The company's Q1 alcohol revenue increased by 12.3%, which is basically in line with the annual alcohol growth target. Structurally, ordinary wine is growing faster. Qingyu products are basically flat year over year, and high-end production still needs to be strengthened. Considering the low Q1 base and subsequent quarterly base increase, the annual growth target is expected to be difficult. Focus on the subsequent recovery in high-end business demand and consumer development for enterprises. On the profit side, with the commissioning of the Rice Wine Industrial Park, the increase in depreciation is expected to affect gross margin performance. Expense rate investment is expected to rise steadily and slightly. Considering that the high-end progress falls short of expectations, the 24-25 EPS forecast was lowered to 0.52 or 0.26 yuan to maintain the “increase in holdings” rating.
24Q1 revenue and net profit to mother increased by 10.74% and 5.34%, respectively. The company released its 2024 quarterly report. Q1 achieved revenue of 567 million yuan, a year-on-year increase of 10.74%, net profit to mother of 62 million yuan, an increase of 5.34% year-on-year, and net profit after deducting non-return to mother of 61 million yuan, an increase of 5.32% year-on-year, lower than previous expectations. 24Q1 sales revenue was 474 million yuan, up 17.26% year on year, faster than revenue growth. It was mainly due to a sharp decline in advance receipts and payables in the same period last year. Net operating cash flow declined by 15.38%, mainly due to increased tax payments.
Alcohol revenue increased by 12.29%, and high-end growth fell short of expectations. The 24Q1 company's main alcohol revenue was 560 million yuan, up 12.29% year on year. Mid-grade liquor/regular wine achieved revenue of 3.97 to 163 million yuan respectively, +10.03%/18.18%. On the one hand, the growth rate of medium- and high-end liquor fell short of expectations. On the one hand, business demand was weak. On the other hand, rice wine was still in the early stages of consumer education, and market penetration outside of Jiangsu, Zhejiang, and Shanghai was dominated by ordinary wine.
Looking at the subregions, Q1 Shanghai/Zhejiang/Jiangsu/other regions achieved revenue of 1.16/1.64/0.43/230 million yuan, respectively, or +9.98%/+10.32%/+4.93%/+19.53% over the same period, continuing to promote the nationalization of rice wine in regions other than Jiangsu, Zhejiang, and Shanghai. The number of dealers in 24Q1 was 1905, an increase of 37 and a decrease of 48. This is a normal fluctuation.
The structure dragged down gross margin slightly, and the cost ratio rose steadily slightly. The 24Q1 company achieved a gross profit margin of 36.54%, a year-on-year decrease of 0.07pct. The growth rate of high-end wine was lower than the overall rate. The rice wine industrial park is currently in a small-scale trial operation state, and the impact on gross margin has not yet been reflected. The 24Q1 sales expense rate/management expense rate/ R&D expense ratio were 12.48%/5.20%/1.42%, respectively, +0.26/+0.11/+0.11pct. The company finally achieved a net interest rate of 10.93% to mother, a year-on-year decrease of 0.56pct.
Investment advice: Q1 is growing steadily, high-end technology needs to be cultivated, and the “gain” rating is maintained. The company's Q1 alcohol revenue increased by 12.3%, which is basically in line with the annual alcohol growth target. Structurally, ordinary wine is growing faster. Qingyu products are basically flat year over year, and high-end production still needs to be strengthened. Considering the low Q1 base and subsequent quarterly base increase, the annual growth target is expected to be difficult. Focus on the subsequent recovery in high-end business demand and consumer development for enterprises. On the profit side, with the commissioning of the Rice Wine Industrial Park, the increase in depreciation is expected to affect gross margin performance. Expense rate investment is expected to rise steadily and slightly. Considering that the high-end progress falls short of expectations, the 24-25 EPS forecast was lowered to 0.52 or 0.26 yuan to maintain the “increase in holdings” rating.
Risk warning: New product expansion falls short of expectations, phased intensification of industry competition, peripheral market expansion falls short of expectations, etc.