Incident: The company announced its 2023 performance forecast. It is expected to achieve full-year revenue of 10-11 billion yuan, a year-on-year decrease of 5.8%-14.4%; a net profit loss of 37-250 million yuan in 23, a loss of 670 million yuan for the same period in '22; a loss of 65-550 million yuan in non-net profit for the same period in '23, and a loss of 670 million yuan for the same period in '22. On a quarterly basis, 23Q4 is expected to achieve revenue of 1,19-2.19 billion yuan, a year-on-year decrease of 14.7%-53.6%; 23Q4 is expected to achieve a net profit loss of between 80 million yuan and profit of 0.4 million yuan, with a loss of 290 million yuan for the same period in '22; 23Q4 is expected to achieve a net profit loss of 2.6 to 360 million yuan without return to mother, a loss of 290 million yuan for the same period in '22.
The non-white business dragged down performance. The profit base of the liquor business was stable, and losses narrowed year on year. The company's losses decreased compared to the same period last year, mainly due to the fact that 1) the liquor business was profitable, and the pork and real estate business was affected by changes in the market environment and industry cyclicality. Product sales prices continued to be sluggish, and losses greatly dragged down performance during the reporting period, 2) The taxes and fees generated by Beijing Shunxin Jiayu Real Estate Development Co., Ltd. sold the assets of the two buildings of the Business Center and Universal Center had a significant impact on the net profit during the reporting period. 3) The company sold 100% of Shunxin Jiayu's shares in '23, and is estimated to generate non-recurring profits and losses of about RMB 280 million.
Leave the burden behind and start again. The long-term strategy for upgrading the main liquor business is clear, profit stability is expected to improve, and management improvements can be expected under multiple measures. We believe that the cyclicality of the macro industry has a volatile impact on the company's non-white business. With the official implementation of Shunxin Jiayu's equity transfer and the completion of the real estate business divestiture within 23 years, it shows the company's firm strategic determination for long-term development. Starting from February 1, '24, the company plans to adjust the prices for the four Niulanshan Aged Brewing series products, including Bai Niuji, again. Each box will increase the price by 6 yuan. This is the fourth time the brand has raised prices in the past two years, which is expected to increase the company's revenue and profit levels. As continuous price increases have been shown in market terminals in recent years+the gold standard aged wine market is expected to bring continuous growth. The main line of structural improvement in the company's product matrix is clear, and gold standard aged wine is expected to become the driving force for the long-term price increase of the Niulanshan brand. At the same time, after divesting real estate and going to the market, the company will continue to optimize the pork business, focus on front-end pig breeding sales and back-end finishing, raise the sector's profit level, and take multiple measures to welcome marginal improvements in operations.
Profit forecast and investment advice: We believe that after the divestment of the real estate business, the company's profit stability will improve. In the short term, low-grade alcohol from the basic business will have a certain degree of consumer resilience. In the long run, with pork business optimization+gold label leading the upgrade to second growth, upward room can be expected at the bottom. We expect the company's revenue for 2023-2025 to be 10.6.66/114.15/12.719 billion yuan, respectively, -8.7%/+7.0%/+11.4%, and net profit to mother of -3.15/4.20/797 billion yuan, respectively, corresponding to 24-25 PE 33/17X, respectively, maintaining the “recommended” rating.
Risk warning: macroeconomic downside risk; risk of increased industry competition; new product promotion falling short of expectations, etc.