Introduction to this report:

At the same time as 24Q1's sales volume is growing, the tonnage price performance is good. Continued sales of pure raw products drive the rapid growth of high-end products, and structural upgrades and marginal improvement in sales margins have boosted profits.

Key points of investment:

Investment advice: Maintain an “Overweight” rating. Maintain the 2024-26 EPS forecast of 0.34, 0.39, and 0.43 yuan, and maintain the target price of 10.2 yuan.

The performance was in line with expectations. 2024Q1 achieved revenue of 1,108 billion yuan, +7.05% year over year, net profit of 121 million yuan, +39.37% year over year, net profit without return to mother of 104 million yuan, and +45.79% year over year. Considering the 23Q4 year-on-year loss, we expect that the quarterly gap factor may increase in the lower profit base in the off-season.

Structural upgrades continue, promoting month-on-month improvements. The company's 24Q1 beer sales volume +0.77% to 263,800 tons, tonne revenue +6.2% to 4201 yuan, and tonnage cost +3.8%, with sales volume of high-end beer products +15.05% YoY. It is expected that the structure will continue to upgrade and improve sales discounts under the relatively rapid growth of pure raw products, thus driving gross margin +1.3 pct year on year; 24Q1 sales/management/R&D/finance rates were +1.3/-0.3/-0.1 pct year on year, and the gross sales margin was +0.1 pct year over year, plus tax and additional revenue share +0.1 pct year on year, plus tax and additional revenue share Receive The ratio was -0.28 pct to 9.05% year over year, asset impairment losses decreased by 13.654 million yuan year on year, preparation for falling inventory prices decreased, other income increased by 5.24 million yuan year on year, mainly due to increased income from other subsidies related to operations. Ultimately, net profit margin was +2.5 pct to 10.9% year on year.

Raise the structure and expand the region to promote growth, and cost improvements can be expected. As the company further optimizes its production capacity layout, the province's ready-to-drink channels and market development in South China are expected to gradually advance. Pure products are expected to maintain a relatively rapid growth rate, and the trend of structural upgrading is expected to continue. The 24-year decline in barley raw material costs is expected to help the company gradually improve its cost per ton.

Risk warning: macroeconomic fluctuations, increased market competition, rising raw material costs