasonal wine continued to unleash Maotai's investment value. In 1935, Maotai completed upgrades and broke through the 10 billion mark, launched a new product of Han Sauce (Inherited Ingenuity), and sorted out the classic price system for Golden Prince and Sauce-flavored Sauces.
Looking ahead to 2024, the company aims to achieve a 15% increase in total revenue over the previous year and complete fixed asset investment of 6.179 billion yuan. The company is expected to further market-based reforms, continue to strengthen the brand foundation, and drive the company's operations to continue to improve.
Profit forecast and investment suggestions: The company is expected to achieve revenue of 175,066 billion yuan, 2020.35 billion yuan, and 229.769 billion yuan in 2024-2026, +16.28%, 13.73% year-on-year; realized net profit of 87.014 billion yuan, 101,168 billion yuan, and 115.847 billion yuan, compared to +16.43%, +16.27%, and 14.51% year-on-year; corresponding EPS is 69.27 yuan, 80.54 yuan, 92.22 yuan; corresponding to 2024- The 2026 dynamic PE is 24.76X, 21.30X, and 18.60X, respectively.
Risk warning:
The recovery in consumer demand fell short of expectations. Economic growth has decelerated in the past two years due to factors such as the macroeconomic environment, and national income growth has also been affected. The pace of recovery in the short to medium term residents' income growth rate and the pace of increase in consumption power may fall short of expectations in the future.
The economic recovery fell short of expectations. 23 was a year of economic recovery, but the pace of improvement in corporate cash flow may be slower than expected, and the pace of recovery in demand for the company's products in high-end commercial alcohol consumption scenarios may fall short of expectations.
Food safety risks. In recent years, food safety issues have always been a hot topic of concern for consumers. Although enterprises in the industrial chain have continuously improved the level of production quality control, there are still risks related to food quality and safety due to the long industrial chain and many links and enterprises involved.
Risk of stock price changes. Capital market sentiment fluctuates, company expectations change, and there are situations where stock prices may fluctuate abnormally.