Shede Spirits (SH:600702) Zheng Quan Zhi Xing·2025-06-11 11:24Core Viewpoint - The company, Shede Liquor Co., reported a significant decline in revenue and production in its 2024 annual report, raising concerns about its business performance and financial health [1][5]. Group 1: Main Business Performance - The company achieved total revenue of 5.357 billion yuan in the reporting period, a year-on-year decrease of 27.08% [1][5]. - The liquor business revenue was 4.789 billion yuan, also down 27.08% year-on-year, with a production volume of 31,300 kiloliters, reflecting a 28.21% decline [1][5]. - The gross profit margin for liquor products has decreased significantly, with previous years showing margins of 81.54%, 80.89%, and 78.55%, indicating a downward trend [1][5]. Group 2: Supplier and Customer Relationships - The company provided detailed disclosures regarding its main suppliers and customers over the past three years, including transaction amounts and balances, confirming no significant related party transactions [2][3]. - Major suppliers include Chengdu Shengshi Pinwei Supply Chain Co., Ltd. and Dezhou Zhicheng Baozhen Liquor Co., Ltd., with transaction amounts of 121.4 million yuan and 121.1 million yuan respectively [2][3]. Group 3: Cost and Revenue Recognition - The company explained that despite the decline in revenue and production, the cost of liquor business remained relatively stable due to its cost accounting methods and revenue recognition policies [4][6]. - The unit cost of liquor increased by 38.80% year-on-year, attributed to rising material costs and changes in procurement practices [5][8]. - The average selling price of liquor products increased by 2%, with specific price segments showing significant changes due to adjustments in sales strategies and market conditions [7][8]. Group 4: Market and Competitive Position - The company adopted a price control model to support distributors, which has led to a temporary decrease in order quantities as part of inventory management strategies [7][9]. - The overall sales structure has shifted, with a notable decline in the sales of higher-priced products, contributing to a decrease in the overall gross margin [7][9].