Incident: The company released 24H1 financial report, 24H1 revenue 1.754 billion yuan/year over year; net profit to mother 0.295 billion yuan/year over year +15.96%; 24Q2 revenue 0.678 billion yuan/year on year +7.73%; net profit to mother 0.074 billion yuan/year over year +1.88%.

Q2 Revenue was in line with expectations, and structural upgrades were relaxed. The 24Q2 company achieved alcohol sales revenue of 0.66 billion yuan, +6.5% over the same period. After the Q1 peak season, the company mainly carried out channel control during the off-season. Considering that 24H1 alcohol revenue increased by 14.7%, and channel inventory at the end of the period was further digested to a healthy level of about 1.5 months, it is expected that the annual revenue target (18% compared to the same period) will be achieved steadily. 1) By product: 24Q2's revenue of 300 yuan/100 to 300 yuan/100 yuan/100 yuan or less was 0.12/0.34/0.2 billion yuan respectively, up 7.1%/2.7%/13.3%. The structure was basically the same as Q1, with over 100 yuan accounting for 70%.

Q2 The company raised the price of the Jinhui four-star and soft series (H3, H6) in due course (about 8 to 10 yuan) and actively controlled the goods to further strengthen its position in the 100-300 yuan price range. 2) Look at the subregions:

In 24Q2, revenue within and outside the province was 0.5/0.16 billion yuan respectively, up 8.3%/1.1% from the same period. The province adopted a “one county, one policy” regional operation strategy. Southeast Longnan led structural upgrades to maintain a stable market share; the “Dalanzhou” market was accurately marketed using circle cultivation ideas, and the increase in word of mouth during the year series is expected to boost share performance; the central and Hexi markets have a low market share, and the plan is to transform growth through additional investment resources.

Outside the province, the focus is on building a model market, opening up a second base market around the five northwest provinces, and building the integrated construction of Ganqingxin and Shaanxi. Currently, the dotted market position is gradually taking shape. Q2 There was a net increase of 130 dealers outside the province, and channel investment and retail sales are progressing in an orderly manner, which is expected to bring further incremental contributions.

Sales rates have been optimized, and income tax and external donations disrupt profit performance. 1) Payout side: The company's contract debt at the end of the 24Q2 quarter was 0.48 billion yuan, +0.04/-0.15 billion yuan year-over-year, respectively. The main companies promoted long-term repayment and slow delivery, and the pace was steady and steady. 24H1's revenue +△ advance revenue also increased by 14.2%.

2) Profit side: 24Q2 net sales margin -0.5pct to 10.7% year-on-year, mainly due to income tax rate and external donations. ① Q2 gross margin was +2.6 pct to 64.7% year over year, due to structural improvements and price increases. Refer to the H1 gross margin level (+1.4pct to 65.1% year over year), and it is expected to maintain a good upward trend throughout the year. ② The Q2 sales rate was -0.5pct to 21.0% year-on-year, mainly due to off-season price control and reduction of channel promotion expenses. Considering that the company is currently in a period of transformation and development, the general direction of investment in brand and consumer cultivation around the C-side is unchanged, and the sales rate is expected to remain stable during the year. ③ The Q2 management rate (including R&D) increased by 0.7 pct, and the main employee's salary and social insurance premiums increased. ④ The Q2 income tax rate was +17.2pct to 24.3% year on year (up about 0.02 billion yuan). During the main period, some sales subsidiaries turned losses into profits, and deferred income tax assets recovered. In addition, external donations (24H1 increased 0.016 billion to 0.017 billion yuan) were confirmed at the wrong time, which also dragged down Q2 net interest rate performance, and donation expenses are expected to remain stable throughout the year.

Profit forecasting and investment rating: The company Q2 regulates the pace in a timely manner, with channel quality and product structure first. I am optimistic about the steady implementation of the company's strategic execution and endogenous driving force. The reputation of the northwest base brand continues to expand, and it is expected to be realized throughout the year. We basically maintain a net profit of 0.4/0.49/0.6 billion yuan in 2024-2026, +21.5%, 22.1%, and 22.4%, respectively. The current market value corresponds to the 2024-26 PE of 23/19/15X, maintaining a “buy” rating.

Risk warning: Competition within the province intensifies, and development outside the province falls short of expectations; continued weakness in the economic environment affects product upgrades and food safety issues.