Incident: The company released its 24-year report. 24H1 achieved revenue of 1.754 billion yuan, net profit of 0.295 billion yuan, net profit of 0.295 billion yuan, +15.96% year-on-year, minus 0.302 billion yuan of non-return mother, +19.08% year-on-year; of these, 24Q2 achieved revenue of 0.678 billion yuan, +7.73% year-on-year, and 0.074 billion yuan of net profit to mother, +1.88% year-on-year, net profit of 0.08 billion yuan , +10.56% compared to the same period last year.

Statement analysis: 24Q2 cash repayment of 0.638 billion yuan, sales return rate 94.15%. Repayment is lower than revenue, and repayment growth rate is much lower than revenue growth rate. 24H1 notes receivable were 0.014 billion yuan, -28% year over year, contract debt was 0.483 billion yuan, up 0.041 billion yuan (+9.3%) year over year, and decreased by 0.148 billion yuan (-23.5%) month on month. Overall, the company's apparent growth rate is relatively good. Although the growth rate of cash payments is slightly poor, forward-looking indicators such as contract debt are relatively good.

Key points of investment

Revenue analysis: The province's performance is steady, and product upgrades are rising steadily. 24H1 achieved revenue of 1.754 billion yuan, +15.17% YoY (Q1: +20.41%; Q2: +7.73%).

1) By product, the company controls the pace, and product upgrades are steadily improving. 24H1 achieved revenue of 0.31, 0.89, and 0.52 billion yuan, respectively, for products priced at 300 yuan (Golden Emblem Series, Jinhui Old Cellar Series, etc.), 100-300 yuan (Soft Gold Emblem Series, Jinhui Positive Energy Series, Century Gold Emblem Five Stars, etc.), and less than 100 yuan (Century Gold Emblem 4 Stars, Century Gold Emblem 2 Stars, Jinhui Aged Brewing, etc.), with year-on-year increases of 44.71%, 14.97%, and 1.77%, respectively. 0.2 billion yuan, up 7.06%, 2.65%, and 13.32% year on year. The structural upgrade has slowed down. We think it is mainly related to the company's shipping pace and Q2 company's price increase control.

2) By region, the province continues to perform steadily and moves forward in adjustments outside the province. 24H1 revenue within the province was 1.349 billion yuan, +16.84%, and revenue from outside the province was 0.376 billion yuan, +7.79%. Among them, revenue growth rates within the province and outside the province were 8.3%/1.1% respectively in 24Q2. The province's performance was steady, and there was a slight increase outside the province. In terms of dealers, 24H1 had 286 dealers in the province, an increase of 40 over the beginning of the year and 739 dealers outside the province, a net increase of 153 over the beginning of the year.

Profit analysis: The gross margin has increased further, and the sales expense ratio has declined. 24H1 gross margin was 65.12%, +1.36pct year on year, of which 24Q2 gross profit margin was 64.67%, and +2.63pct year on year. The further increase in Q2 gross margin was due, on the one hand, to the company's low investment in markets such as alcohol donation, and on the other hand, due to the company's cost control. The 24H1 sales expense ratio was 19.16%, -0.20pct year on year. Among them, the advertising rate increased by 0.91 pct, and the business promotion fee decreased by 1.

34 pct, mainly because the company controlled goods and reduced promotion expenses; the management cost ratio was 9.70%, +0.72 pct compared to the previous year, mainly due to a significant increase in employee remuneration and social security. In addition, there was a certain difference between 24Q net profit and the growth rate of non-return to mother, mainly in advance of external donations.

Looking ahead to 2024: The company focuses on the 100-300 yuan price range, and continues to consolidate its strong position in the province and build a leading brand in the northwest. Looking ahead to 2024, we believe:

1) In terms of product strategy, the company's mainstream price band focuses on 100-300 yuan products, which are expected to maintain a 20-30% growth target, and products above 300 yuan are expected to maintain a 30% growth rate. The main reason is that the company has done a lot of work in major customer operations and major customer engineering.

2) Channel side: Accurate operation of the provincial market, one county, one policy, consolidates the construction of the northwest base market and drives a steady increase in market share; markets outside the province gradually cultivate East China and North China as the second growth curve to help the company implement its medium- to long-term strategy; the Internet has built a nationalized online marketing platform for Jinhui, which is expected to become the third growth curve.

According to the company's next five-year plan, the company plans to consolidate its strong position in the province and become a leading brand in the northwest.

3) Target for 24 years: The company has set a target for 2024, striving to achieve revenue of 3 billion yuan and net profit of 0.4 billion yuan. According to the tasks already achieved in the first half of the year, the 24H2 revenue is 1.246 billion (+22%) and profit growth rate 0.105 billion (+41%). We believe that in the first half of the year, the company took the initiative to raise prices and control inventory to prepare for peak sales in the second half of the year. Although the target for the second half of the year is quite challenging, the possibility of completion is still high.

Investment advice: In the short term, we believe that the company actively controlled and raised prices during the Q2 off-season, sorted out channel prices and removed inventory, and prepared for the Mid-Autumn Festival National Day peak season in advance. It is likely that the target for the whole year will be achieved. Looking at the medium to long term, the company's product structure within the province continues to be upgraded and optimized, compounding the expansion of new volume from outside the province. It is expected that future performance will still have a lot of room for growth.

We expect the company's revenue for 2024-2026 to be 3.06, 3.61, 4.2 billion yuan, and a year-on-year increase of 20%, 18.1%, and 16.3% year-on-year net profit of 0.41, 0.51, and 0.63 billion yuan, up 23.1%, 26.7% year-on-year, corresponding EPS of 0.80, 1.01, and 1.24 yuan respectively, and corresponding PE of 21.5x, 17.0x, and 13.9x respectively, maintaining the “increase in holdings -A” rating.

Risk warning: increased competition in the industry, the risk of rising raw material costs, falling short of expectations in expansion outside the province, food safety issues, etc.