Shede Spirits (SH:600702) Guoxin Securities·2024-08-23 08:34Investment Rating - The investment rating for the company is "Neutral" [4][9]. Core Views - The company experienced a significant decline in revenue and profit in the second quarter of 2024, with revenue down 7.3% year-on-year and net profit down 35.7% [5][6]. - The second quarter saw a revenue of 1.165 billion yuan, a decrease of 22.6% year-on-year, and a net profit of 41 million yuan, down 88.4% year-on-year [5][6]. - The company is focusing on maintaining channel health and managing inventory levels amid weak demand in the off-season [5][6]. Summary by Sections Financial Performance - In the first half of 2024, the company achieved total revenue of 3.271 billion yuan, a decrease of 7.3% year-on-year, and a net profit of 591 million yuan, down 35.7% year-on-year [5][6]. - The second quarter's performance was particularly weak, with mid-to-high-end liquor revenue at 876 million yuan (down 19.33%) and low-end liquor revenue at 146 million yuan (down 47.34%) [5][6]. - The gross profit margin for Q2 2024 decreased by 11 percentage points to 60.9% due to product mix changes and increased discounts in certain categories [5][6]. Market Dynamics - The company reported a decline in both domestic and international sales, with domestic revenue at 1.022 billion yuan (down 18.25%) and international revenue at 655 million yuan (down 28.46%) [5][6]. - The number of distributors increased to 2,809 by the end of June, reflecting a slight improvement in distribution channels [5][6]. Profitability and Cost Management - The net profit margin decreased by 19.5 percentage points year-on-year, attributed to rigid costs and declining sales [5][6]. - Sales expenses increased by 37% year-on-year, driven by efforts to support distributors and enhance market penetration [5][6]. Future Outlook - The company has revised its revenue forecasts for 2024 and 2025, expecting revenues of 6.119 billion yuan (down 13.6%) and 6.648 billion yuan (up 8.6%) respectively [6][7]. - The net profit forecast for 2024 is adjusted to 1.279 billion yuan (down 27.8%), with a slight recovery expected in 2025 [6][7].