Matters:
On January 26, the State Council issued the "opinions on supporting Guizhou to blaze a new path in the western development in the new era". On January 27, Kweichow Moutai Co.Ltd(600519) announced that the board of directors of the company passed a proposal and decided to invest 4.11 billion yuan to implement the phase I construction project of Maotai flavored wine Xishui tongminba in the 14th five year plan, and the required funds will be raised by the company itself.
Ping An View:
The State Council issued opinions to support the construction of Baijiu in Guizhou. Baijiu Baijiu, a new Guizhou port in the new era, points out that Guizhou will play an important role in the production of Maotai flavor liquor in the Chishui River Basin, and build an important national Baijiu production base, and implement the incentive policies for the state-owned technology enterprises to share ownership and dividends, and steadily push forward the reform of the liquor enterprise marketing system. The opinions show that the State supports the construction of the main sauce and wine producing areas dominated by Maotai from the policy level, affirms the current construction of the main sauce and wine producing areas in the Chishui River Basin of Maotai Town, and promotes the development of the sauce and wine industry with the Chishui River Basin as the core.
Maotai plans to invest 4.14 billion yuan to promote the production capacity construction of series liquor. On January 26, Maotai announced that the first meeting of the third board of directors in 2022 decided to invest 4.11 billion yuan to implement the phase I construction project of Maotai flavor liquor Xishui tongminba in the 14th five year plan, and the required funds shall be raised by the company itself. The construction site of the project is located in Tongmin Town, Xishui County, Guizhou Province. After the completion of the project, a series of liquor can be formed, with a liquor production capacity of about 12000 tons, a koji production capacity of about 29400 tons and a liquor storage capacity of about 36000 tons. The construction period is 24 months. According to the production and operation of 2021 released by Kweichow Moutai Co.Ltd(600519) , the base liquor of Kweichow Moutai Co.Ltd(600519) series was about 28200 tons in 2021. It is expected that the revenue of series liquor will be about 12.6 billion yuan, with a year-on-year increase of about 11.2%. The "14th five year plan" construction project will promote the further expansion of the production capacity of a series of liquor, meet the overflow demand under the production capacity restriction of Maotai liquor, build a flagship brand with price dominance and leadership in the sauce liquor market, and become the main growth pole of the development of Maotai Group.
Maotai Group acts frequently and invests in supporting projects for many times. In December 19, Maotai Group announced that it would invest about 4.1 billion yuan to build an 80000 ton series wine packaging workshop and supporting projects. As an automatic integration and intelligent optimization packaging project in recent years, the series of wine packaging workshop and supporting facilities project is regarded as the major action of Moutai group focusing on Baijiu main industry. In December, 2001, Kweichow Moutai Co.Ltd(600519) was put into operation again to meet the needs of product packaging, storage and logistics, with an investment of 7.833 billion yuan. The first phase of the packaging logistics park project was implemented in Tanchang street, Renhuai City. The funds were raised by the company itself, and the construction period was 24 months.
The production capacity of Feitian Maotai is limited, and the production of series liquor is actively expanded. The difference between Feitian and series wine is: 1) different producing areas, Moutai liquor is located in the upper reaches of Chishui River, and is produced in 15.03 square kilometers of Maotai Town core producing area. The series of liquor is located in the lower reaches of Chishui River, but it is also in the core producing area of Maotai Baijiu liquor in the world. 2) The brewing cycle of Maotai liquor is at least 5 years, while that of series liquor is about 3 years. Compared with Feitian's short supply, the production capacity of series wine has not reached the ceiling in the short term, and the large-scale product volume is expected to drive the company's revenue to achieve further growth.
Investment suggestion: both supply and consumption sides should be improved to benefit the long-term development of the industry. From the consumer side, according to channel research, the current sauce and wine fever is significantly lower than that in the early stage, the price transmission of some products is blocked, the dynamic sales of OEM products and second and third tier products are not smooth, and the phenomenon of goods rejection is exacerbated. However, the performance of head brands is still good, and the industry concentration is expected to increase. From the supply side, the State Council supports the construction of sauce and wine producing areas in Chishui River Basin. The head sauce and wine enterprises actively expand production and carry out the construction of relevant supporting measures, which is expected to drive the revenue scale of head enterprises to rise steadily. On the whole, the improvement of both the supply side and consumption side of sauce and wine is conducive to the long-term and stable development of the industry. We believe that the head sauce and wine enterprises are expected to benefit fully, and recommend Kweichow Moutai Co.Ltd(600519) .
Risk tips: 1) policy risk. Baijiu industry demand and tax rate are greatly influenced by policies, such as changes in relevant policies, which may have a greater impact on the company's revenues and profits. 2) Baijiu industry downturn risk. Baijiu industry and the price trend is highly correlated, if Baijiu prices decline, may lead to a substantial slowdown in corporate revenue growth. 3) Industry competition intensifies. There is a problem of intensified competition in the Baijiu industry. We should guard against the adverse effects of price war and fleeing goods brought about by the deterioration of competition. 4) Food safety risks. Food safety is the red line. Once food safety problems occur, they will have a great negative impact on the industry. 5) The risk of epidemic aggravation. The Baijiu consumption scenario is reduced when the epidemic intensifies, which may impact the Baijiu industry boom.
