In the first half of 2024, the growth rate of liquor companies slowed down, and major liquor companies began to reduce their inventory, with the effect already reflected in the company's financial statements, especially the de-stocking effect of finished liquor is more obvious.

At the same time, in the context of a prolonged consumption recovery cycle, there is a further task of reducing inventory for white liquor companies.

After two consecutive years of decline in white liquor revenue, Shunxin Agriculture's white liquor revenue achieved positive growth again in the first half of 2024.

After a period of adjustment, Shunxin Agriculture's inventory reduction has been effective.

Not only Shunxin Agriculture, but also the overall inventory of listed liquor companies has basically stopped growing.

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Under the condition that the overall inventory has basically stopped growing, the inventory of finished liquor has obviously decreased.

The inventory of finished liquor of most liquor companies, including Shunxin Agriculture, is declining.

The China Alcoholic Drinks Association also pointed out that in the first half of 2024, liquor companies have been digesting inventory through promotions, strong channels, etc., and through the implementation of the price-following project, liquor companies can gradually solve the problem of price inversion and stabilize the market price system.

However, the price adjustment behavior of liquor companies has not completely offset the inventory pressure, and the inventory reduction still needs to be made.

The semi-annual report released by Shunxin Agriculture shows that in the first half of 2024, the company achieved a revenue of 5.687 billion yuan, a year-on-year decrease of 8.45%; it achieved a net profit of 423 million yuan attributable to shareholders of the listed company, a year-on-year increase of 621.87%, and the net profit of the company in the first half of the year reached the best level in the past three years.

One of the reasons why Shunxin Agriculture can turn losses into profits is that the company has divested its long-term loss-making real estate business.

In June 2023, Shunxin Agriculture listed the transfer of its subsidiary responsible for the real estate business, Beijing Shunxin Jiayu Real Estate Development Co., Ltd. At the end of November, the company transferred the subsidiary for 2.259 billion yuan.

After divesting the real estate business, Shunxin Agriculture's main business currently has two - white liquor and pig slaughtering related business.

The decline in the company's revenue is not due to white liquor but due to the decline in slaughtering revenue.

Looking at the business, in the first half of 2024, Shunxin Agriculture's slaughtering business achieved a revenue of 786 million yuan, a year-on-year decrease of 36.64%.

The revenue of the white liquor business was 4.698 billion yuan, a year-on-year increase of 3.17%.

Due to the small volume and low gross margin of the slaughtering business, the core of Shunxin Agriculture's revenue and profit lies in the white liquor business.

The market and institutions' attention to Shunxin Agriculture is also focused on this.

The increase in the revenue of Shunxin Agriculture's white liquor business in the first half of 2024 seems not to be significant, but it is the first positive growth in the revenue of Shunxin Agriculture's white liquor business in the past three years.

The main products of Shunxin Agriculture's white liquor business industry are represented by "Niulan Mountain" and "Ningcheng", the latter is represented by Ningcheng Laojiao white liquor, and the former is the more famous Beijing Erguotou liquor.

The year 2019, the year before the epidemic, was the peak of Shunxin Agriculture's white liquor revenue.

In this year, the company's white liquor business achieved a revenue of more than 10 billion yuan, reaching 10.289 billion yuan.

In the following 2020 and 2021, Shunxin Agriculture's white liquor revenue was 10.185 billion yuan and 10.225 billion yuan respectively, which was not as good as 2019, but it was not much different.

In these three years, Shunxin Agriculture's white liquor revenue was above 10 billion yuan, maintaining a high level.

After that, Shunxin Agriculture's white liquor sales began to decline step by step.

In 2022, it fell to the level of 8 billion yuan, and in 2023, it was less than 7 billion yuan.

After the white liquor revenue began to decline, Shunxin Agriculture started to reduce inventory.

First, it was production reduction.

Taking the Niulan Mountain Distillery, which contributes the vast majority of white liquor revenue, as an example, in 2021, the actual production capacity of Niulan Mountain Distillery was 645,000 tons, and in 2023, it fell to 313,000 tons.

The second is to speed up the de-stocking.

At the end of 2021, Shunxin Agriculture's finished liquor inventory was 462,380 tons, and in 2022, it grew rapidly to 138,000 tons, an increase of about 2.2 times.

In 2023, Shunxin Agriculture increased its efforts to reduce inventory, and at the end of the year, the company's finished liquor inventory fell to 86,743 tons, which has obviously fallen back.

At the end of the first half of 2024, Shunxin Agriculture's finished liquor inventory fell sharply to 19,623 tons, and this inventory scale is already a new low for the company in recent years.

From the inventory situation of Shunxin Agriculture's main products, it can also be seen that the company's inventory has decreased.

In the first half of 2024, one of Shunxin Agriculture's main products, 42-degree 500ml Niulan Mountain Chen Brewing liquor, had an inventory of 544,000 tons.

Compared with this, at the end of 2022, the inventory of this product reached 108,000 tons.

Shunxin Agriculture's control of production capacity and promotion of sales can also be seen from this product.

In 2023, Shunxin Agriculture produced 154,000 tons of 42-degree 500ml Niulan Mountain Chen Brewing liquor, while the sales volume was 246,000 tons, and the sales volume was much greater than the production volume.

This is also the basis for the sharp decline in the inventory of 42-degree 500ml Niulan Mountain Chen Brewing liquor.

Before this, from 2020 to 2021, the production and sales of 42-degree 500ml Niulan Mountain Chen Brewing liquor were basically the same.

In 2022, the output was 94,602 tons more than the sales volume, which led to the rapid increase in the inventory of the product.

The rapid de-stocking of finished liquor naturally reduced the balance of white liquor inventory in the inventory.

In the first half of 2024, the balance of white liquor finished products in Shunxin Agriculture's inventory was 472 million yuan.

In the semi-annual report that can be checked, in the first half of 2022, the balance of white liquor finished products in Shunxin Agriculture's inventory was the lowest, at 420 million yuan.

The current balance of white liquor finished products in the inventory is close to the lowest level.

Among the leading liquor companies, Yanghe shares are also working hard to reduce inventory.

In the first half of 2024, the company achieved a revenue of 22.876 billion yuan, a year-on-year increase of 4.58%; it achieved a net profit of 7.947 billion yuan attributable to shareholders of the listed company, a year-on-year increase of 1.08%.

If we look at it by quarter, Yanghe shares' situation in the second quarter is not ideal.

In the second quarter of 2024, Yanghe shares achieved a revenue of 6.621 billion yuan, a year-on-year decrease of 3.02%; it achieved a net profit of 1.892 billion yuan attributable to shareholders of the listed company, a year-on-year decrease of 9.75%.

The company's revenue and net profit both declined.

Among the leading liquor companies, Yanghe shares are the only liquor company whose revenue and net profit both declined.

This may be related to the company's ongoing inventory reduction.

After the inventory reached a new high two years ago, Yanghe shares are working hard to reduce inventory.

In the first half of 2024, the inventory of Yanghe shares' white liquor was 24,673 tons, a slight year-on-year decrease of 1.78%.

After setting a new high of 27,581 tons in the first half of 2022, the inventory of Yanghe shares' white liquor has achieved two consecutive declines.

In the first half of 2023, the company's white liquor inventory fell by 8.92% to 25,122 tons.

Of course, there is still room for the inventory of Yanghe shares' white liquor to continue to decline.

At the end of the first half of 2020-2021, the company's white liquor inventory was 15,428 tons and 18,618 tons respectively.

Compared with these two years, there is still a large room for the decline of Yanghe shares' inventory.

If we look at the whole year, after an inventory decline in 2019, the inventory of Yanghe shares began to grow.

In 2020, the company's white liquor inventory increased by more than 30%, reaching 23,898 tons, and in 2021, the increase was 85.08%, with the inventory reaching 44,228 tons.

In 2022, it increased slightly by 5.13% to 46,496 tons, which was the peak of the company's white liquor inventory.

After that, Yanghe shares began to reduce inventory.

At the end of 2023, the company's white liquor inventory was 39,176 tons, a year-on-year decrease of 15.74%.

It is already the low level of the past three years.

However, compared with the period before 2021, there is still a large room for decline.

How to sort out the channels and achieve a benign development of the company and channel inventory is a must-answer question for white liquor companies.

It is not difficult to find from the semi-annual report submitted by liquor companies in the first half of 2024 that the inventory of listed white liquor companies has obviously improved, especially the finished liquor has obviously declined.

Active control starts from the inventory scale.

The overall inventory of listed liquor companies basically bid farewell to growth.

In the first half of 2024, the inventory scale of the 20 listed white liquor companies was 150.681 billion yuan, compared with 149.095 billion yuan at the end of 2023, the growth rate is about 1%, and there is basically no growth.

Among them, the inventory scale of 6 liquor companies, including Shunxin Agriculture and Yanghe shares, began to decline.

Among the growing liquor companies, except for Shuijingfang, the increase is more than 20%, and the inventory of other white liquor companies is basically a slight increase, or a slight increase.

Even the Guizhou Maotai that is not worried about selling, the increase in its inventory is less than 3%.

In contrast, in the first half of 2023, the inventory of the 20 listed white liquor companies was 136.07 billion yuan, an increase of 2.44% from the beginning of the year.

As mentioned earlier, liquor companies have already started the process of reducing inventory in 2023.

At the end of the first half of 2023, the inventory of the 20 liquor companies was 18.073 billion yuan, a decrease of 15.6% from 21.424 billion yuan at the end of 2022.

Correspondingly, at the end of the first half of 2024, the inventory of the 20 liquor companies was 19.986 billion yuan, a decrease of 17.89% from 24.34 billion yuan at the end of 2023.

If the comparison with the beginning of the year is not obvious, the year-on-year data is more direct.

From the first half of 2021 to 2023, the inventory of the 20 listed white liquor companies was 15.157 billion yuan, 18.073 billion yuan, and 19.986 billion yuan, respectively, with year-on-year increases of 35.15%, 19.24%, and 10.58%.

The growth rate in the first half of 2024 is slightly more than 10%, and the year-on-year growth rate of the inventory of white liquor companies is lower than that in the first half of 2024, and it can be traced back to the 4.53% in the first half of 2020.

It is well known that in the first half of 2020, the macro economy was affected by the sudden epidemic, and the slowdown of white liquor growth has objective reasons.The current slowdown in the growth rate of white liquor revenue is influenced by multiple factors.

A research report published by Soochow Securities points out that the second quarter is the off-season for white liquor demand, compounded by the high growth caused by the backlog after the pandemic was relaxed in the same period of 2023, leading to a slowdown in the growth rate of white liquor.

In addition, liquor companies are focusing on the long-term and actively controlling the pace of operations.

Among them, high-end and sub-high-end liquor companies with a higher product structure and a larger proportion of business demand are showing pressure in revenue realization, and slowing down to improve quality has begun to become a common choice.