In 2023, the company achieved revenue of 2.83 billion yuan, a year-on-year decrease of 30.1%, and net profit to mother of 550 million yuan, a year-on-year decrease of 47.8%. Sales payback was 2.51 billion, -26.1% YoY, net operating cash flow of 51 million, -87.3% YoY. Revenue and cash flow were under pressure, channel competition intensified, cost investment increased, and profitability was under pressure. Naisen and Xiangquan declined a lot, and the company strengthened the manufacture of large products. 24Q1 marketing model transformation puts pressure on revenue and profit.
Performance during the transition period was under pressure, and awaiting results, we downgraded the company's 2024-2026 EPS to 1.16, 1.23, and 1.27 to a “gain” rating.
Revenue and cash flow were under pressure for 23 years. In 2023, the company achieved revenue of 2.83 billion yuan, a year-on-year decrease of 30.1%, and net profit to mother of 550 million yuan, a year-on-year decrease of 47.8%. Sales payback of $2.51 billion, -26.1% YoY, net operating cash flow of $51 million, -87.3% YoY, under pressure on revenue and cash flow. Single Q4 revenue was 690 million yuan, up 21.7% year on year, achieving net profit attributable to listed shareholders of 70 million yuan, down 10.1% year on year.
The gross profit margin in 2023 was 78.3%, -1.3 pct year on year, achieving a net profit margin of 19.4%, -6.5 pct year on year, and a management expense ratio of 5.9%, +1.5 pct year on year; sales expenses ratio was 32.2%, +6.9pct year on year. Channel competition intensified, cost investment increased, and profitability was under pressure. In 2023, the plan is to distribute 10 yuan in cash per share. The amount is down 23%, and the dividend rate is 59%, up 19 points from '22.
Naisheng and Xiangquan declined a lot, and the company strengthened the manufacture of large single products. By product, the company's annual alcohol sales achieved revenue of 4.05 billion yuan, +18.6% over the same period last year. The Neshan series achieved revenue of 710 million, or -38.2% year-on-year, accounting for 25.3% of alcohol sales revenue; achieved a gross profit margin of 90.1%, or -1.5pct year-on-year. The Alcoholics series achieved revenue of 1.65 billion yuan, or -27.5%, accounting for 58.2% of alcohol sales revenue; the gross profit margin of the Alcoholics series was 77.5%, -2.5pct year on year. The Xiangquan series achieved revenue of 390 million yuan, -68.3% year-on-year, accounting for 13.7% of alcohol sales revenue.
Affected by insufficient confidence in repayment and inventory digestion, the company's revenue declined significantly. In '23, the company focused on the creation of large products from Naisan and Hongtan, focused on the construction of display outlets and banquet activities within the province, and promoted the creation of 22 model markets outside the province to accelerate consumer development. In '23, the number of opened bottles of Hongtan 18 increased by 70%, and the number of banquets increased by 40%.
24Q1 marketing model transformation puts pressure on revenue and profit. 24Q1 achieved revenue of 490 million yuan, or -48.8% year on year; realized net profit of 70 million yuan, -75.6% year on year; realized cash repayment of 320 million yuan, -58.2% year on year, net operating cash flow of -260 million, -253% year on year; the company was responsible for 240 million yuan in contracts at the end of Q1, -130 million year over year.
At a critical stage of marketing model transformation, new products are being introduced, internal participation is being phased out, and revenue is under phased pressure. 24Q1 gross profit margin 71.1%, YoY -10.5pct, net profit margin 14.9%, YoY -16.9pct, sales expense ratio 33.9%, YoY +7.9%; management expense ratio 8.0%, +4.3pct yoy. Q1 increased market cost investment, focusing on model market construction, core terminal construction, consumer marketing, etc., and the cost ratio has increased.
Performance during the transition period was under pressure. Waiting for results to be achieved, it was downgraded to an “increase in weight” rating. Currently, business demand in the liquor industry is still recovering slowly, and the Matthew effect is intensifying. There are more requirements for the overall competitiveness of enterprises. Alcoholics is actively implementing channel changes, but the phased performance during the transition period is under pressure. It is recommended to wait for the reforms to bear fruit and inventory removal. We downgraded the company's 2024-2026 EPS to 1.16, 1.23, and 1.27 to the “Overweight” rating.
Risk warning: Economic recovery falls short of expectations, channel reforms fall short of expectations, and expansion outside the province is blocked.