Shede Spirits (SH:600702) Orient Securities·2024-08-24 13:03Investment Rating - The report maintains a "Buy" rating for the company with a target price of 61.20 CNY based on a reasonable valuation level of 17 times the 2024 earnings per share [3][9]. Core Views - The company reported a revenue of 3.27 billion CNY for the first half of 2024, a year-on-year decrease of 7.3%, and a net profit attributable to the parent company of 590 million CNY, down 35.7% year-on-year. In Q2 alone, revenue was 1.17 billion CNY, a decline of 22.6%, with net profit dropping 88.4% to 40 million CNY [2]. - The company is expected to control volume and stabilize prices, leading to a gradual reduction in inventory. However, cash collection has slowed significantly in Q2 2024. The mid-to-high-end liquor segment saw a revenue of 2.60 billion CNY in H1 2024, down 5.7% year-on-year, with Q2 revenue declining by 19.4% [2]. - The company's gross margin for H1 2024 was 69.4%, a decrease of 6.2 percentage points year-on-year, primarily due to a decline in the proportion of premium products. The sales and management expense ratios increased to 20.1% and 9.4%, respectively [2]. - The company is actively pursuing an old liquor strategy, aiming to enhance brand, channel, product, and organizational strength, which is expected to gradually increase the proportion of high-end products and improve brand positioning [2]. Financial Summary - The company’s revenue for 2024 is projected to be 6.57 billion CNY, with a year-on-year growth of -7.3%. The net profit attributable to the parent company is expected to be 1.20 billion CNY, reflecting a decrease of 32.2% year-on-year. Earnings per share for 2024 is forecasted at 3.60 CNY [7][9]. - The gross margin is expected to decline to 69.2% in 2024, with net profit margin projected at 18.3% [7]. - The company’s total assets are estimated to reach 12.71 billion CNY by 2024, with total liabilities of 4.25 billion CNY [13].