Description of the event

The company achieved operating income of 13.063 billion yuan (YoY +0.26%); net profit to mother of 1.332 billion yuan (YoY -0.9%), minus non-net profit of 1.306 billion yuan (-1.61% YoY); total operating income of 4.202 billion yuan (-7.11% YoY) of the company in 2024Q3; net profit of 0.431 billion yuan (YoY -10.1%), less non-net profit of 0.418 billion yuan (YoY -11.6%)

Incident comments

High-end production has slowed down, and the company's tonnage price has suffered a short-term setback. Looking at volume and price breakdown: 1) Volume: Sales volume in the first three quarters was 2.657 million tons, +0.2% year over year, of which 2024Q3 sales were 0.8732 million tons, -5.6% year over year. Looking at the structure, revenue from high-end, mainstream, and economy products in the third quarter was -9.24%/-7.63%/+19.97% year-on-year, and the decline in high-end and mainstream products increased compared to 2024Q2.

Looking at individual products, we expect sales in Wusu, Chongqing, and 1664 to be under pressure. 2) Price: The tonnage price was basically the same in the first three quarters, and the tonnage price in the third quarter was -1.61% year-on-year.

Depreciation and amortization of new plants has increased, and the company's net interest rate has declined. Due to the commissioning of the new plant and weakening of the scale effect of the decline in sales volume, the company's 2024Q3 tonne cost was +1% year over year, gross margin -1.35 pct to 49.17% year on year, sales/management expenses ratio was -0.87 pct/+1.04 pct year on year, and net profit margin was -0.34 pct to 10.25% year on year. Looking at the first three quarters, the company's net profit margin was -0.12 pct to 10.2% year on year, and gross margin was +0.01pct year on year to 49.2%, including sales expense ratio (+0.17 pct year over year), management expense ratio (+0.27 pct year over year), R&D expense ratio (+0.02 pct year over year), and financial expense ratio (+0.18 pct year over year).

The road is long, and the road is about to come. As a high-end beer company, the company faces difficulties in the current environment, but the company base has a stable market base, rich brand reserves, and the ability to return to growth after the industry improves; at the same time, the company maintains high dividends and actively rewards investors. We expect the company's EPS to be 2.73/2.88/3.11 yuan in 2024/2025/2026, and the corresponding PE will be 24X/23X/21X, awaiting improvement and maintaining the “buy” rating.