Actively controlled the pace in the second quarter, the growth potential in the province was relatively good, maintaining the “increase” rating of Jinhui Liquor 2024H1 with revenue of 1.754 billion yuan, +15.17%; net profit to mother of 0.295 billion yuan, +15.96% year on year; net profit without return to mother 0.302 billion yuan, +19.08% year on year; 2024Q2 revenue 0.678 billion yuan, +7.73% year on year; net profit to mother 0.074 billion yuan, +1.88% year on year; net profit of net income to mother of 0.074 billion yuan, +1.88% year on year; net profit of net income to mother Net profit attributable to mother was 0.08 billion yuan, +10.56% year on year; the company donated 17 million yuan in the first half of the year, which had a significant impact on the net profit growth rate. We slightly lowered our profit forecast for 2024-2026. The net profit for 2024-2026 is estimated to be 4.0 (-0.1) billion yuan, 4.9 (-0.3) billion yuan, 6.0 (-0.7) billion yuan, respectively, +20.6%, +24.0%, and +22.3% year-on-year, and EPS is 0.78 (-0.01) yuan, 0.97 (-0.06) yuan, and 1.19 (-0.13) yuan, respectively. The current stock price corresponds to PE at 21.5, 17.3, and 14.2 times, respectively. The company's market construction base is good. Maintain an “Overweight” rating.

Control the price increase in the second quarter and actively control the pace of repayment

Sales revenue in the first half of the year was 1.877 billion yuan, +12.83% year over year, contract debt was 0.483 billion yuan, +9.30% year over year, and repayment performance was slower than revenue performance. Beginning in the second quarter, prices for the main products in the Soft, Star, and Year series were raised one after another to promote cost transformation. The plan is to gradually shift from manufacturers and dealers jointly investing in market expenses in the past to having the company control the direction and pace of all future expenses. 2024Q2's revenue for liquors over 300 yuan was +7.06%, revenue for 100-300 yuan liquors was +2.65%, and revenue for liquors under 100 yuan was 0.522 billion yuan, +13.32% year-on-year.

The performance within the province is more steady, and the market outside the province is progressing steadily

2024H1 revenue within the province was 1.349 billion yuan, +16.84% year over year, and revenue outside the province was 0.376 billion yuan, +7.79% year over year.

2024Q2 revenue within and outside the province +8.30%/+1.10%, respectively. Beginning in the second half of 2023, the province's performance was superior to that of outside the province. On the one hand, after early market paving the way, the soft series of around 200 yuan grew rapidly, and the annual series above 300 yuan achieved a breakthrough. On the other hand, markets outside the province are in a development period, and sales are temporarily under pressure.

The gross margin increased, the sales expense ratio declined, and profitability increased slightly in 2024Q2. The company's gross margin increased by 2.63 pct to 64.67% year on year. On the one hand, due to the company's lack of market policies in Q2, on the other hand, the company also strengthened various cost controls, and the Q2 sales expenses ratio decreased 0.41 pct year on year. The deducted non-net interest rate was 11.79%, +0.30pct year over year.

Risk warning: Macroeconomic fluctuations have led to a decline in demand, and expansion outside the province falls short of expectations, etc.