Incident: Chongqing Brewery released its 2023 annual report. In 2023, it achieved revenue of 14.815 billion yuan, +5.53% year-on-year, net profit to mother of 1,337 billion yuan, +5.78% year-on-year, net profit of 1,314 billion yuan after deducting non-return net profit of 1,314 billion yuan, or +6.45% year-on-year. 2023Q4 achieved revenue of 1,786 billion yuan, or -3.76% year-on-year, net profit of -0.07 billion yuan, compared with 81 million yuan in the same period last year, net profit after deducting non-return to mother of -013 million yuan, compared with 73 million yuan in the same period last year.
The mainstream price band sales growth rate was relatively rapid, and the structural upgrade slowed slightly in the fourth quarter. The company's performance grew steadily in 2023, in line with the expectations of the previous performance report. The pressure on 2023Q4's performance was mainly due to the decline in tonnage prices. In terms of volume and price breakdown, the company's sales volume/ton price in 2023 was 2.9975 million kiloliters/4817.8 yuan, respectively, +4.93%/+0.49% compared with the same period last year. 2023Q4's sales volume/ton price were 345,800 thousand kiloliters/5165.28 yuan respectively, +4.76%/-8.13% year over year. The company's tonnage price drop in the fourth quarter was mainly due to:
1) Low trade-off strength of 2022Q4 has led to a high tonnage price base; 2) High-end product performance such as Usu and 1664 outside the border is under pressure. In terms of price, in 2023, the company's high-end, mainstream, and economy achieved revenue of 88.55/ 52.97/2,896 billion yuan, respectively, +5.18%/+5.64%/+10.06% YoY, premium/mainstream/economy sales volume +3.98%/+5.97%/+3.80%, premium/mainstream/economy tonnage price +1.15%/-0.31%/+6.03%. The volume and price of high-end products in Zhongleborg rose sharply. It is estimated that overall sales in Wusu will increase slightly, 1664 and overseas consumption Force and channel adjustments There was a decline, and the mainstream price band contributed to the biggest sales growth rate. From the price side, the company maintained a trend of structural upgrading throughout the year. Looking at the subregion, the Northwest District/Central District/Southern Region achieved revenue of 40.23/60.84/4.334 billion yuan respectively, or +1.10%/+3.01%/+13.74%, respectively, accounting for 27.86%/42.13%/30.01% respectively. The Southern Region is expected to maintain a high growth rate after the Foshan plant is put into operation, and the northwest region is expected to maintain a high growth rate after the Foshan plant is put into operation. The base market has clearly recovered.
Gross margin was under pressure due to the rise in the cost of tons and the slowdown in structural upgrades in 2023, and the outlook for 2024 is positive. In 2023, the company's gross profit margin was 49.15%, -1.33pct year on year. The cost per ton was 2,421 yuan/ton, +3.2% year-on-year. The decrease in gross margin was mainly due to the slowdown in structural upgrades and upward pressure on costs. Among them, 2023Q4 gross margin continued to decline to 48.79% due to product structure, -6.80pct year-on-year, and -1.74pct month-on-month. In 2023, the sales/management/ R&D/ finance rates were 17.10%/3.34%/0.18%/-0.41%, respectively, +0.53pct/-0.47pct/-0.61pct/-0.01pct, the net margin reached 18.30%, and -0.13pct y/y. In 2024, the company proposed medium to high single-digit revenue growth targets, using a 6+6 product matrix on the product side to continue to promote high-end strategies, launch the 1986 version of Green Usu to promote structural upgrading, promote brands such as Leborg and Chongqing nationally, and continuously innovate sales models on the channel side, such as strengthening channel distribution and grid optimization, and expanding new retail and online sales. Due to the cancellation of Australia's “double reverse” measures, barley prices are expected to continue to decline this year to drive cost improvements, but the Foshan plant will be put into operation in the second quarter. The additional depreciation and amortization will offset some of the cost reduction dividends, and the overall gross margin is expected to remain stable.
The company continues to increase its dividend rate, and high dividends boost market confidence. In 2023, the company plans to distribute a cash dividend of 1,355 billion yuan, with a dividend rate of 101.39%, which is a further increase from the dividend rate of 83.00%/99.58% in 2021/2002. The dividend rate corresponding to the current market value is 4.2%.
Investment advice: In the “Fast Sailing” phase of the new development strategy, the company promotes the growth of high-end products, accelerates the development of growth markets, and is expected to maintain steady growth in the future with the investment of new production capacity. The 2024-2026 EPS is expected to be 3.00/3.27/3.53 yuan, respectively, and the corresponding PE is 22x/20x/18x, respectively. Based on the 2024 results, the target price is 69.00 yuan, maintaining the “gain” rating.
Risk warning: Food safety risks, structural upgrades falling short of expectations, and increased risk of industry competition.