Incident: The company released its 2024 quarterly report. 2024Q1 achieved revenue of 4.29 billion yuan (+7.2% YoY), net profit to mother of 452 million yuan (+16.8% YoY), and net profit of 446 million yuan (YoY +16.9%). The company's revenue grew rapidly, and net profit to mother increased more than expected.
The volume and price of beer have increased rapidly, and the share of revenue from premium products has steadily increased. 2024Q1's beer revenue grew 6.59% year on year, and the overall sales volume reached 866,800 kiloliters (+5.25% year over year). The growth rate was leading the industry. The tonnage price of beer was 4,820 yuan (+1.3% year over year), maintaining a steady upward trend under a high base. By product grade, the company's 2024Q1 revenue of high-end (price above 8 yuan) /mainstream (4-8 yuan) /economy (4 yuan or more) was 25.7/15.2/0.9 billion yuan respectively, with a year-on-year growth rate of +8.3%/+3.6%/+12.4%. Among them, high-end products accounted for 61.6% (+1pct year on year). The structure continued to upgrade. Sales of economic beer increased 1.7% year on year, and the price increased 10.5% year on year. Looking at the subregion, the revenue of 2024Q1 companies in the northwest region/central district/southern region was 11.6/18.1/1.21 billion yuan respectively, up 3.2%/7.1%/9.3% year-on-year. The central and southern regions benefited from accelerated channel expansion and achieved relatively rapid growth.
Cost reduction results are remarkable, and profitability continues to increase. 2024Q1's beer ton cost was 2,580 yuan, -3.3% year over year. Significant cost optimization and product structure upgrades increased 24Q1 gross margin by 2.7 pct to 47.9% year over year. The 2024Q1 company's sales expense ratio is 13.1%, +0.2pct year on year. As the peak operating season gradually approaches, the company may increase marketing and channel investment. We expect the cost rate to remain flat, with a management fee ratio of 3.1%, flat year over year, financial expenses ratio -0.2%, +0.1 pct year on year, income tax rate 18.8%, +0.4 pct year on year, and steady cost control. 2024Q1 net profit margin increased by 0.9 pct to 10.5% year-on-year, optimizing profitability.
The product matrix is diverse, the big city plan emphasizes deep cultivation, and the dividend ratio is industry-leading. 2024Q1 continued the sales trend since the Spring Festival and performed well. Looking ahead to the whole year, the company's rich product matrix represented by Wusu/Lebourg/Chongqing will continue to advance, and this year it will focus on promoting the nationalization process of the Chongqing brand.
On the channel side, the company will focus more on intensive cultivation. Major cities plan to expand to 100 cities (9 more cities compared to the end of 2023), and the number of high units in revenue is expected to increase in 24 years. On the cost and expense side, although the Foshan plant will be put into operation one after another and Beijing A will increase some discounted costs, considering the reduction in cost pressure on raw materials such as barley and packaging materials, supply chain optimization will also drive down costs and transportation costs. We expect that the cost per ton will improve year over year 24, and there is still room for improvement in profit margins. Furthermore, the company has emphasized shareholder returns over the years, and the dividend rate is among the highest in the food and beverage industry. We expect the company's dividend rate to remain above 4% in 2024.
Profit forecast and investment rating: Based on the above assumptions and the quarterly report's performance exceeding expectations, we raised the company's 2024-26 net profit of 15.0/16.2/1.73 billion yuan (the 2024-26 net profit CAGR was 7.4%, the previous value was 14.7/15.9/1.70 billion yuan), and the latest closing price corresponding to 2024-26 PE was 22/20/19 times. We continue to be optimistic about the certainty and growth of the company's performance, and maintain an “gain” rating.
Risk warning: industry competition; scenario recovery and structural upgrades falling short of expectations; fluctuating raw material costs; food safety and public opinion risks.