Key points of investment:

The company released its 2024 mid-year report: 20241H, and the company achieved revenue of 7.304 billion yuan, an increase of 22.36% year on year; net profit without return to mother was 2.446 billion yuan, an increase of 19.23% year on year.

With 2024Q2, the company achieved revenue of 2.634 billion yuan, an increase of 21.52% over the previous year; net profit not attributable to mother was 0.921 billion yuan, an increase of 14.79% over the previous year.

Revenue has maintained steady high growth, and the product structure is solid. 20241H's revenue increased 22.36% year on year. Basically, it maintained the growth level of the same period in the past three years, and there were no major fluctuations.

Furthermore, the revenue of the three levels of Jinshiyuan A, Jinshiyuan A, and Jinshiyuan A+ all maintained steady and high growth. Specifically, in 20241H, Jinshiyuan A, Jinshiyuan A, and Jinshiyuan A+ recorded revenue of 0.258 billion yuan, 2.216 billion yuan, and 4.654 billion yuan respectively, increasing by 14.32%, 26.05%, and 21.91%, respectively. The growth level remained consistent with the same period in 2022 and 2023, with no major changes. In the current period, the three accounted for 3.53%, 30.33%, and 63.72% of revenue. Compared with the same period in 2021, Jinshiyuan A+'s sales share decreased slightly, from 65.66% to 63.72%; Jinshiyuan A's sales share increased slightly, from 26.27% to 30.33%. Since 2021, the share of sales of high-grade wines has remained stable, and the product structure is solid.

Markets within and outside the province have maintained high growth. In 20241H, the provincial market achieved sales revenue of 6.658 billion yuan, an increase of 21.1% over the previous year; the overseas market achieved sales revenue of 0.599 billion yuan, an increase of 36.39% over the previous year. Markets inside and outside the province have maintained the level of growth over the past three years, and the growth of markets outside the province is still faster than that within the province. In the current period, the revenue share of the two was 91.15% and 8.20%, respectively. The share within the province decreased slightly by 1.04 percentage points year on year, and the share outside the province increased slightly by 0.84 percentage points year on year. Looking at the province, the Soviet and Chinese markets grew relatively fast. The current period recorded sales revenue of 1.119 billion yuan, an increase of 32.91% over the previous year; sales growth in the Huai'an, Southern Jiangsu, and Yancheng markets remained at 20% +, with steady growth; and sales growth in the Nanjing and Xuzhou markets remained at 10% +.

The decline in gross margin is expected to be due to higher costs taken into account. The consolidated gross margin of 20241H was 73.79 percent, down 0.68 percentage points from the same period last year. The company's procurement amount for the same period last year was high, and it was postponed to the current period. The estimated average cost was high, and the gross margin declined due to cost reasons.

Investment rating: We forecast the company's earnings per share for 2024, 2025, and 2026 to be 3.00, 3.62, and 4.37 yuan, respectively. Referring to the closing price on September 4, the corresponding price-earnings ratios were 12.99, 10.76, and 8.90 times, respectively, giving the company an “increase in holdings” rating.

Risk warning: Social consumption is weak, impacting various consumer markets, and sales uncertainty is high.