Liquor revenue grew rapidly in 2023, and internal reforms continued to advance. In 2023, the alcohol business achieved revenue of 982 million yuan, +43.5% year-on-year. Among them, high-end liquor/mid-range liquor/low-end liquor achieved revenue of 0.53/2.30/699 million yuan, which is expected to benefit from the company's internal organizational restructuring, channel remodeling, brand remodeling, and product remodeling. In terms of gross margin, the overall net profit margin in 2023 was +13.9pcts year-on-year, which is expected to benefit from improved product structure, internal cost reduction and efficiency. The tax and surcharge rate is +3.9 pcts year-on-year, which is expected to be due to land value-added tax generated by the disposal of investment real estate. On the cost side, the 2023 sales expense ratio is -4.6 pcts year over year, which is expected to be a shift in the fee investment model; the management expense ratio is -1.1 pcts year over year, mainly due to increased dismissal benefits (large-scale personnel optimization) and depreciation. On the profit side, the net profit loss returned to mother in 2023 was mainly due to dealing with historical burdens and business transformation.
2024Q1 profits have been reversed, and the Spring Festival competition is progressing smoothly. The 2024Q1 liquor business achieved revenue of 369 million yuan, +32.7% year-on-year, mainly due to the good progress of the Spring Festival competition. Among them, high-end liquor/mid-range liquor/low-end liquor achieved revenue of 0.25/0.83/262 million yuan, +178%/215%/8% year-on-year, benefiting from the overall layout of channels within the province. On the gross margin side, the overall gross margin of 2024Q1 was +17.3 pcts year-on-year, continuing to benefit from cost-side optimization and gradual improvement in the results of reforms. On the cost side, the 2024Q1 sales expense ratio is -1.4 pcts year over year, which is expected to contribute to the cost investment model and scale effect; the management expense ratio is +1.2 pcts year over year. On the profit side, 2024Q1's net profit reversed losses, mainly benefiting from significant improvements in gross margin and excellent results during the Spring Festival campaign.
It is proposed to sell 92% of Goldsun Pharmaceutical's shares to improve overall asset use efficiency. At the end of 2024Q1, the contract debt balance was 111 million yuan, which was basically flat month-on-month, or -34.5% year-on-year. Looking at the revenue ratio, 2024Q1 revenue was -3.4% year-on-year (base effect for the same period last year), which is basically in line with the revenue growth rate. Looking at asset integration, the company plans to list and sell 92% of Golden Sun Pharmaceutical's shares, thereby optimizing the industrial structure and improving overall asset utilization efficiency. Looking at channel reform, the Fuhexiang series, chassis products, etc. have completed the overall channel layout for various markets in the province. The completion rate of the channel layout in the Anhui region exceeds 70%, the channel layout for key markets outside the province exceeds 80%, and the channel layout continues to advance.
Risk warning: competition intensifies; reforms fall short of expectations; demand recovery falls short of expectations, etc.
Investment proposal: Considering the uncertainty of the reform and the company's intention to transfer the holding subsidiary Golden Sun Pharmaceutical, the company is expected to achieve revenue of 15.1/16.7/2.03 billion yuan in 2024-2026 (the value before 2024-2025 was 1.78/2.25 billion yuan, 2%/15%/21%), an increase of 2.4%/10.9%/21.3% year-on-year; achieve net profit of 1.3/1.9/310 million yuan (value before 2024-2025 1.3/310 million yuan, revised down about 3%/40%), year-on-year reversing/ 50%/65%, corresponding to PE 80.3/53.6/32.5X. In view of the large fluctuations in short-term performance and the uncertainty of reforms, no ratings have been given for the time being.