Shede Spirits (SH:600702) Capital Securities·2024-08-29 07:49Investment Rating - The investment rating for the company is "Accumulate" [2] Core Views - The report highlights that the company is actively controlling inventory and stabilizing prices to prepare for long-term development [3] - The company reported a decline in revenue and net profit for the first half of 2024, with revenue at 3.271 billion yuan, down 7.28% year-on-year, and net profit at 591 million yuan, down 35.73% year-on-year [3] - The report indicates that the company is focusing on long-term growth by balancing its product portfolio and enhancing brand presence in traditional markets [3] Summary by Sections Financial Performance - In Q2 2024, the company's revenue was 1.165 billion yuan, a decrease of 22.61% year-on-year, with net profit dropping to 41 million yuan, down 88.40% year-on-year [3] - The gross margin for Q2 2024 was 60.93%, a decline of 10.96 percentage points year-on-year, attributed to inventory control measures [3] - The company has increased its number of distributors to 2,809 by the end of Q2 2024, up by 154 from the end of 2023 [3] Future Projections - The report projects the company's net profit for 2024, 2025, and 2026 to be 1.21 billion yuan, 1.33 billion yuan, and 1.45 billion yuan respectively, with year-on-year changes of -32%, +10%, and +10% [3] - The current stock price corresponds to a price-to-earnings (PE) ratio of 12, 11, and 10 for the years 2024, 2025, and 2026 respectively [3] Market Strategy - The company is implementing a strategy to control inventory and stabilize prices in response to a challenging market environment for mid-to-high-end liquor [3] - The focus is on enhancing the sales of its flagship product, "Pinnacle Shide," while also maintaining a balanced product lineup across different price segments [3]