Incident: Kweichow Moutai released its 23rd annual report. During the year, the company achieved total operating revenue of 15.560 billion yuan, an increase of 18.04% over the previous year; net profit attributable to shareholders of listed companies was 74.734 billion yuan, an increase of 19.16% over the previous year.
The annual performance target for '23 was exceeded with high quality. Maotai liquor and wine series went hand in hand: in '23, the company successfully completed the 15% gross revenue growth target set at the beginning of the year. In the fourth quarter of '23, Maotai's total revenue was 45.244 billion yuan. Q4 single quarter increased 19.8% year-on-year, up 6.66 pcts month-on-month.
Among them, Maotai Liquor's 23Q4 revenue was 39.32 billion yuan, up 17.6% year-on-year in a single quarter, and the revenue of the 23Q4 series was 5,036 billion yuan, up 48.19% year-on-year in a single quarter. The increase in Maotai Liquor's revenue in the fourth quarter is expected to be mainly related to the November Feitian price increase. We speculate that the increase in the growth rate of the series wine may mainly be related to the company's sales volume of 1935 in the fourth quarter.
Profitability is excellent, and direct sales channels continue to expand: according to the annual report for 2023, the company's gross margin was 91.96%, up 0.09pct year on year; net sales margin was 52.49%, slightly down 0.19pct from last year, and the overall profitability of the company was excellent. Direct sales channel revenue in '23 was 67.23 billion yuan, up 36.16% year on year, and agent revenue was 79.986 billion yuan, up 7.52% year on year. We speculate that the high-quality increase in direct sales revenue may be related to the increase in iMaotai's revenue.
The 24-year target setting is reasonable and scientific, and the probability of reaching the target for the whole year is high: the company's main goal for 2024 is to achieve a 15% increase in total revenue over the previous year, which is in line with the target set in early 2023. Benefiting from the price increase in November 23 and the continued promotion of products, channels, brands, and terminals, we expect a high probability of achieving our performance targets for the full year of '24.
Wholesale prices are basically stable, and medium- to long-term layout opportunities are highlighted: 4.10 Feitian's full box/bottle price was 2,70/2505 yuan respectively. Channel profits are still abundant, and the joint stock company's toolbox to achieve its 2024 growth target is still sufficient. We believe that the current position may have ushered in medium- to long-term layout opportunities.
Investment suggestions: According to the adjusted profit forecast according to the company announcement, total operating income is expected to reach 1757.19/2050.99/239.412 billion yuan; 24-26 net profit to mother is expected to reach 871.39/1015.30/117.035 billion yuan; and EPS is expected to achieve 69.37/80.82/93.17 yuan in 24-26. The current stock price is 24.7/21.2/18.4 times PE, respectively. Maintain a “buy” rating.
Risk warning: Economic recovery falls short of expectations, industry policy risks, food safety issues, etc.