Core views

As a leading beer company in Guangdong Province, the company's market share has been stable for a long time, local consumption capacity is strong, and high-end is leading the country. In an environment where the industry base is generally high in Q1 2024, the company still achieved a sharp rise in volume and price, exceeding the industry's performance. On the product side, the company's pure products have maintained relatively rapid growth, driving the company's tonnage price to continue to rise, and the trend of structural upgrading is clear. On the cost side, the prices of packaging materials such as aluminum, corrugated paper, and glass fell year on year. Australia and wheat were cancelled, barley costs fell, and the company's profitability is expected to be further released in 2024.

occurrences

Company releases report for the first quarter of 2024

In Q1 2024, the company achieved operating income of 1,108 billion yuan, a year-on-year increase of 7.05%, net profit to mother of 121 million yuan, an increase of 39.37% year-on-year, and net profit after deducting non-attributable net profit of 104 million yuan, an increase of 45.79% over the previous year.

Brief review

Volume and price have risen sharply, and high-end products have performed brilliantly

In 2024, Q1 Company sold 263,800 tons of beer, up 0.77% year on year, sales of premium beer products increased 15.05% year on year, and high-end single products represented by 97 pure students increased significantly. Benefiting from structural upgrades, the company's 24Q1 tonnage price was 4,201 yuan/ton, an increase of 6.2% over the previous year. The base business in South China has strong consumption capacity and sufficient momentum for structural upgrading. The company's volume and price have risen sharply, and its performance is outstanding.

Cost pressure continues, and rate optimization enhances profitability

In 2024, the company's gross profit margin was 42.13%, up 1.35pcts year on year. The main reason was the company's product structure upgrade. The increase in tonnage price was higher than the tonnage cost. 24Q1 companies' ton cost was 2,431 yuan/ton, up 3.8% year on year. The sales expense ratio was 16.62%, up 1.27 pcts year on year, and the management expense ratio was 8.03%, down 0.39 pcts year over year. In addition, the company's asset impairment losses decreased by 13.6542 million yuan year-on-year, mainly due to a reduction in inventory price reduction preparations. In the end, the company's net interest rate to mother was 10.91%, up 2.53 pcts year on year, and 9.41% after deducting net income from mother, up 2.5 pcts year on year.

Guangdong beer faucet, sufficient upgrade power

As a leading beer company in Guangdong Province, the company's market share has been stable for a long time, local consumption capacity is strong, and high-end is leading the country. In an environment where the industry base is generally high in Q1 2024, the company still achieved a sharp rise in volume and price, exceeding the industry's performance. On the product side, the company's pure products have maintained relatively rapid growth, driving the company's tonnage price to continue to rise, and the trend of structural upgrading is clear. On the cost side, the prices of packaging materials such as aluminum, corrugated paper, and glass fell year on year. Australia and wheat were cancelled, barley costs fell, and the company's profitability is expected to be further released in 2024.

Profit forecast: The company is expected to achieve revenue of 57.92, 62.15, and 6.634 billion yuan in 2024-2026, and achieve net profit of 7.32, 8.51, and 942 million yuan, corresponding to PE of 25X, 22X, and 20X in 24-26, maintaining a “buy” rating.

Risk warning:

1. Risk that high-end products fall short of expectations: The industry has entered an era of high-end development, and enterprises have raised their profit levels by promoting sales of high-end products.

Currently, competition in the premium beer market is fierce. If the company's promotion of high-end products is blocked, profits will fall short of expectations.

2. Risk of fluctuations in raw material prices: Raw materials such as beer ingredients and packaging materials account for most of the cost of beer production, and rising raw material prices will significantly reduce the profit level of enterprises. The current cost of barley has declined from a high point. If the price of raw materials fluctuates in the future, the price increase that exceeds expectations will cause the company's profit to fall short of expectations.

3. The recovery in market demand falls short of expectations: since 2023, beer consumption places such as restaurants have gradually recovered. If the pace of restoration falls short of expectations, it will affect the company's product sales.