On April 28, 2024, the company disclosed its annual report for the year 23 and the quarterly report for the year 24. 1) In '23, we achieved revenue of 83.27 billion yuan, +12.6% year-on-year, and net profit of 30.21 billion yuan to mother, +13.2% year-on-year. 2) 24Q1 achieved revenue of 34.83 billion yuan, +11.9% year-on-year; net profit to mother was 14.05 billion yuan, +12.0% year over year, slightly exceeding market expectations.
Product-side and volume growth have been the core growth drivers for 23 years. In '23, Wuliangye/Other Liquors achieved revenue of 628.0/13.64 billion yuan respectively, with sales volume +18%/+28% (sales volume of Wuliangye products reached 38,700 tons), price difference was -4%/-13%, and gross margin was +0.1pct/-0.5pct, respectively; structurally, in '23, the company developed and sold 18 cultural wine products including Wanshoutan.
In terms of regional structure, the main sales area performed well. The West/East/Central Division achieved revenue of 262/224/13 billion yuan in 2013, +22%/+18%/+16% YoY, and the North/South Division achieved revenue of 81/68 billion yuan, or -9% YoY. In terms of channel layout, in '23, there were +81 Wuliangye dealers to 2,570, flavor dealers +159 to 814, specialty stores +32 to 1,662, and 26,000 new core terminals were added throughout the year.
The company's profitability remains stable. Net profit margin in '23 was +0.2pct to 36.3% year over year, with limited fluctuations in gross profit margin and expense ratio; 24Q1 gross profit margin and net profit margin were flat year over year, sales expenses ratio was +0.8 pct, and management expenses rate/tax and additional share were slightly reduced. In terms of repayment, the balance of contract debt at the end of 24Q1 was 5.05 billion yuan, or 490 million yuan, but it was significantly narrower than the same period last year. We calculated 23Q4+24Q1 revenue and contract debt variables at the end of Q1 compared to the 23Q3 end, and estimated +9.2% year-on-year ratio under the same caliber, which remained stable. In addition, fluctuations in the sales revenue growth rate are expected to be related to the repayment policy. The balance of receivables financing at the end of 24Q1 was $28.1 billion, +14 billion yuan over the previous month; the company's dividend rate increased to 60%.
As a leader in the price of 1,000 yuan, the company's deep-seated brand awareness is a solid barrier. The goal is to increase Wuliangye's brand value as the core and accelerate the return of prices to a reasonable return to brand value.
Considering that demand for high-end wine continues to weakly recover, we lowered the company's 25-year net profit of 7%, with an estimated revenue of +11%/+10%/+10% for 24-26; +12%/+11%, corresponding net profit to mother of 339/376/41.7 billion yuan, respectively; EPS was 8.73/9.69/10.75 yuan, and PE valuations corresponding to the current price of the company's stock were 17.4/15.7/14.2 times, respectively, maintaining the “buy” rating.
Macroeconomic pressure risk; industry policy risk; food safety risk.