SCSF(SH:600779) Huachuang Securities·2024-07-29 04:01Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 44 CNY, compared to the current price of 35.84 CNY [1][2]. Core Insights - The company's Q2 performance exceeded expectations, with revenue of 7.9 billion CNY, a year-on-year increase of 16.6%, and a net profit of 0.6 billion CNY, up 29.6% [2][3]. - The growth in revenue is attributed to the strong performance of the flagship product, Zhenniang No. 8, which saw both volume and price increases [3]. - The company is focusing on the mid-to-high-end market segment and has plans to enhance its marketing strategies following a management change [3]. Financial Performance Summary - For the first half of 2024, the company reported total revenue of 17.2 billion CNY, a 12.6% increase year-on-year, and a net profit of 2.4 billion CNY, up 19.5% [2]. - The Q2 revenue breakdown shows that finished liquor sales reached 7.4 billion CNY, with a year-on-year growth of 11.2% [3]. - The gross profit margin remained stable at 81.5%, with a slight increase in high-end liquor margins due to price adjustments [3]. - The company has adjusted its earnings per share (EPS) forecasts for 2024-2026 to 2.91, 3.21, and 3.57 CNY respectively [3][4]. Market Strategy and Outlook - The company plans to invest more in its mid-range products and explore new distribution channels, aiming to capture a larger market share in the 200-400 CNY price range [3]. - The management is expected to implement more effective market strategies following recent leadership changes, focusing on digital marketing and optimizing sales expenses [3]. - The company anticipates a gradual increase in dividend payouts as capital expenditures decrease after the completion of the Qionglai project [3].