In 2024, the company achieved operating income of 5.22 billion yuan, a year-on-year increase of 5.3%, and achieved net profit of 1.34 billion yuan, an increase of 5.7% over the previous year. Performance grew steadily, and cash flow was under relative pressure. Structural downgradation is under pressure on gross profit, cost control is effective, and core product performance is stable. 25Q1 premium wines are driving growth at an accelerated pace, and profitability is stable.
A 25-year outlook, improved brand matrix, and accelerated channel expansion. The performance is steady and the strategy is clear. We slightly adjusted the 2025-2027 EPS to 2.87, 3.02, and 3.21, corresponding to the 25-year 16X PE, maintaining the “Highly Recommended” rating.
Performance grew steadily, and cash flow was under relative pressure. In 2024, the company achieved operating income of 5.22 billion yuan, up 5.3% year on year, and realized net profit of 1.34 billion yuan, up 5.7% year on year. Single Q4 company achieved revenue of 1.43 billion yuan, +4.7% year on year, net profit of 0.22 billion yuan, -12.3% year on year. Revenue profit was in line with previous forecasts. Sales repayment was 5.35 billion yuan, -5.1% year on year, and net cash flow from operating activities was 0.74 billion yuan year on year. -57.2%, mainly due to increased production of base wine after the expansion of the new factory area. The company plans to pay a cash dividend of 0.97 yuan per share in 2024. The total amount is estimated to be about 0.47 billion yuan, with a dividend rate of 35%.
Structural downgradation is under pressure on gross profit, cost control is effective, and core product performance is stable. 2024 gross margin was 82.8%, net margin was 25.7%, -0.4pct and +0.1pct YoY. The decline in gross margin was mainly due to a downward shift in the product structure. The operating income of high/mid-range wine in 24 years was 4.76 billion/0.26 billion, up 2.0%/29.1% year on year. The profit margin of high/mid-range wine was 85.7%/62.7%, +0.9/-2.4pct. No. 8 led the growth of high-end wine, and the scale effect of the single product led to an increase in gross profit. Jingtai and Collection declined under pressure. Expense control was effective in 2024. The sales expense rate was 25.1%, down 1.3 pct year on year, and the management expense ratio was 8.2%, +0.9 pct year on year, mainly due to the increase in depreciation expenses after the Qionglai factory was put into operation.
25Q1 premium wines are driving growth at an accelerated pace, and profitability is stable. The 25Q1 company achieved revenue of 0.96 billion, +2.7% YoY, net profit 0.19 billion, +2.2% YoY, a slight increase in line with expectations. Net operating cash flow -0.58 billion was mainly due to a decrease in cash flow from sales and an increase in spending on purchasing goods. Accounts receivable at the end of Q1 were 0.39 billion, an increase of 0.38 billion over the previous year, mainly due to the liberalization of credit sales to some dealers to guarantee partner capital turnover.
25Q1 gross profit margin was 82.0%, +1.5pct year on year. High/mid-range wine achieved revenue of 0.85/0.05 billion, 6.7%, -34.2% year-on-year, and the product structure improved. Sales/management expense ratio 27.5%/9.0%, year-on-year -7.4/-0.5pct, net profit margin 19.8%, year-on-year -0.1pct.
25-year outlook: Improve the brand matrix and accelerate the expansion of stores through channels. Looking ahead to 2025, no specific growth figures are mentioned.
On the brand side, it promoted the implementation of the dual brand strategy, the first factory went public, and the Shuijing Fang series was iteratively launched. Channel coverage has been accelerated. The number of newly opened stores exceeded 10,000 in 2024. In 2025, it is planned to expand stores in key cities by double digits, and single-store sales of benchmark stores have increased by double digits over the same period last year.
Investment advice: Steady performance, clear strategy, and maintenance of the “Highly Recommended” rating. Shuijingfang is a relatively stable and pragmatic company in the industry. This characteristic is the core competitive advantage of wine companies in the current adjustment period. The company's growth was steady in the first quarter, and the potential for core products continued. After formulating a clear brand strategy, sorting out the product line, and formulating a detailed and implementable channel development plan, the company's competitive advantage is expected to strengthen. We slightly adjusted the 2025-2027 EPS to 2.87, 3.02, and 3.21 to correspond to 25-year 16X PE, maintaining the “Highly Recommended” rating.
Risk warning: Economic recovery falls short of expectations, competition for sub-high-end prices intensifies, implementation of new strategies falls short of expectations, and cultivation of high-end products falls short of expectations
