Off-season growth decelerated, and sales revenue was slower than revenue

The company released its 2024 semi-annual report. 2024H1 achieved revenue of 1.754 billion yuan, +15.17% year over year, and net profit to mother of 0.295 billion yuan, +15.96% year over year. Single Q2 achieved revenue of 0.678 billion yuan, +7.73% YoY, and net profit to mother 0.074 billion yuan, +1.88% YoY. 2024H1 contract liabilities were $0.483 billion, +9.30% YoY. 2024Q2 revenue+delta contract liabilities were 0.53 billion yuan, -17.67% year-on-year. Revenue+delta contract liabilities fluctuated slightly but were in line with the yearly rhythm. 2024Q2 sales revenue was 0.639 billion yuan, or -12.84% year-on-year. We expect this is mainly due to the company's off-season price control and control the pace of repayment and delivery.

Q2 The price band below 100 yuan grew rapidly. The growth rate in the province was higher than that of products outside the province. 2024Q2 achieved revenue of 0.122/0.339/0.198 billion yuan for liquors above 300 yuan/100-300 yuan/100 yuan or less, respectively, up 7.06%/2.65%/13.32% year-on-year, respectively. The company continued to consolidate its core scenario and price band position. Looking at the subregion, 2024Q2 achieved revenue of 0.5/0.158 billion yuan within and outside the province, respectively, an increase of 8.30%/1.10% year-on-year. The company maintains high competitiveness within the province through cost investment and refined execution, and continues to promote marketing transformation outside the province. 2024H1 distributors in and outside the province increased net by 14/147 to 286/739 respectively.

Gross margin increased, and Q2 management expenses dragged down net interest rates

The 2024Q2 gross profit margin was 64.67%, +2.63pct year over year, or mainly benefited from price increases and packaging material procurement costs. The sales/management/sales tax and additional ratios were 21.03%/12.54%/15.13%, respectively, -0.51/+1.06/-0.45pct, respectively. Higher management expenses were mainly due to increased employee remuneration, and net interest rate due to 10.90% and -0.63pct year over year.

Investment advice: Continued structural upgrading, maintaining the “buying” rating. Considering the weak recovery in consumption, we expect the company's revenue for 2024-2026 to be 3.014/3.378/3.767 billion yuan, with year-on-year growth rates of 18.32%/12.07%/11.53%, respectively, and net profit to mother of 0.407/0.471/0.543 billion yuan, respectively, with year-on-year growth rates of 23.62%/15.78%/15.28%, corresponding to a three-year CAGR of 18.16%. The corresponding 2024-2026 PE valuation is 21/18/16X, respectively. In view of the steady performance of the company's base market, the trend of structural upgrading continues, maintaining a “buy” rating.

Risk warning: Liquor consumption is declining, industry competition is intensifying, and the macroeconomy falls short of expectations