Introduction to this report:

The company's U8 still has great potential and is maintaining high growth. Fresh beer and refreshing upgrades help growth. Personnel and supply chain efficiency continue to improve under comprehensive transformation, and the acceleration of the peak season is expected to bring about catalysis.

Key points of investment:

Investment advice: Maintain an “Overweight” rating. Maintain the 2024-2026 EPS forecast of 0.33, 0.43, and 0.53 yuan, and maintain the target price of 12.3 yuan.

Large single products continue to gain strength, and refreshes and upgrades help growth. Sales of the core single product, Yanjing U8, increased by more than 36% year on year in 2023. With the strengthening of the Beijing-Tianjin-Hebei sales organization and the progress of the Baixian Project, we expect that in 2024, Yanjing U8 will further consolidate the Huanjing market and penetrate into the country's dominant regional and county-level markets, so it is expected that the high growth rate will continue. At the same time, fresh beer and refreshing are the two basic single products, fresh beer, and refreshing, gradually promoting the replacement and unification of old products in various regions after the packaging has been renewed and upgraded, which helps sort out the price system and unify production processes and packaging. The raw material procurement function is concentrated at the headquarters, which is expected to lead to a sharp increase in volume and price, and production line efficiency and cost reduction.

The profits of subsidiary companies have improved markedly, and human efficiency continues to improve. The company continues to promote the streamlining of the organizational structure of the headquarters and branch companies, and the appointment of jobs to promote personnel optimization. After the implementation of a rigid assessment, incentives are optimized and human efficiency continues to improve. While optimizing and integrating production capacity and refined factory management, a number of weak regional subsidiaries introduced U8 to bring significant increases, successively reversing the losses of previous years to achieve profits. With the benefits of the company's all-round transformation in production, marketing, marketing, and supply chain, we expect all subsidiaries to show a more comprehensive and balanced improvement trend. The benefits brought about by one-time investments such as early personnel optimization and digital intelligent transformation of production lines will continue to be reflected in future profits.

The peak season is accelerating, and catalysts can be expected. The company has passed a high Q1 base. As sales gradually accelerate during the peak season, we expect volume and price increases gradually in subsequent quarters, and the trend improvement in the economy will be catalyzed. The company's sales volume is still growing faster than the industry, and there is still plenty of room for future increases in tonnage prices and profits.

Risk warning: increased market competition, fluctuating raw material costs, weather factors, etc.