Core Viewpoint - The company, Yanghe Co., Ltd. (002304), is undergoing active adjustments in its operations while awaiting improvements in its business performance, as highlighted in the recent research report by Dongwu Securities [1]. Financial Performance - In 2024, the company reported a revenue of 28.876 billion yuan, a year-on-year decrease of 12.83%, and a net profit attributable to shareholders of 6.673 billion yuan, down 33.37% year-on-year [2]. - For Q4 2024, revenue was 1.360 billion yuan, reflecting a significant decline of 52.17% year-on-year, with a net profit of -190.5 million yuan compared to -18.8 million yuan in the same period last year [2]. - In Q1 2025, the company achieved a revenue of 11.066 billion yuan, a decrease of 31.92% year-on-year, and a net profit of 3.637 billion yuan, down 39.93% year-on-year [2]. Strategic Adjustments - The company is actively adjusting its business strategy in response to the competitive pressures in the white liquor industry, particularly in the mid-range and premium segments [2]. - Revenue from mid-to-high-end liquor and ordinary liquor in 2024 decreased by 14.79% and 0.49% respectively, indicating a proactive adjustment in core product lines [2]. - The company plans to focus on the Jiangsu province and surrounding markets to strengthen its market position [2]. Profitability and Cost Structure - In 2024, the sales net profit margin decreased by 7.16 percentage points to 23.09%, with a gross profit margin down by 2.09 percentage points to 73.16% due to a decline in the proportion of mid-to-high-end liquor [3]. - The tax and additional rate increased by 0.81 percentage points to 16.71%, while the sales expense ratio rose by 2.84 percentage points to 19.10% and the management expense ratio increased by 1.34 percentage points to 6.67% [3]. Q1 2025 Performance Insights - In Q1 2025, the sales net profit margin decreased by 4.41 percentage points to 32.83%, with a gross profit margin of 75.59% [4]. - Sales collections in Q1 2025 amounted to 9.805 billion yuan, a decline of 24.03% year-on-year, with contract liabilities at 7.024 billion yuan, reflecting a year-on-year increase of 1.209 billion yuan [4]. Future Outlook and Investment Rating - The company is expected to maintain strategic discipline and enhance management to return to a growth trajectory, with updated net profit forecasts for 2025, 2026, and 2027 at 5.46 billion yuan, 5.66 billion yuan, and 5.90 billion yuan respectively [5]. - The current market capitalization corresponds to a price-to-earnings ratio (PE) of 18.9, 18.3, and 17.5 for 2025 to 2027, with a maintained "buy" rating [5].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is undergoing proactive adjustments while awaiting operational improvements. The white liquor industry is entering a phase of stock competition, with significant pressure on mid-range and premium products. The company is actively adjusting its operational strategies and strengthening its management [7][8] - In 2024, the company reported total revenue of 28.76 billion yuan, a year-on-year decrease of 12.83%, and a net profit attributable to shareholders of 6.67 billion yuan, down 33.37% year-on-year. The fourth quarter of 2024 saw revenue of 1.36 billion yuan, a decline of 52.17% year-on-year [7][8] - The company plans to focus on the Jiangsu and surrounding markets to build a solid foundation for growth, as revenue from both domestic and external markets declined [7][8] - The company is expected to maintain a cash dividend of no less than 70% of the net profit attributable to shareholders, with a projected total cash dividend of at least 7 billion yuan for 2024, corresponding to a dynamic dividend yield of over 6.5% [7][8] Financial Summary - The company's total revenue is projected to decline from 28.76 billion yuan in 2024 to 24.47 billion yuan in 2025, with a gradual recovery expected in subsequent years [1][8] - The net profit attributable to shareholders is forecasted to decrease from 6.67 billion yuan in 2024 to 5.46 billion yuan in 2025, with a slight recovery in 2026 and 2027 [1][8] - The earnings per share (EPS) is expected to drop from 4.43 yuan in 2024 to 3.62 yuan in 2025, with a gradual increase thereafter [1][8] - The price-to-earnings (P/E) ratio is projected to be 18.93 for 2025, 18.27 for 2026, and 17.52 for 2027, indicating a potential for value recovery in the coming years [1][8]

Core Viewpoint - The company reported a decline in revenue and net profit for 2024, indicating a challenging market environment and intensified competition, leading to a strategic adjustment in operations to navigate through the downturn [1][4]. Financial Performance - In 2024, the company achieved revenue of 28.876 billion yuan, a year-on-year decrease of 12.8%, and a net profit attributable to shareholders of 6.673 billion yuan, down 33.4% year-on-year [1]. - The fourth quarter of 2024 saw revenue of 1.360 billion yuan, a significant decline of 52.2% year-on-year, with a net loss of 1.905 billion yuan compared to a loss of 0.188 billion yuan in the same period last year [1]. - For the first quarter of 2025, revenue was 11.066 billion yuan, down 31.9% year-on-year, and net profit was 3.637 billion yuan, a decrease of 39.9% year-on-year [1]. Market Dynamics - The company faced increased competition and a softening demand, leading to a strategic decision to slow down growth and undergo deep adjustments to navigate the cycle [1][4]. - Sales revenue from domestic and external markets in 2024 was 12.748 billion yuan and 15.500 billion yuan, respectively, reflecting declines of 11.4% and 14.4% year-on-year [2]. Profitability and Cost Management - The gross margin for 2024 was 73.2%, a decrease of 2.1 percentage points year-on-year, with the fourth quarter gross margin dropping to 59.9%, down 9.8 percentage points year-on-year [3]. - The company’s net profit margin for 2024 was 23.1%, down 7.1 percentage points year-on-year, while the fourth quarter showed a net profit margin of -140.1% [3]. Strategic Adjustments - The company is undergoing a marketing and channel adjustment phase, focusing on internal management optimization and product structure adjustments to address market challenges [1][4]. - A stable dividend policy was maintained, with total cash dividends of 7 billion yuan for 2024, reflecting a dividend payout ratio of 104.9% [4]. Future Outlook - The company is expected to experience a revenue of 23.594 billion yuan and 24.151 billion yuan in 2025 and 2026, respectively, with a projected year-on-year decline of 18.3% in 2025 followed by a growth of 2.4% in 2026 [4]. - The net profit for 2025 and 2026 is anticipated to be 5.044 billion yuan and 5.148 billion yuan, respectively, with a year-on-year decline of 24.4% in 2025 and a slight increase of 2.1% in 2026 [4].