Event: The company released its 2023 annual report and 2024 quarterly report.
Comment:
The company successfully closed in 2023. The company achieved total revenue of 83.272 billion yuan in 2023, an increase of 12.58% over the previous year, and realized net profit of 30.211 billion yuan, an increase of 13.19% over the previous year. In the fourth quarter of a single quarter, the company achieved total revenue of 20.736 billion yuan, an increase of 14.00% over the previous year; net profit to mother was 7.378 billion yuan, an increase of 10.07% over the previous year. The company achieved double-digit growth in both revenue and profit in 2023, and the year ended smoothly. By product, in 2023, the company's Wuliangye products and other liquor products achieved operating revenue of 62.804 billion yuan and 13.643 billion yuan respectively, up 13.50% and 11.58% year-on-year respectively.
2024 was off to a good start. The company's sales performance during the Spring Festival was good this year, and sales in many places reached double digit growth. In addition to the positive growth of Pu Wu, low-grade Wuliangye, 1618, etc. are also doing well when scanning codes to open bottles, and the company successfully achieved a good start. With 2024Q1, the company achieved total revenue of 34.833 billion yuan, an increase of 11.86% year on year, and realized net profit of 14.045 billion yuan, an increase of 11.98% year on year. The company plans to maintain steady double-digit growth in total revenue in 2024. Steady performance in the first quarter lays a solid foundation for full-year results.
The company's profit level was steady in 2024Q1. Benefiting from product and channel structure optimization, the company achieved a gross profit margin of 75.79% in 2023, an increase of 0.37 percentage points over the previous year; the sales expense ratio, management expense ratio, and financial expense ratio were 9.36%/3.99%/-2.97%, respectively, an increase of 0.11 pct/decrease of 0.16 pct/ a decrease of 0.23 pcts over the previous year. Based on gross margin and expense ratios, the company achieved a net profit margin of 37.85% in 2023, an increase of 0.04 percentage points over the previous year. With 2024Q1, the company achieved a gross profit margin of 78.43%, an increase of 0.04 percentage points over the previous year; the sales expense ratio, management expense ratio, and financial expense ratio were 7.53%/3.06%/-2.07%, respectively, up 0.75 pct/ down 0.46 pct/ down 0.10 pct year on year. Based on gross margin and expense ratios, the company achieved a net profit margin of 42.02% in 2024Q1, a year-on-year decrease of 0.07 percentage points, and the profit level remained steady.
Maintain a buy rating. The company's earnings per share in 2024/2025 are expected to be 8.76 yuan and 9.81 yuan, respectively, and the corresponding PE valuation is 17 times and 15 times, respectively. As a leader in the high-end strong liquor industry, the company's production capacity expansion and structural upgrading are progressing steadily, and there is room for further improvement in product volume and price. Maintain the company's “buy” rating.
Risk warning. Product upgrades fall short of expectations, channel expansion falls short of expectations, industry competition intensifies, macroeconomic fluctuations, etc.