Incidents:
The company released its annual report for the year 23 and the quarterly report for '24, and achieved revenue of 33.126 billion yuan, +10.04% year-on-year; net profit to mother was 10.016 billion yuan, +6.80% year-on-year. Among them, 23Q4 achieved revenue of 2,843 billion yuan, or -21.51% year-on-year; net profit to mother of 187 million yuan, -161.28% year-on-year.
24Q1 achieved revenue of 16.255 billion yuan, +8.03% year over year; net profit to mother of 6.055 billion yuan, +5.02% year over year.
The company plans to distribute cash dividends of 46.60 yuan (tax included) for every 10 shares, with a total dividend of 7.02 billion yuan, and a dividend ratio of 70.09%.
24-year goal: Strive for a 5% to 10% year-on-year increase in revenue.
Statement analysis: The growth rate of cash payments is higher than the growth rate of revenue. Cash repayments in '23 were $34.854 billion, higher than the revenue growth rate (+10.04%), and the sales return rate was 105%, of which 23Q4 cash payments were $9.312 billion, -0.26% year over year, higher than revenue growth rate (-21.51%); contract liabilities were $11.105 billion, year-on-year, -2,637 billion yuan/month-on-month +5.589 billion yuan. Cash revenue in 24Q1 was approximately $12.906 billion, +25.09% year-on-year, higher than the revenue growth rate (+8.03%), and the sales return rate was 79%. The contract debt was about 5.815 billion yuan, year-on-year - 1,160 billion yuan/month-on-month - 5.289 billion yuan.
Key points of investment:
The pace was adjusted in 23Q4, with double-digit growth throughout the year. Revenue in '23 was $33.126 billion, or +10.04% (of which Q1: +15.51%; Q2: +16.06%; Q3: +11.03%; Q4: -21.51%). 23Q4 company rhythm adjustments combined weak demand, and both revenue and profit declined. By product, 23 high-end wines achieved revenue of 28.539 billion yuan, +8.82% year-on-year; ordinary wine achieved revenue of 3,950 billion yuan, +20.70% year-on-year. In the subregion, revenue of 143.93/18.096 billion yuan was achieved within and outside the province in '23, respectively, +8.05/ 11.85%. The growth rate outside the province was higher than that of the province. Gross profit margin in '23 was 75.25%, +0.64pct year over year.
Expenses have increased, and profitability has declined slightly. In '23, the company's sales/management expense ratios were 16.26%/5.33%, respectively, and +2.38/ -1.10pct, respectively. The increase in sales expenses was mainly due to the increase in the company's advertising and promotion expenses; the 23Q4 sales expenses ratio was +19.02pct to 64.18% year over year, mainly due to adjustments in the business pace and part of the company's estimated expenses. Taken together, the net interest rate returned to mother in '23 was 30.24%, -0.91 pct year on year.
24Q1 business analysis: The 24Q1 company's revenue was +8.03% year-on-year (the company's revenue growth target for 24 years was 5-10%), maintaining steady growth. The 24Q1 gross margin was -0.56pct to 76.03% year-on-year, and the 24Q1 sales/management expenses ratio was 16.93%/2.85%, respectively, and +2.05/-0.89pct year-on-year, respectively. Taken together, the net profit margin for 24Q1 was 37.25%, -1.07pct year on year, and profitability declined slightly.
24-year outlook: 1) Product dimensions: The company has a complete product matrix, and the high-end products Dream Blue Manual Course and Dream 9 raise the brand height; Dream 6+ and Crystal Dream have strong recognition in the next high-end price range; popular prices include Sky Blue and Sea Blue, which have a consumer base; the middle and low end are represented by Yanghe Daqu and Shuanggou Daqu, with clear product positioning at various price ranges. 2) At the regional level, the provincial market carries out systematic planning around the general direction of “upgrading the trend and returning to Jiangsu”, with the aim of improving organizational system capabilities and implementing supporting resources and marketing strategies; markets outside the province continue to promote nationalization strategies, which continue to be deepened around overall layout, highland market cultivation, model market construction, and product structure upgrading. Regional markets are expected to sink further.
In the medium to long term, the company continues to focus on the highland market and high-end consumer groups, consolidating mid-range products in line with market changes. One is to promote regional decline, and the other is to launch strategic products and introduce Blue Classic 2003 commemorative products in local markets, increasing the share of the 100-200 yuan price band. The company has advantages in brand building, channel layout, etc., and is expected to expand further in high-end prices after demand improves. The adjustment of the marketing organization structure and digital construction are expected to further help focus on the consumer side and support the company's steady development.
Investment advice: The company has a complete product matrix and strong brand recognition for its core products; the company continues to strengthen market construction and adjust the marketing organization structure, which is expected to support the company's steady development. We expect the company's 24-26 revenue to be 35.9 billion yuan, 38.9 billion yuan, and 42.7 billion yuan, respectively, up 8.4%, 8.4%, and 9.8% year-on-year net profit of 10.8 billion yuan, 11.9 billion yuan, and 13.3 billion yuan, respectively. EPS will be 7.15, 7.93, and 8.81 yuan respectively, and corresponding PE will be 13.4X, 12.1X, and 10.9X, respectively. For the first time, we have covered a “holder-A” proposal.
Risk warning: Competition within the province has intensified, the company has experienced major management flaws; macroeconomic fluctuations have occurred, and liquor consumption has declined sharply.