YINGJIA DISTILLERY(603198) Southwest Securities·2024-11-01 02:30Investment Rating - The report maintains a "Buy" rating for the company, with a current price of 63.53 CNY and a target price not specified for the next 6 months [1]. Core Views - The company reported a revenue of 5.51 billion CNY for the first three quarters of 2024, representing a year-on-year increase of 13.8%, and a net profit attributable to the parent company of 2.01 billion CNY, up 20.2% year-on-year. However, Q3 revenue growth slowed to 2.3% year-on-year, with net profit growth at 2.9% [1]. - The demand during the Mid-Autumn Festival and National Day was weak, leading to a decline in sales performance. The company is actively managing channel inventory, which has contributed to the slowdown in revenue growth [1]. - The gross profit margin improved by 2.9 percentage points year-on-year to 75.8% in Q3, driven by the increasing proportion of high-end products. The overall expense ratio increased by 1.0 percentage points to 13.3% [1]. - The company’s cash flow showed some pressure, with cash receipts from sales at 1.87 billion CNY, a year-on-year increase of 0.8%, while contract liabilities decreased by 20.5% year-on-year [1]. Summary by Sections Revenue and Profitability - For the first three quarters of 2024, the company achieved a revenue of 5.51 billion CNY, with a year-on-year growth of 13.8%. The net profit attributable to the parent company was 2.01 billion CNY, reflecting a 20.2% increase year-on-year. In Q3 alone, revenue was 1.71 billion CNY, up 2.3% year-on-year, and net profit was 620 million CNY, up 2.9% year-on-year [1]. Product and Market Performance - In Q3, the mid-to-high-end liquor segment generated 1.30 billion CNY in revenue, a year-on-year increase of 7.1%. The company’s mainstream products are expected to maintain steady growth, while the mid-range products faced pressure [1]. - Revenue from the domestic market in Q3 was 1.12 billion CNY, up 6.8% year-on-year, while revenue from outside the province was 520 million CNY, down 3.6% year-on-year, indicating a phase of growth pressure in external markets [1]. Profit Margins and Cash Flow - The gross profit margin in Q3 increased to 75.8%, up 2.9 percentage points year-on-year, attributed to the growing share of high-end products. The net profit margin also improved by 0.7 percentage points to 36.4% [1]. - Cash flow from sales was 1.87 billion CNY, a slight increase of 0.8% year-on-year, while contract liabilities decreased significantly by 20.5% year-on-year [1]. Long-term Growth Potential - The company’s "Dòngcáng" series continues to show growth potential despite a challenging external consumption environment. The brand's market recognition is increasing, and it is expected to achieve steady growth in the future [1]. - Earnings per share (EPS) are projected to be 3.39 CNY, 3.95 CNY, and 4.59 CNY for 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (PE) ratios of 19, 16, and 14 [1].