Incident Overview
The company released the 24H1 performance forecast. The net profit of 24H1 is expected to reach 0.476-0.531 billion yuan, +30%-45% year over year; net profit after deducting non-return to mother will reach 0.436-0.487 billion yuan, +30%-45% year over year. According to this estimate, 24Q2's net profit attributable to mother reached 0.355-0.41 billion yuan, +27%-47% year-on-year; net profit after deducting non-return to mother reached 0.332 to 0.382 billion yuan, or +26%-45% year-on-year. The company's profit side performance surpassed our previous expectations.
Analytical judgment:
Sales bucked the trend, and Q2 revenue is expected to continue to rise
According to the company's 24H1 performance forecast, the company achieved year-on-year increases in beer sales and revenue during the reporting period. Judging from the overall output of the beer industry announced by the National Bureau of Statistics, 24H1 showed a pressure trend (24Q2 was particularly obvious, with sales volume of -9.1%/-4.5% year-on-year in April/May, respectively). We expect the company's 24Q2 performance to be superior to the industry average, and is expected to continue the 24Q1 volume and price upward trend (24Q1 sales +0.8% year over year, tonnage price +6.2%), and achieve high revenue growth.
Structural improvement+cost optimization, unleashing profit flexibility
According to the company's 24H1 performance forecast, the company “takes achieving high-quality development as the main line, continuously optimizes the product structure, and actively carries out cost reduction and efficiency efforts” during the reporting period. We believe that the main reason for the company's profit side's performance exceeding expectations is 1) deepening the “3+N” brand strategy (Snow Fort, Pure Life, Pearl River + features) on the product side and also launching ultra-high-end products such as Nanyue Huzun, 980ml Pearl River Puree, and 7 Fresh Pearl River Puree to improve the product structure; 2) Benefiting from falling prices of raw materials such as barley, we expect the pressure on the company's cost side to be greatly relieved, releasing greater profit elasticity.
Guangdong has a stable market advantage and continues to forge ahead to meet industry changes
The company is a leading enterprise in the Guangdong beer market. According to data from China Research Network, the company once had a market share of more than 50% in the Guangdong beer market, but at this stage it still exceeds 30%, surpassing Budweiser, China Resources, Tsingtao Brewery, etc., and ranks first in the province. We believe that the Guangdong market has a high level of economic development and high beer consumption (according to the Research Report Network data, annual consumption exceeds 2 million tons, accounting for 8% of the country's consumption), providing a fertile base market for the development of Pearl River Beer. We have long been optimistic that the profitability of the company's main beer business will continue to improve under the general trend of industry structural upgrading and the company's general direction of improving quality and efficiency, so as to achieve joint development between the beer brewing industry and the beer culture industry, and strengthen the competitiveness of the company's region and industry.
Investment advice
Referring to the company's latest performance forecast, we added a 24-26 revenue forecast of 5.769/6.16/6.525 billion yuan, respectively, and a 24-26 EPS forecast of 0.36/0.38/0.42 yuan respectively, corresponding to the closing price of 8 yuan/share on July 12, PE 22/21/19 times, respectively, maintaining the “buy” rating.
Risk warning
Raw material prices fluctuated, market competition exceeded expectations, structural upgrades fell short of expectations