Conclusions and recommendations:

Performance summary:

The company announced that 2024H1 achieved revenue of 22.75 billion, up 19.6% year on year, and recorded net profit of 8.41 billion yuan, up 24.3% year on year. Based on this calculation, 2Q achieved revenue of 7.4 billion, up 17% year on year, and recorded net profit of 2.15 billion yuan, up 10% year on year. Q2 The results were in line with expectations.

Comment:

H1's revenue was in line with expectations. Looking at the category, medium- to high-priced wines achieved revenue of 16.43 billion yuan, an increase of 17.4% year on year. In addition to leading the blue and white series, the company strengthened waist products this year. The Lao Bai Fen and Panama series performed well. Other alcoholic beverages achieved revenue of 6.23 billion, an increase of 27.4% year on year. In Q2, the revenue of medium- and high-priced wine was 4.57 billion, up 1.5% year on year, affected by blue and white controls. Other wines achieved revenue of about 2.8 billion yuan, an increase of 58.3% year on year, benefiting from continuous optimization of bamboo leaf Market layout, strengthened dealer network system. Regionally, H1 province achieved revenue of 8.39 billion, up 11.4% year on year; outside the province achieved revenue of 14.27 billion, up 25.7% year on year, maintaining relatively rapid growth, and achieved a steady breakthrough in the market south of the Yangtze River; in Q2, the province achieved revenue of 2.8 billion, up 11.2% year on year, and 4.57 billion yuan of revenue outside the province, up 21.8% year on year.

In terms of costs and expenses, gross margin increased 0.39 pcts to 76.69% year on year in the first half of the year, benefiting from price increases and product structure improvements; Q2 gross margin fell 2.7 pcts year on year to 75.1%, mainly affected by changes in product structure caused by Fenjiu's control volume. On the cost side, benefiting from improved management efficiency, the H1 rate was stable. The fee rate for the period decreased by 0.4 pct to 11.8% year on year; the cost rate decreased by 0.11 pct year on year to 16.19% during the Q2 period.

Currently, the company is operating smoothly, and the pace of repayment and delivery is normal. In the second half of the year, the company is expected to strengthen overall management, optimize refined channel management, and stimulate the vitality of the marketing team. The Q2 contract debt balance is 5.73 billion, which is basically the same as the same period last year (5.75 billion in the same period last year), and channel confidence is relatively stable. Looking at the product, we expect H2 waist products to maintain good performance and will be an important support for achieving annual business goals.

The profit forecast was lowered. Net profit of 12.77 billion, 14.9 billion, and 16.8 billion yuan is expected to be achieved in 2024-2026 (the original forecast was 12.94 billion, 15.4 billion, and 18.22 billion yuan), with year-on-year increases of 22.3%, 16.8%, and 12.7%, respectively. EPS is 10.45 yuan, 12.22 yuan, and 13.77 yuan, respectively. The current stock price corresponds to PE 15 times, 13 times, and 11 times, respectively, due to Mid-Autumn Festival terminal consumption Investment recommendations for “ranged operations” are not as strong as expected.

Risk warning: Expansion outside the province falls short of expectations, industry competition intensifies, and expenditure exceeds expectations