Incident: The company's revenue/net profit to mother/ net profit after deducted net profit for the first three quarters of 24 was 7.832/0.168/0.149 billion yuan (-5.10%/-27.36%/-15.24%), respectively; 24Q3 company revenue/net profit attributable to mother/ net profit without return to mother was 1.889/0.013/0.012 billion yuan, respectively (-20.84%/-84.17%/-64.64%).

Demand for liquor was generally weak in the third quarter, and the revenue side was under pressure. Although consumption was concentrated in the third quarter, such as Mid-Autumn Festival and National Day, terminal feedback sales declined year-on-year, and the company's operations were under phased pressure under pressure from the industry.

The profit side is under phased pressure, and costs are continuously optimized. The 24Q3 company has a gross profit margin of 8.50% (-1.93pcts), a sales expense ratio of 5.54% (y-o-0.96pcts), a management expense ratio of 1.83% (+0.03pcts year-on-year), and a net profit margin of 0.67% (y-2.68pcts). We expect a relatively large decline in Q3 companies' net interest rate due mainly to the reduction in government subsidies received in 24Q3. The actual net interest rate of 24Q3 companies withheld to mother was 0.63% (-0.78pcts year over year). The company's advance payment balance at the end of 24Q3 was 1.468 billion yuan (-7.78% year over year). We expect that the company's advance payments declined year over year or are related to the company's adjustment of the repayment pace for some distribution brands.

The veteran marketing veteran took over as general manager and looked forward to using his experience to protect the company's steady and far-reaching future. In mid-October, the company issued a personnel adjustment notice, added Mr. Wu Qirong as a non-independent director of the company, and appointed Mr. Yang Wuyong as the company's general manager. Mr. Wu Qirong has a father-son relationship with Mr. Wu Xiangdong, the actual controller and chairman of the company, which shows that the controller attaches great importance to the management of the company. Mr. Yang Wuyong has followed the chairman for many years and served as Deputy General Manager of Beijing Jinliufu Liquor Co., Ltd., Jiangsu Regional Marketing Director, and General Manager of East China Marketing Center. We believe that the general manager's rich experience during the industry adjustment period is expected to protect the company's steady and far-reaching progress.

Considering the background of a weak recovery in liquor consumption, we lowered our profit forecast. The company's revenue for 24-26 is 9.293/9.761/10.692 billion yuan (previous value was 10.984/12.151/13.435 billion yuan), and net profit to mother is 0.178/0.219/0.254 billion yuan (previous value was 0.255/0.307/0.356 billion yuan), and corresponding PE is 45.9/37.2/32.1X, respectively. We believe that demand for liquor is expected to recover in the future under policy catalyst, and the company's operations are expected to benefit from the recovery in demand, which will reach an inflection point and maintain a “buy” rating.

Risk warning: Competition in the industry intensifies; consumer demand falls short of expectations; store upgrades and expansion fall short of expectations; fine wine sales fall short of expectations.