Incident: The company released the 23-year performance report and 24Q1 pre-profit announcement.
Comment:
The company's profitability increased quarterly. 1) Revenue of 1,469 million (+24%) for 23 years, including 982 million (+43%) for liquor and 417 million (-14%) for pharmaceuticals. Net profit attributable to mother - $22 million (-187 million for the same period last year), net profit from non-return mother - $57 million (-206 million for the same period last year). It is in line with the lower end of previous performance forecasts. 2) 23Q4 revenue of 396 million (+7%), of which liquor was 285 million (+24%), and net profit to mother of 13 million (-51 million in the same period last year). 3) For 24Q1, we expect revenue of 650 million yuan (corresponding growth rate of 50%), and the company expects net profit of 0.13-019 million yuan (same period last year - 41 million yuan), deducting non-return 0.16 million yuan (same period last year - 43 million yuan).
The new product Fu16 was launched, and the product system was further improved. 1) According to the company's announcement, on March 9, the company's directors, general manager and deputy general manager each completed an increase of 20,000 shares. After the increase was completed, General Manager He Xiuxia held 65,000 shares, and Vice President Liu Fudang held 40,000 shares. This increase in holdings is beneficial to boosting confidence.
2) According to reports from the wine industry, on March 11, the China Liquor Industry Association Group Standards Review Committee issued a “Notice on Approving the Issuance of T/CBJ2114 “Golden Seed Fuhexiang Liquor”. 3) According to Zhijiu reports, Fu 16 was launched on March 28, positioning it as a sub-high-end and gradually improving the product system.
There is misplaced competition within the province, and it is expected that performance will gradually be released. 1) In 2023, the company successfully concluded the “Seven Must-Win Battles” with the theme of organizational restructuring and channel transformation. The channel layout within the province met 100% of the standards, and the channel layout around Anhui and the outside of the province completed about 80%; Anhui Province achieved terminal coverage of 173,000, of which 730,000 were premium. We believe that the trend of consumption upgrading in Anhui Province is still strong. With the further improvement of the company's product system and channel layout expansion, the company is expected to gradually increase its share and performance by relying on the misplaced competitive advantage of subhigh-end prices with niche flavors and boxed wine below 100 yuan.
Profit forecast and investment rating: We lowered our 23-year EPS forecast to -0.03 yuan and maintained the 24-25 EPS forecast of 0.49/0.80 yuan. Maintain a “buy” rating.
Risk factors: New product promotion falls short of expectations, industry competition intensifies