WLY(SZ:000858) Tianfeng Securities·2024-10-13 06:43Investment Rating - The report maintains a "Buy" rating for the company with a target price of 183 CNY per share, based on a 21X PE for 2024 [2][4]. Core Insights - The company is undergoing a second entrepreneurial phase, focusing on product and channel reforms to enhance brand value and market presence. The high-end liquor market is expected to grow significantly, driven by a stable consumer base of high-net-worth individuals [1][2]. - The company aims to solidify its position in the high-end market by controlling volume and increasing prices, particularly for its flagship product, "Pu Wu" [1][2]. Summary by Sections Company Overview - The company has a rich history, transitioning from an OEM model to a more controlled brand strategy, addressing past issues of brand dilution and market control [1][9]. - Recent reforms have led to a clearer product matrix and improved channel management, enhancing profitability and cash flow stability [1][9]. Market Trends - The high-end liquor market is projected to grow at a CAGR of approximately 18% from 2015 to 2023, with the market size expected to reach about 188.9 billion CNY in 2023 [1][2]. - The flagship product "Pu Wu" holds a dominant market share of around 50% in the 1,000 CNY price segment, supported by strong brand and channel capabilities [1][2]. Financial Performance - The company is expected to achieve revenues of 926 billion CNY in 2024, with a year-on-year growth of 11%. The net profit attributable to shareholders is projected to be 339 billion CNY, reflecting a 12% increase [2][3]. - The company's gross margin is currently lower than its main competitors, indicating significant room for improvement in profitability [1][2]. Product Strategy - The company is diversifying its product offerings, focusing on high-end and low-alcohol products to capture different market segments. The introduction of new products like "1618" and low-alcohol variants is part of this strategy [1][2][12]. - The product matrix has been optimized to include a range of price points, enhancing the company's ability to respond to market demands and consumer preferences [1][12]. Channel Management - The company is shifting towards a more direct sales model, with a significant increase in the proportion of direct sales revenue. This change is aimed at improving market control and enhancing the efficiency of sales channels [1][23]. - The number of distributors has increased, and the company is implementing stricter management practices to ensure market order and price stability [1][23].