Description of the event

The company's 2024Q1-3 gross revenue was 9.942 billion yuan (YoY +18.85%), net profit to mother was 3.086 billion yuan (YoY +17.08%), after deducting non-net profit of 3.074 billion yuan (+16.59% YoY). The company's total revenue for 2024Q3 was 2.637 billion yuan (+10.11% YoY), net profit to mother 0.624 billion yuan (YoY +6.61%), after deducting non-net profit of 0.628 billion yuan (YoY +7.33%).

Incident comments

Revenue maintained double-digit growth in the third quarter, leading the way among listed liquor companies. The company's total revenue in 2024Q3 was 2.637 billion yuan (YoY +10.11%), by product, Q3 2024 was 1.813 billion yuan (YoY +11.7%), Q3 2024 Special Class A 0.646 billion yuan (+9.55% YoY), Q3 2024 Class A 0.109 billion yuan (YoY +7.74%), Class B 0.041 billion yuan (YoY) in the third quarter of 2024 (YoY- 11.86%), Class C and Class D were 0.017 billion yuan in the third quarter of 2024 (-17.8% YoY). Core products, Special A+ and Special A led the growth. Looking at the subregion, the Jiangsu market has strong potential, while the growth rate of the Nanjing market is relatively slow and optimized.

Profit in the third quarter was slower than revenue growth, and gross sales margin declined, which is expected to correspond to a slight decline in the consumer price band. The company's 2024q3 net income interest rate fell 0.78 pct to 23.68% year on year, gross margin -5.14 pct to 75.59% year on year, and the period expense ratio -3.05 pct year on year to 24.99% year on year, detailed changes: sales expense ratio -3.9 pct year on year, management expense ratio +0.46 pct year on year, R&D expense ratio -0.01pct year on year, financial expense ratio +0.41 pct year on year, sales tax and additional rate -0.95pct year on year.

In 2024, the company proposed to reduce the burden on channels, maintain a high level of product market atmosphere, and continue to realize potential market expansion to help achieve the 14th Five-Year Plan goals. We expect the company's EPS in 2024/2025 to be 2.92/3.30 yuan, corresponding to the latest PE 16/14 times, maintaining a “buy” rating.

Risk warning

1. Industry demand falls short of expectations;

2. Increased market price fluctuations, etc.