occurrences

The company announced its 2024 three-quarter report. In the first three quarters of 2024, the company achieved total revenue of 0.987 billion yuan (+4.89%), net profit due to mother 0.057 billion yuan (-45.80%), and net profit not attributable to mother of 0.054 billion yuan (-45.44%). In the 24Q3 quarter, the company achieved total revenue of 0.228 billion yuan (-18.76%), net profit to mother of -0.022 billion yuan (-334.41%), and net profit of non-return to mother of 0.022 billion yuan (-435.00%).

Increased market cost investment+confirmation of restricted stock fees affects profit margins in the short term 1) Increased market expenses based on marketing transformation+confirmation of restricted stock fees affects profit margins in the short term. In the first three quarters of 2024, the company's gross margin was 59.36%, -4.35pct year on year, 5.82% year-on-year, and -5.45pct. The decline in profit margin was mainly due to a slowdown in revenue growth in the first three quarters, an increase in market expenses based on marketing transformation, and the impact of restrictive stock expenses; judging from the cost ratio, the company's sales, management, R&D, and financial expenses were 23.27%, 13.20%, 1.35%, and -0.24%, year-on-year, +0.86, +1.02 pct, +1.02pct, and financial expenses The increase in the rate was mainly affected by the US dollar exchange rate, and exchange earnings declined.

2) Q3 profit margin situation in a single quarter: 2024Q3, the company's gross margin was 59.06%, -6.43pct year on year, and the net profit margin was -9.73% year-on-year, -13.11pct, which was mainly affected by the decline in gross margin and increase in the cost ratio; the Q3 company's sales, management, R&D, and financial expense ratios were +2.55, +3.62, +0.94, +1.72pct to 31.29%, 19.59%, 2.03%, and 1.36%, respectively.

A number of measures promoted sales of products in the price range above 100 yuan/500 ml to 2024H1. The company's sales revenue for barley liquor, other barley wine, and wine was 0.639, 0.003, and 0.005 billion yuan, respectively, +8.49%, -2.34%, and -14.96% compared with the same period last year. Looking at the price of the company's Qingli Liquor products, the revenue of liquor products above 100 yuan/500ml and below was 0.333 billion yuan and 0.306 billion yuan, respectively, +12.60% and +4.35%. The company promoted sales growth of products in the 100-200 yuan/500ml price range through five core tasks, including terminal shelf seizure actions, plans to upgrade weak areas of individual products, restoration of market order, improvement of basic marketing work, and consolidation of customer relationships; among them, Human Resources products are making a big splash. In display work, single product sales increased significantly; Fukujiu, Yongqing, and series products strengthened weak regions with remarkable results, and the full regional coverage of the base market was further improved.

Investment advice

We expect the company's net profit to be 0.051, 0.077, and 0.1 billion yuan respectively in 2024, 2025, and 2026, up -42.71%, +49.55%, and +30.27% year-on-year, corresponding to PE 100, 67, and 51 times (market value of 5.1 billion yuan) on October 28, respectively, maintaining the “increase” rating.

Risk warning

Consumption recovery falls short of expectations, risk of excessive market competition, and risk of policy changes.