Volume and price are rising rapidly, and structural improvements are expected to unleash profit elasticity

24Q1 revenue/ net profit attributable to mothers/ net profit excluding non-attributable net profit of 11.1/1.2/100 million yuan, +7.1%/+39.4%/+45.8% year-on-year. In terms of volume price, the total sales volume of 24Q1 beer was 264,000 tons (+0.8% year over year). Scenes such as drinking and entertainment were repaired during the Spring Festival, and the revenue per ton of alcohol was +6.2% to 4201.2 yuan. Thanks to the increase in sales volume of the company's high-end single products represented by 97 pure students (+15.1% year over year), structural upgrades continued. On the profit side, under cost pressure (Q1 ton cost +3.8% YoY), the company relied on high-end, strengthened procurement management, reduced fees and increased efficiency to drive 24Q1 gross margin/net margin +1.3/+2.5pct year over year. Looking ahead to 24 years, I am optimistic that the company's sales potential will continue, and structural upgrades will drive profit release. We expect EPS of 0.35/0.41/0.48 yuan for 24-26. Referring to the 24-year average PE 28x (Wind agreed expectations), we will give 24-year 28xPE with a target price of 9.80 yuan to “increase our holdings”.

Volume and price soared in 24Q1, and premium wines performed well

24Q1 achieved sales of 264,000 tons of beer, +0.8% year-on-year, and revenue of tons of alcohol increased 6.2% year over year to 4201.2 yuan. Thanks to the continuous restoration of catering and entertainment channels during the Spring Festival, sales volume continued to grow steadily; revenue for tons of alcohol continued to increase, mainly due to the acceleration of structural upgrading. 24Q1 sales of high-end products represented by 97 Chunsheng were +15.1% year-on-year. As terminal recognition continued to increase, sales accelerated, and prices rose sharply Profit release period. Looking ahead to 24 years, the company's South China base market has strong consumption capacity, forming the core support for the promotion of high-end products. The company continues to enhance brand penetration through structural upgrades and channel innovation.

Cost pressure continues, and structural optimization drives profit release

24Q1 gross profit margin was 42.1%, +1.3 pct year on year, beer ton revenue/ton cost +6.2%/+3.8%. The company actively responded to rising cost pressure by optimizing the product structure and strengthening procurement management; the 24Q1 sales expense ratio was 16.6%, +1.3 pct year over year, and market expenses gradually recovered as consumption scenarios were repaired; the management expense ratio was 8.0%, -0.4 pct year on year; in addition, Q1 company's asset impairment loss decreased by 136.542 million yuan year on year (revenue share -1.5 pct year on year), mainly inventory Preparation for price drops was reduced, and in the end, a net non-net interest rate of 10.9% was recorded, +2.5pct compared to the previous year. In 2024, the company will accelerate the collaborative development of its two main businesses (beer brewing and beer culture industry), rely on state-owned enterprise reform, use structural upgrades as a starting point, and focus on cost control, and do a good job of opening up, saving money, and increasing efficiency. Profits are expected to continue to be unleashed.

Based in South China, upgrades continue, and maintain the “gain” rating

Considering the company's asset depreciation and rapid structural upgrade, we raised our profit forecast to give 24-26 EPS 0.35/0.41/0.48 yuan (0.34/0.39/0.45 yuan), and give 24-year 28xPE with a target price of 9.80 yuan (9.52 yuan previously), maintaining the “gain” rating.

Risk warning: Food safety, the high-end process falls short of expectations, and market competition exceeds expectations.