Shede Spirits (SH:600702) Huaxin Securities·2025-05-07 06:30Investment Rating - The report maintains a "Buy" investment rating for the company [5][7]. Core Views - The company's performance is under pressure, with expectations for a recovery in elasticity as the economy stabilizes [5][7]. - The first quarter of 2025 saw total revenue and net profit attributable to shareholders at 1.576 billion and 346 million yuan, respectively, reflecting year-on-year declines of 25% and 37% [5]. - The company is positioned as a resilient player in the mid-to-high-end market, with anticipated brand strength improvement post-economic recovery [7]. Financial Performance Summary - In Q1 2025, the gross margin and net profit margin were 69% and 22%, showing declines of 4.8 and 4.2 percentage points year-on-year [5]. - The company's operating cash flow significantly increased, with a year-on-year growth of 107% to 224 million yuan [5]. - Contract liabilities reached 206 million yuan by the end of Q1 2025, reflecting a quarter-on-quarter increase of 41 million yuan [5]. Sales Channel and Product Performance - E-commerce sales showed significant growth, with a year-on-year increase of 37%, while wholesale and agency sales declined by 32% [6]. - The revenue from mid-to-high-end liquor and ordinary liquor in Q1 2025 was 1.234 billion and 208 million yuan, respectively, with mid-to-high-end liquor sales experiencing a larger decline [6]. - The company has focused on developing its domestic market, particularly in regions like Suining, resulting in a year-on-year revenue increase of 7 percentage points in provincial markets [6]. Earnings Forecast - The earnings per share (EPS) estimates for 2025-2027 have been adjusted to 2.10, 2.84, and 3.61 yuan, respectively, with corresponding price-to-earnings (PE) ratios of 28, 20, and 16 times [7][10]. - The company is expected to see a recovery in business dining scenarios, which will enhance its performance in the next few years [7].