Key points of investment
Event: 2023 revenue/net profit to mother was $331.3/10.02 billion, respectively, +10.0%/+6.8% YoY. 2024Q1 revenue/ net profit attributable to mother was 162.5/6.06 billion yuan, +8.0%/+5.0% year-on-year.
Revenue grew by double digits in '23, achieving profits of 10 billion dollars. The company's revenue in '23 was +10% year-on-year, and there was a relative slowdown in the fourth quarter. On the one hand, the company advanced its battle mission to confirm the annual repayment task ahead of schedule in October-November; 2, the personnel structure in the province was still changing in 2023. By product, the company's high-end and regular wines reached 28.539 billion yuan and 3.95 billion yuan respectively, +8.82%/+20.7% compared with the same period, and the share of medium to high-end alcohol increased to 87.8%. Looking at the subregions, sales revenue within and outside the province reached 143.93 billion yuan and 18.096 billion yuan, respectively, +8.05%/+11.85% compared with the same period last year. On the profit side, the company's annual growth rate of Tianzhilan and Dream 6+ was relatively good. The gross margin continued to rise to 75.25%, +0.65pct year on year; the tax and additional rate was 15.91%, up 1.33pct year on year, the sales expenses ratio was 16.26%, +2.38pct year on year. The main companies increased advertising, rebate red envelopes, etc. to promote marketing, and the net sales margin was 30.25%, down 0.94 pct year on year.
24Q1 progressed steadily, with a slight year-on-year decline in net interest rates. Q1 revenue was +8.03% year over year, in line with expectations. The company maintained a positive layout during the Spring Festival and increased support for various products at banquets. In particular, Nanjing Crystal Dream's banquet had increased its penetration compared to itself. Haizhi Blue benefited from consumer resilience in the popular price range and achieved good turnover. On the profit side, the profit growth rate was slightly lower than expected. Among them, due to the stronger basic spending power in the 100-300 yuan price range, and the combined effects of increased Q1 code scanning and red envelopes, the company's gross margin achieved 76%, a year-on-year decrease of 0.5 pct, and the sales expense ratio increased to 8.52%. The gross sales margin was 67.48%, narrowing 1.7 pcts year on year, and the net sales margin was 37.24%, down 1.1 pct year on year.
Cash flow performance is relatively healthy, and the increase in dividend rates highlights cost performance. The company's repayment policy was adjusted flexibly. In order to prepare for a good start to the Spring Festival, the cash received from 23Q4+24Q1 sales products was 22.2 billion yuan, +13% over the same period last year. The net cash flow from operating activities continued to increase, and the cash flow performance was relatively healthy. As of the end of Q1, the company had contractual liabilities of 5.815 billion yuan, down 5.29 billion yuan from the end of '23. The main reason for this was a month-on-month decline after confirming some revenue in the first quarter. The company's dividend rate increased from 60% to 70% in 2023, highlighting the cost performance ratio.
Profit forecast and investment rating: Taking into account the liquor consumption environment and the competitive environment in the province, we adjusted the company's 24-25 net profit to be 104/115 billion yuan (previous value: 123/143 billion yuan), adding 26 billion yuan of net profit to mother. Currently, PE corresponding to 24-26 is 14, 13, and 11X. Considering Yanghe's steady business pace and significant increase in dividend rate, highlight the cost performance ratio, and maintain the “buy” rating.
Risk warning: competition within the province intensifies, development outside the province falls short of expectations, food safety issues