\u3000\u3000 Chongqing Brewery Co.Ltd(600132) (600132)
We covered Chongqing Brewery Co.Ltd(600132) (600132. CH) for the first time and gave a "buy" rating for the first time. Some investors questioned whether Wusu could maintain a relatively high growth rate in the next two years after the slowdown of 4q21. We believe that the growth slowdown of 4q21 is mainly due to the external environment. At this stage, we are full of confidence in Wusu's brand strength and competitiveness and the company's brand operation ability.
From local leaders to high-end representatives: after Carlsberg China injected its high-quality assets into the listed company of heavy beer in 2020, Chongqing Brewery Co.Ltd(600132) (heavy beer) became the only platform for Carlsberg to operate beer assets in China, and pocketed all Carlsberg brands in China. The restructured heavy beer has both domestic online red brand (Wusu) and international well-known brand (Carlsberg + 1664) in the high-end and ultra-high-end price belt, and the brand portfolio has been greatly upgraded. This has laid a solid foundation for heavy beer to meet the continuous high-end trend of China's beer market.
Wusu: the main driving force for the future growth of heavy beer: Wusu is currently the brand with the largest proportion of heavy beer (accounting for 26% of the total sales volume of heavy beer in 2020), and it is also the brand with the fastest growth rate. With the successful marketing based on social media, ussu has rapidly stepped out of the circle and expanded significantly in recent years. We estimate that Wusu's sales outside Xinjiang will increase by more than 70% in 2021 and maintain a high growth rate in the next two years, so as to further improve the company's product structure and gross profit margin.
The road of nationalization is unstoppable: after the reorganization, Carlsberg further deepened its "big city plan" and hopes to accelerate its omni-channel development in big cities through its rich product portfolio in the high-end price belt (especially Wusu + 1664). We believe that Carlsberg's expansion from the west to more economically developed areas will help the effective implementation of its high-end strategy. Valuation: therefore, we use 23x2022eev / EBITDA (100% premium level relative to the average valuation of international brands) as the valuation of Chongqing Brewery Co.Ltd(600132) , and get the target price of 180.6 yuan, which has 31.5% room for rise compared with the current stock price.
Investment risk: (1) the high-end process of the whole industry is slower than expected; (2) The price increase of raw materials is higher than expected; (3) Wusu's growth rate is slower than expected; (4) The epidemic situation repeatedly and continuously affects the current drinking channels; (5) Supply chain disruption affects the company's output.
