Introduction to this report:
Against the backdrop of pressure from industry demand, 1Q25 companies still achieved positive revenue and profit growth. In the future, the company will actively establish a dual brand system of sub-high-end “Shuijing Square” and high-end “First Square”, and embrace new retail channels.
Key investment points:
Investment advice: maintain the “increase in holdings” evaluation and raise the target price to 58.34 yuan. We gave 2025-2027 EPS predictions of 2.92, 3.08, and 3.28 yuan, respectively. In an environment of weak demand, the company showed strong business resilience. Referring to comparable company valuations, the company was given 20XPE in 2025, corresponding to a target price of 58.34 yuan.
The year 24 ended smoothly, and 1Q25 started well. In '24, the company achieved total revenue of 5.22 billion yuan, +5.3% year-on-year, net profit of 1.34 billion yuan, +5.7% year-on-year; of these, Q4 achieved revenue of 1.43 billion yuan in a single quarter, +4.7% year-on-year, and net profit of 0.22 billion yuan, or -12.3% year-on-year.
1Q25 achieved revenue of 0.96 billion yuan, +2.7% YoY, and net profit to mother 0.19 billion yuan, +2.1% YoY. Adding 4Q24 and 1Q25, the company's revenue/net profit to mother was +3.9%/-6.1%, respectively. By the end of 25Q1, the company's contract debt was 0.94 billion yuan, down 0.01 billion yuan from the previous month, and 0.21 billion yuan from the previous year. After considering the month-on-month change in contract debt ratio, actual sales in Q1 were +9.4% YoY.
Clarify a dual brand strategy and actively embrace new retail. 1) The company's liquor revenue in '24 was +3.1% to 5.03 billion yuan, of which high-end and mid-range liquor revenue was +2.0%/+29.1% year-on-year to 4.76/0.26 billion yuan, respectively. High-end and mid-range liquor sales were +2.7%/+36.1%, respectively, and volume growth was the main driver. 2) In the first quarter of '25, the company's premium/mid-grade liquor revenue was +6.7%/-34.2% year-on-year to 0.85/0.05 billion yuan, respectively. By channel, wholesale agent/new channel revenue was -20.4%/+184.4% to 0.61/0.29 billion yuan, respectively. The company's domestic and foreign distributors changed from -14/-4 to 42/1 respectively during the period. In terms of products, the company will establish a dual brand system of “Shuijingfang” and “First Square”. The former will create a second obvious single product to complement the No. 8 series, while the latter will focus on the high-end market of 800 yuan or more, and the corresponding products will be on the market in 25 years. In terms of channels, the company has officially launched a new O2O retail business, cooperating with leading platforms such as Meituan Flash Sale and JD Second Delivery, as well as leading O2O retailers such as Weima Liquor Delivery to enrich channels and seize share.
Cost control is more efficient, and profitability is stable. 1) The company's gross margin was -0.4 pcts to 82.8% year on year, and the sales/management expense ratio was -1.3 pcts/+0.9 pcts year over year, respectively. The absolute investment in sales expenses remained stable. The increase in management expenses was mainly due to depreciation and an increase in employee expenses after the operation of the Qionglai project. Net profit margin was +0.1pcts YoY to 25.7%. 2) In 1Q25, the company's gross margin improved by 1.5 pcts, the sales/management expense ratio was -7.6pcts/-0.5pcts year-on-year, the operating tax rate increased, the actual income tax rate was stable, and the net interest rate to mother was basically stable year-on-year.
Risk warning. Food safety, industrial policy adjustments, etc.
