Shede Spirits (SH:600702) ZHESHANG SECURITIES·2024-08-24 12:23Investment Rating - The investment rating for the company is maintained as "Buy" [5] Core Views - The company reported a revenue of 3.271 billion yuan for H1 2024, a decrease of 7.28% year-on-year, and a net profit of 591 million yuan, down 35.73% year-on-year [2] - The consumption environment is under pressure, leading to a decline in the main business revenue of the company [2] - The company is focusing on channel inventory digestion and is not pushing for aggressive sales growth, which is expected to benefit long-term development [4] Summary by Sections Financial Performance - For Q2 2024, the company achieved revenue of 1.165 billion yuan, a decline of 22.65% year-on-year, with a net profit of 41 million yuan, down 88.40% year-on-year [2] - The revenue from liquor products in Q2 2024 was 1.022 billion yuan, a decrease of 25.02% year-on-year, with mid-to-high-end liquor and ordinary liquor revenues of 876 million yuan and 146 million yuan, down 19.33% and 47.34% respectively [2] Market Expansion - The company generated 910 million yuan in revenue from the domestic market, down 2.46% year-on-year, and 2.076 billion yuan from the external market, down 11.16% year-on-year for H1 2024 [3] - The number of distributors increased by 14 to 2,809, indicating ongoing efforts to cultivate base markets and expand nationally [3] Profitability and Costs - The gross margin for H1 2024 decreased by 6.16 percentage points to 69.44%, and the net margin decreased by 5.26 percentage points to 18.09% [3] - The company faced increased sales and management expense ratios due to upfront advertising costs and rising employee salaries [3] Earnings Forecast and Valuation - The company is expected to experience revenue growth rates of -2.50%, 4.79%, and 11.80% from 2024 to 2026, with net profit growth rates of -29.04%, 3.07%, and 15.59% respectively [4] - The estimated earnings per share (EPS) for 2024, 2025, and 2026 are projected to be 3.77 yuan, 3.89 yuan, and 4.49 yuan respectively, with a current price-to-earnings (P/E) ratio of 11.6 times for 2024 [4]