Incident: The company released its 2023 annual report. During the reporting period, the company achieved total revenue of 15.56 billion yuan, +18.0% year on year, net profit to mother of 74.73 billion yuan, +19.2% year on year. Among them, Q4 achieved total operating income of 45.24 billion yuan, +19.8% year over year, and net profit to mother of 21.86 billion yuan, +19.3% year over year.
Comment: The annual business target was exceeded. The volume and price of Maotai liquor rose sharply, and direct sales channels led the growth.
Actual revenue for 2023 surpassed the growth plan of about 15% at the beginning of the year. At the same time, revenue and profit exceeded previously disclosed performance forecasts, and overall performance slightly exceeded expectations. By product, the revenue of the company's Maotai liquor/series wine in '23 was +17% (volume +11%, price +6%)/+29% (volume +3%, price +26%), respectively.
The increase in sales volume of Maotai liquor reached more than double digits. For the first time since 2018, the increase in tonnage prices is expected to increase mainly due to the increase in the share of direct sales channels. At the end of 23, the price increase contribution is expected to be reflected slightly in 23Q4. The price increase effect is expected to be realized more significantly this year; the series wine series continues to grow faster, and sales are expected to increase slightly due to the company's focus on core single product strategies such as 1935, Han Sauce, and Prince Liquor. Last year, sales surpassed 11 billion yuan, and successfully reached the 10 billion single product category in 2 years. Highlight the company's strong brand strength and ability to operate new products. By channel, the company's direct/wholesale channel revenue was +36%/+8%, respectively, and the share of direct management increased by 5.8pct to 46%. Among them, iMaotai achieved revenue of 22.37 billion yuan and YOY +88%, accounting for 15%. In terms of production, production of Maotai liquor/series wine was 57,200 tons/42,900 tons respectively, an increase of 0.7%/22.4%. Sales of base wine are expected to ease in 2025.
Gross margin and profitability were relatively stable, and investment in sales expenses increased year-on-year. The company's gross margin of alcohol in 2023 was 92.11%, +0.11pct year-on-year, mainly driven by an increase in the share of direct sales channels. The sales/management/ R&D/ finance expense ratios were 3.1%/6.5%/0.1%/-1.2%, compared with +0.5pct/-0.6pct/+0.0pct/-0.1pct. The increase in sales expenses was mainly due to the same 26% increase in the company's advertising expenses, and the basic stability of employee remuneration led to a prominent effect on the scale of management expenses. The company tax and additional rate was 14.8%, +0.3 pct year over year. Overall, the company's net sales profit margin was 52.5%, -0.2pct year on year. In terms of cash flow indicators, repayments for products sold in 2023 increased by 16.4%, which is basically in line with the revenue side. The company's contract debt at the end of the reporting period was 14.13 billion yuan, 1.34 billion month-on-month/+2.74 billion yuan, respectively. The leading indicator was steady.
In 2024, the company plans to increase its total revenue by about 15% year over year. We believe that under the effect of the price increase, the company's volume and price strategy will be more relaxed this year. Pufei's price increase is expected to contribute about 5% to the tonnage price of Maotai wine. Currently, non-standard products such as Longmao and boutique products will continue to contribute in volume. Under multiple toolboxes, we believe it is expected to achieve growth goals with high quality, dispelling previous market questions about expectations of deceleration.
Profit forecast: The company's net profit for 2024-2026 is expected to be 88.06 billion, 102.33 billion, 118.22 billion, an increase of 17.8%/16.2%/15.5%, respectively. The corresponding PE is 24x/21x/18x, respectively, maintaining the purchase rating.
Risk warning: macroeconomic downturn, impact of industry policies