Core performance: The company achieved revenue of 31.93 billion yuan (yoy +21.8%) in 23 years; realized net profit of 10.44 billion yuan (yoy +28.9%). In 23Q4, revenue and net profit to mother increased by 27.4% and 2.0%, respectively. In 24Q1, the company achieved revenue of 15.34 billion yuan (yoy +20.9%); realized net profit of 6.26 billion yuan (yoy +30%) to mother.
The Blue and White series led the upgrade, with strong growth south of the Yangtze River. By product, in 23 years, the company achieved revenue of 23.203 billion yuan (yoy +22.6%), of which the blue and white series sales accounted for 46%, with prominent high-end brand highlights; revenue from medium- and high-priced alcoholic beverages accounted for 73.1% (yoy+0.4pct) of liquor revenue. Volume and price split, and the company's liquor sales volume and tonnage price increased 16.3% and 4.8%, respectively, year on year in '23. In 24Q1, medium- and high-priced alcoholic beverages achieved revenue of 11.86 billion yuan (yoy +24.9%), accounting for 77.5% of liquor revenue, and the structure continued to be optimized. By region, in '23, the company's revenue within the province was 12.08 billion yuan (yoy +20.4%) and revenue from outside the province was 19.66 billion yuan (yoy +22.84%). The market that reached the level of 1 billion yuan outside the province continued to increase. The core market south of the Yangtze River increased by more than 30% year-on-year, and the company's nationalization process was further expanded. In 24Q1, revenue within and outside the province increased by 11.4% and 27.6% year-on-year. At the end of 24Q1, the total number of dealers increased by 71 over the same period last year. As of the end of 24Q1, the company's contractual debt was 5.59 billion yuan (yoy +34.1%), supporting subsequent performance growth.
The advertising cost rate has decreased, and profitability has increased. The company's gross margin in '23 was 75.3% (yoy-0.1pct), and the sales and management expenses ratio decreased by 2.9 pct and 0.9 pct year-on-year. In 24Q1, the company's gross margin was 77.5% (yoy+1.9pct); sales expenses ratio was 7.5% (yoy-0.5pct). Taken together, the company's net interest rate in '23 was 32.8% (yoy+1.6pct), and 24Q1 was 40.9% (yoy+2.8pct).
Terminal and price control have improved, and sales volume within and outside Qinghua Province has increased. Looking at individual products, Bofen will increase its sales in the nurturing market in '24 and continue to create an atmosphere for the consumption of fragrant liquor, while in mature markets, it will focus on stable quantities and improve its product structure upward. As the top 10 billion single product, Blue and White 20 is expected to continue to break through across the country, and the core market south of the Yangtze River is growing strongly. The company is expected to exceed the 2024 revenue target of 20% year-on-year growth as disclosed in the annual report.
Considering that the company Blue and White 20 is leading the upgrading of national products, the overseas market is growing strongly, increasing revenue and gross profit margin for 24-25 years. We forecast the company's EPS for 24-26 to be 10.80, 13.15, and 15.53 yuan respectively (the original forecast was 10.52 and 12.67 yuan for 24-25). Comparable to the company's 24-year PE, 22 times. Considering that the company's performance is highly deterministic, a 25% valuation premium was maintained, corresponding to 28 times PE in 24, and the target price was 297.00 yuan, maintaining the purchase rating.
Risk warning: Macroeconomics falls short of expectations, expansion outside the province falls short of expectations, risk of food safety incidents.