Incidents. The company released its 2024 quarterly report: 1Q24, the company achieved total operating income of 4.293 billion yuan, +7.2% year-on-year, net profit to mother of 452 million yuan, +16.8% year-on-year, after deducting net profit of 446 million yuan, or +16.9% year-on-year.
Sales have increased steadily, and the structure has improved. 1Q24's beer revenue was +6.6% year-on-year to 4.178 billion yuan, of which total sales volume/average price was +5.2%/+1.3% year-on-year to 866,800 kiloliters/4,820 yuan/liter, respectively (if other business revenue is taken into account, the company's revenue per liter was +1.8% to 4,952 yuan per liter in the first quarter). The sales growth rate is close to the 6.1% year-on-year growth rate of national beer production during the same period. Looking at prices, the company's quarterly report continued the annual report's adjustment of the product structure classification method. High-end, mainstream, and economic products are beer with a consumer price of 8 yuan/4 yuan/8 yuan/4 yuan or less, respectively. 1Q24's premium, mainstream, and economy beer revenue was +8.3%/+3.6%/+12.4% year-on-year to 25.72/15.20/086 million yuan, respectively. Among them, the growth of economic beer is still mainly driven by rising average prices, and its sales volume increased by 1.7%. Looking at the subregion, 1Q24's revenue in the northwest/central/southern regions was +3.2%/+7.1%/+9.3%, respectively. In terms of channels, the company added 199 new dealers during the first quarter, a decrease of 299. At the end of the quarter, there were 2,969 dealers.
The decline in cost per ton helped increase gross margin. Expense ratios were generally stable during the period, and net interest rates improved. The gross margin of the 1Q24 company was +2.74pct year-on-year. Specifically, the average sales price/average cost of beer was +1.3%/-3.3% year-on-year, respectively. In terms of the period expense ratio, the 1Q24 company's sales/management/R&D/finance expense ratios were +0.18/+0.02/+0.07/+0.15pct, respectively. The actual income tax rate increased slightly, +0.35pct year on year.
In summary, the company's net interest rate/net profit margin was +1.60/+0.87pct year-on-year to 20.94%/10.53%, respectively.
Profit forecasting and investment advice. We expect the company's 2024-2026 EPS to be 3.02, 3.30, and 3.55 yuan/share, respectively. Referring to comparable company valuations, we gave the company 22-27 times PE in 2024, with a corresponding reasonable value range of 66.44-81.54 yuan, maintaining a “superior to the market” rating.
Risk warning. High-end demand is differentiated and fragmented, some price bands have restarted price wars, the scale and profits of new businesses in the early stages of diversification were poor, and raw material prices rose.