Description of the event

The company's total revenue for 2024Q1 was 1.08 billion yuan (+7.05%); net profit attributable to mother was 121 million yuan (+39.37%), after deducting non-net profit of 104 million yuan (+45.79%), mainly due to the company's impressive tonnage performance.

Incident comments

High-end products are growing rapidly, and the company's tonnage price is rising rapidly against the trend. Looking at volume and price breakdown, 2024Q1 achieved beer sales of 263,800 tons, up 0.77% year on year. Among them, sales of high-end products increased 15.05% year on year, with significant structural improvements, driving the company's tonnage price to 4,201 yuan/kilolitre year on year. Raw material procurement costs have declined, and the cost pressure on the company has been relieved. The cost of 2024Q1 tons increased 3.8% year over year, narrowing from 2023Q1. Driven by structural upgrades and cost improvements in both directions, the company's gross margin increased by 1.35 pct to 42.13% year on year.

The cost rate was stable during the period, and the company's profitability increased steadily. The company's expense ratio for the period increased slightly by 0.47 pct year on year, the sales/management expense ratio was +1.27/ -0.39 pct year on year, the asset impairment charge value increased by 13.65 million yuan, and the company's net interest rate to mother increased by 2.53 pct to 10.91%. Looking at the full year, it is expected that in 2024, the profitability of tonnes of wine will continue to improve as the closing costs of the Australian and Malian Mutual Exchange are expected to improve.

The structural upgrade continues, and there is no change in the direction of operation for the better throughout the year. The company actively lays out pure products and enjoys dividends in the context of focusing on consumer cost performance. Currently, the release of product potential energy has maintained relatively rapid growth. At the same time, the company has created high-end products such as puree, Nanyue Huzun, and 980ml canned English IPA, which is expected to bring new growth points to the company. Rainfall in the south in April may have an impact on sales for that month, but looking ahead to 2024, the steady growth trend of the mid-range industry will not change. The recovery of Australian wheat will help beer companies improve the cost side, and the company's profitability is expected to increase. The company's EPS is expected to be 0.34/0.39/0.44 yuan in 2024/2025/2026, corresponding to PE valuation 25/22/19 times, maintaining a “buy” rating.

Risk warning

1. The risk of slow recovery in demand;

2. Industry competition further exacerbates risks;

3. Risk of changes in consumer consumption habits, etc.;