Incident: The company 24H1 achieved revenue of 0.667 billion (-13%, year-on-year data, same below), of which liquor revenue was 0.552 billion (+12%), and net profit to mother was 0.011 billion (-0.038 billion for the same period last year). 24Q2 liquor revenue was 1.83 (-15%), and net profit attributable to mother was 0.007 billion (0.003 billion in the same period last year).

Comment:

Expenses have been stepped up, and repayments are under pressure. 1) 24Q2 gross profit margin of 41.7% (+8pct) We believe that the main reason is the increase in the Fuhexiang series, the net profit margin is -2.6% (-3.6pct), and the main reason is the increase in cost investment. 2) 24Q2 sales expenses 0.056 billion (+151%) accounted for 23% (+16pct) due to increased advertising and labor costs; 0.019 billion (-53%) of management expenses accounted for 8% (-4pct) due to reduced termination benefits, 0.039 billion (-10%) in taxes and surcharges, and 19.1% (-8pct) of gross sales difference.

3) 24Q2 sales revenue of 0.223 billion (-47%). The contract debt was 0.062 billion, and the loop depreciated 0.049 billion.

The Fuhexiang series still has potential for growth, and the growth rate of ordinary liquor has declined markedly. 1) By product: 24H1 liquor revenue was 0.552 billion (+12%), of which medium and high-end 0.141 billion (+31%) accounted for 26%, and ordinary liquor 0.374 billion (-3%). In 24Q2, high-end revenue of 0.07 billion (-3%) accounted for 39%; ordinary wine revenue was 0.112 billion yuan (-21%). 2) Subregions: 24H1 revenue of 0.436 billion (+3%) in the province accounts for 79%; 0.116 billion (+62%) outside the province. In 24Q2, revenue of 0.136 billion (-22%) in the province accounted for 74%; 0.047 billion (+14%) outside the province. Competition within the province is fierce, and the growth rate outside the province is impressive.

3) 24Q2 had a total of 521 dealers (+16), 317 (+21) in the province and 204 (-5) outside the province.

Focus on key markets in Fuyang/Hefei, and firmly integrate the two wings. 1) The company adheres to the TOP store offensive battle with Fuhexiang as the core, the chassis large single product blasting battle, and the light bottle combination position battle. Combined with the “Spring Festival Attack Battle” and “Spring Farming Operation”, the company focuses on core business actions such as TOP stores and chassis core stores to achieve 80% chassis product terminal coverage. 2) Adhere to high standards for attracting large investors, continue to promote channel layout optimization, and achieve a large-scale, nationwide layout based in Anhui.

3) The company divested the pharmaceutical industry to focus on its main business and announced the completion of the cancellation of Golden Sun Pharmaceutical on August 15.

Profit forecast and investment rating: The company's short-term performance is under pressure, but as operations stabilize, the results of the reform are expected to gradually be reflected. We lowered our 24-26 EPS forecast to 0.04/0.15/0.18 yuan (previously 0.07/0.23/0.36 yuan). Maintain a “buy” rating.

Risk factors: food safety risks, increased industry competition