Jinshiyuan Announces 3 Quarterly Results. 1-3Q24's revenue was 9.94 billion yuan, +18.9% year over year, and net profit to mother was 3.09 billion yuan, +17.1% year over year. The 3Q24 company's revenue and net profit to mother were 2.64 billion yuan and 0.62 billion yuan respectively, +10.1% and 6.6% year-on-year respectively. By the end of the third quarter, the company's contract debt was 0.54 billion yuan, -0.08 billion yuan month-on-month, and +0.18 billion yuan month-on-month compared to the same period last year. In the 3rd quarter, the company actively regulated, and performance decelerated month-on-month, and the province's potential continued to maintain the buying rating.

Key points to support ratings

The third quarter was affected by the external market environment, and the company actively regulated, and revenue growth slowed down. 3Q24's revenue was 2.64 billion yuan, up 10.1% year on year. Affected by the industry environment and compounded by the company's active regulation, the third quarter results decelerated month-on-month. (1) By product, 3Q24's special A+ (300 yuan+) revenue was 1.81 billion yuan, +11.7% year over year, accounting for 68.8% of revenue, up 1.0 pct year on year. Special Class A products (100-300 yuan) had revenue of 0.65 billion yuan, +9.5% year-on-year. Product revenue of less than 100 yuan was 0.17 billion yuan, -0.7% YoY. The company's core single products account for a relatively high commercial consumption scenario, which decelerated month-on-month due to the external environment. We judge that the 3rd quarter was basically the same as the company's average growth rate. After the Volkswagen Price Belt was released rapidly in the first half of the year, the company took the initiative to adjust the pace and the growth rate slowed down. (2) Looking at the subregion, revenue within the province and outside the province was 2.42 billion yuan and 0.2 billion yuan respectively, up 9.3% and 23.0% year-on-year respectively. Among them, the revenue of the provincial market accounted for 91.9%, maintaining steady growth, and the competitive advantage continued.

Markets outside the province continued to develop, maintaining high growth under a low base. By the end of the 3rd quarter, the total number of the company's dealers was 1193, including 588 dealers in the province, an increase of 54 over the previous month. The company continued to cultivate weak markets in the province. The number of dealers outside the province was 605, an increase of 89 month-on-month. The company focused on model markets outside the province, concentrated on accurate resource allocation, and expansion outside the province progressed smoothly.

Discounted investment increased its impact on gross margin performance, and contract debt declined sequentially. (1) As of the end of the third quarter, the company's contract debt was 0.54 billion yuan, -0.08 billion yuan month-on-month, and +0.18 billion yuan month-on-month over the same period last year. 3Q24's sales revenue was 3.06 billion yuan, -1.8% year-on-year, and operating cash flow was 0.98 billion yuan, a year-on-year decrease of 16.9%, mainly related to slow repayment progress. (2) Since the 3rd quarter, the overall sales of the industry have been under pressure, and the company has taken the initiative to increase trade-off efforts to promote sales. Affected by sales policy adjustments and increased trade-off efforts, the 3Q24 company's gross margin was 75.6%, a year-on-year decrease of 5.1 pct, a significant decline. The 3Q24 company's four expense ratios decreased by 3.0 pct year on year. Among them, the sales expense ratio and management expense ratio were -3.9 pct and +0.5 pct, respectively, to 20.6% and 4.6% year-on-year. The corporate tax rate decreased by 0.9 pct to 19.4% year over year. Overall, the company's net interest rate to mother was 23.7%, down 0.8 pct from the previous year.

valuations

The company is one of the leading wine companies in Jiangsu Province. In recent years, it has gained full momentum in the province. Product life cycle dividends have been released, and there is still room to increase its market share within the province. Outside the province, it focuses on the model market, sells accurately, and continues to break through. Currently, the industry has entered a period of adjustment, and the company is actively adjusting the pace of operation, with inventory removal and price stability as the top priority tasks. According to the company's 3 quarterly report results, we lowered our previous profit forecast. We expect the company's revenue growth rates to be 17.2%, 11.8%, and 12.3% respectively from 24 to 26, with net profit growth rates of 16.1%, 13.8%, and 12.8% respectively, EPS of 2.90, 3.30, and 3.73 yuan/share, respectively, and corresponding PE of 15.3X, 13.5X, and 11.9X respectively, maintaining the purchase rating.

The main risks faced by ratings

There are downside risks to the macroeconomy, and the recovery on the demand side is slow. The province is being squeezed by competitive products, and competition in the industry has intensified.

Exploration outside the province fell short of expectations. Channel inventory exceeds expectations