Introduction to this report:
The company successfully concluded 2023, and nationalization continued, and the 2023Q4+2024Q1 profit growth rate was in line with expectations; 2024Q1 high-quality growth continued, and the company's competitive advantage continued to be highlighted in the latter half of the liquor inventory cycle, and the certainty of performance strengthened.
Key points of investment:
Maintain the “Overweight” rating and maintain the target price of 325.5 yuan. According to the company's quarterly report, the profit forecast for 2024-2025 was raised, and the profit forecast for 2026 was increased. The estimated EPS for the period is 11.04 yuan (+0.19 yuan), 13.70 yuan (+0.62 yuan), and 16.72 yuan, respectively.
2023 came to a successful conclusion, and the 23Q4 profit center was smoothed out. In 2023, the company achieved high-quality growth, supported by the province, with high growth in Yangtze and Jiangnan outside the province, and continued nationalization; judging from the product structure, revenue from blue and white wine, waist, and glass bottle fenjiu increased by 30% +, 20% +, and 15% + respectively during the period, and the wine series is still being adjusted. The company ended successfully in 2023. Looking at 2023Q4 and 2024Q1 net profit combined, the total net profit growth rate for the two quarters was 27% year-on-year, which is basically in line with the expected profit growth center.
The 2024Q1 trend is positive, and high-quality growth continues. The company's 2024Q1 revenue also increased by 20.94%, in line with expectations. Marketing system reforms will continue to be implemented during the period, and channel-side control will improve; we expect the 2024Q1 blue and white series to grow at more than 25%, with blue and white 20 and blue 25 showing relatively high growth. 2024Q1's sales revenue also increased by 44.6%, cash flow performance was steady, and end-of-period contract debt was 5.59 billion yuan, which is still high in the historical range.
The competitive advantage continues to strengthen, reaffirming Fenjiu's core logic for 2024. We believe that in 2023, the company completed the marketing structure, continued improvement of the organizational hierarchy, and the company's marketing system has basically reached maturity; looking ahead, based on competition in liquor stocks and marginal pressure on high-end demand, Fenjiu's focus is on the market south of the Yangtze River and the Shanxi market, while the categories focus on the blue and white series and the Laobaifen series. The company continues to concentrate its share of benefits and strengthen its performance certainty.
Risk factors: management team changes, food safety, industrial policy adjustments, etc.