The company released its 2024 semi-annual report and achieved operating income of 13.81 billion yuan (yoy +22.1%) in the first half of the year; net profit to mother of 3.573 billion yuan (yoy +28.5%). Looking at the second quarter of a single quarter, the company achieved operating income of 5.52 billion yuan (yoy +16.8%), achieved net profit of 1.51 billion yuan (yoy +24.6%), and achieved a high increase in performance.

The volume and price of liquor rose sharply, and puree remained high during the year. In 24H1, the sales volume and tonnage price of the company's liquor business increased by 12.8% and 8.5%, respectively, and volume and price increased sharply. In 24H1, annual puree achieved revenue of 10.79 billion yuan (yoy +23.1%), of which sales volume and tonnage price increased 16.6% and 5.6% year-on-year respectively; Gujing Gongjiu achieved revenue of 1.24 billion yuan (yoy +11.5%); and Yellow Crane Tower and others achieved revenue of 1.4 billion yuan (yoy +26.6%). By region, North China/Central China/South China achieved revenue of 1.11/11.87/0.82 billion yuan respectively, with year-on-year increases of 35.1%/21.3%/17.2%, respectively.

At the end of 24H1, North China, Central China, and South China each had 1288/2848/630 dealers, compared to +64/+45/+37 at the end of 23, respectively. At the end of 24H1, the company's contract debt was 2.22 billion yuan, a year-on-year decline of 26.7%.

Increased gross margin and improved profitability. 24H1, the company's gross margin was 80.4% (yoy+1.5pct), and the beneficiary structure is expected to be upgraded; sales/management expense ratios were -0.8/-0.3 pct year on year, respectively. In 24Q2, the company's gross margin was 80.5% (yoy+2.7pct), and the sales/management expense ratios were +0.3/+0.2pct year-on-year, respectively. Overall, 24H1's net sales margin was 26.7% (yoy+1.5pct), 24Q2 was 28.1% (yoy+1.8pct), and profit improved significantly.

Anchoring the “nationalization, sub-high-end” strategy, strengthening the provincial market and speeding up the market outside the province. Continue to stick to the high standards, anchor the “nationalization and sub-high-end” strategy, continue to deepen the “three-way project”, optimize the product structure and customer structure; promote the two major domestic and international markets in an integrated manner, accelerate the nationalization process domestically, strengthen the domestic market, speed up the market outside the province, and refine key markets. The international community used the “Belt and Road” opportunity to fully launch global investment and find the best agents; continue to use Gu 20 as a strategic fulcrum to expand the sub-high-end consumer base.

According to the semi-annual report, we maintain our forecast for 24-26 earnings per share of 11.24, 13.49, and 15.71 yuan. Using a comparable company valuation method, we gave 20 times PE in 24 years, and the target price was 224.8 yuan, maintaining the purchase rating.

Risk warning: Consumption upgrades fall short of expectations, Yellow Crane Tower's performance falls short of expectations, risk of food safety incidents.