Core views:

Event: The company released its 2024 quarterly report. The company achieved total revenue of 46.48 billion yuan in 24Q1, +18.0% year-on-year; net profit to mother was 24.07 billion yuan, +15.7% year-on-year. Among them, Gimu's net profit growth rate was slower than revenue mainly due to tax and surcharges (+31.8% YoY in 24Q1) and sales expenses (+50.8% YoY in 24Q1).

Maotai and a series of wines are working together to increase the potential of the wholesale channel. By product, 24Q1's Maotai Liquor/ Series achieved revenue of 397.1/5.94 billion yuan respectively, or +17.7%/+18.4% year-on-year, respectively. By channel, the company's wholesale agents and direct sales channels achieved revenue of 263.2/19.32 billion yuan respectively in 2023, +25.8%/+8.5% year-on-year, respectively.

Gross profit margins have remained stable, and taxes and sales expenses have increased. In terms of gross margin, the company achieved a gross profit margin of 92.6% in 24Q1, which was basically the same. In terms of cost ratio, taxes and surcharges reached 7.20 billion yuan, increasing their share of total revenue from 13.9% in 23Q1 to 15.5%. The sales and management expenses ratio was 2.5%/4.4%, respectively, +0.5/-0.7pct year-on-year, respectively. Taken together, the 24Q1 company's net interest rate was 54.4% (-1.2pct year on year), mainly due to increased taxes and sales expenses. In addition, the company's 24Q1 sales revenue was +29.3% year-on-year, and the cash flow performance was good.

Adhere to steady progress and set a 15% revenue growth target in 2024. 2024 is a critical year for the company to achieve the goals of the “14th Five-Year Plan”. The company will anchor the group company's goals of “double first-class, three-breakthrough, and five-leapfrogging. According to the company's annual report, the company's management level anchors two major goals in 2024:

(1) Total operating income increased by about 15% over the previous year; (2) Fixed asset investment of 6.179 billion yuan.

Profit forecasting and investment advice. We expect the company's revenue for 2024-2026 to be 1757/2017/227.1 billion yuan, +17%/15%/13% year over year, and net profit to mother of 875/1012/114.7 billion yuan, +17%/13% year over year. Corresponding 2024-2026 PE is 25x/21x/19x. Considering that the company is a leader in the industry, it was given 30 times PE in 2024, with a reasonable value of 2090.78 yuan/share, maintaining a “buy” rating.

Risk warning. The macroeconomic downturn affects demand; large price fluctuations; food safety issues.