Key points of investment:
Incident: The company released its 24-year semi-annual report. 24H1 achieved total revenue of 0.667 billion yuan, a year-on-year decrease of 13.16%, and net profit to mother of 0.011 billion yuan, reversing the year-on-year loss. Of these, 24Q2 achieved total revenue of 0.247 billion, a year-on-year decrease of 26.25%, net profit to mother - 0.007 billion, and 23Q2 - 0.003 billion. In our performance outlook, we forecast a -5% year-on-year increase in the company's total revenue for 24Q2. The company's previous performance forecast for 24H1 was 0.01-0.015 billion in net profit, which is in line with the forecast.
Investment rating and valuation: Due to the cessation of the company's pharmaceutical sales business, demand for liquor was weakened, and the profit forecast was lowered. The net profit forecast for 24-26 was 0.014 billion, 0.102 billion, and 0.12 billion (previously 0.062 billion, 0.125 billion, 0.151 billion), and increased 629% and 18% year-on-year in 25-26. The PE corresponding to the current stock price is 487x, 67x, and 57x, respectively, taking into account the company's During the reform period, 24H1's performance turned a loss into a profit. The price-earnings ratio was higher than that of the liquor industry's central players because the pharmaceutical sales business stopped dragging down overall performance and maintained an increase in holdings rating. We believe that after China Resources joined China Resources, the company was reformed and refreshed. The Fuhexiang series focused on major stores such as the core tobacco hotel and the banquet hotel, strengthening the Fuyang base market and the key market in Hefei. The number one seed China Resources enabled the integration of beer and white channels. The results of the company's reform will gradually become apparent in the long run.
In 24Q2, the company's alcohol revenue was 0.183 billion, down 14.92% year over year. By product, 24Q2 high-end wine revenue was 0.012 billion, up 50.34% year on year; mid-range wine revenue was 0.058 billion, down 9% year on year; low end wine revenue was 0.112 billion yuan, down 21.32% year on year. High-end wines perform better than low-end wines. Looking at the subregion, the province's revenue in 24Q2 was 0.136 billion yuan, down 21.82% year on year, accounting for 74.16%, and revenue outside the province was 0.047 billion, up 13.99% year on year, accounting for 25.84%, up 6.55 percentage points. The performance outside the province was better than within the province.
24Q2 net profit margin was -2.61%, down 3.7 pct year on year, mainly due to increased tax rates and sales expenses. The 24Q2 gross profit margin was 41.7%, up 7.91 pct year on year. The main reason was the suspension of pharmaceutical sales business and the corresponding cost reduction; the tax rate was 15.71%, up 2.83 pct year on year, and the main reason was the consumption tax increase; the sales expense ratio was 22.6%, which is expected to increase 15.95pct year on year, mainly due to increased advertising expenses and labor costs; management expenses (including R&D expenses) rate of 9.46%, down 4.26pct year on year.
Net operating cash flow in 24Q2 was -0.086 billion, and 23Q2 was -0.011 billion, of which 0.223 billion was cash received from sales of goods and services, a year-on-year decrease of 46.89%. The decline in cash flow was mainly due to the cessation of the pharmaceutical sales business. Advance accounts received at the end of 24Q2 were 0.07 billion, down 0.055 billion from the previous month, and 0.103 billion yuan from the end of 23Q2, down 0.089 billion from the previous month.
The catalyst for stock price performance: Anhui's economic development exceeded expectations; the growth rate of core products exceeded expectations; and the growth rate of net profit exceeded expectations.
Core hypothetical risks: economic downturn affects demand for liquor; food safety incidents.