\u3000\u3000 Chongqing Brewery Co.Ltd(600132) (600132)
The growth forecast for 2021 is better than expected: Chongqing Brewery Co.Ltd(600132) predicted its performance for the whole year of 2021 on the evening of February 6. The company predicts that its annual net profit will reach RMB 1.17 billion in 2021, an increase of 8.3% year-on-year in 2020. This also means that the net profit of 4q21 of the company reached 120 million yuan (a year-on-year increase of 10 times compared with 4q20), and the net profit margin reached 6.3% (compared with 0.6% of 4q20). We believe that under the pressure of raw material prices, the significant increase in net profit margin in the fourth quarter is mainly due to the increase in the proportion of high-end products, the optimization of the company's operating efficiency and the help of price increase. The annual operating profit of 2021 is expected to increase by 50.1% year-on-year, and the operating profit of 4q21 will reach 257 million yuan (compared with the operating loss of 72.3 million yuan of 4q20). On the revenue side, the annual revenue increased by 20% year-on-year, slightly lower than our forecast. However, the market has long expected the slowdown of 4q21 revenue growth, so it has a relatively small impact on market sentiment. Although the surge in 4q21 net profit is not very referential (considering that the fourth quarter is the off-season of the industry), in the face of severe epidemic, heavy beer still maintains positive growth in revenue and significant expansion of profit margin in 4q21, which is enough to show the high certainty of the company's nationalization and high-end. We will continue to pay close attention to the growth trend and profit margin changes of heavy beer brands.
We predict that the future growth trend of Wusu will remain unchanged: the management said that due to the early spring festival, the overall dynamic sales of the company will be strong in January 2022. In 2021, the sales volume of Wusu increased by 34% year-on-year to more than 800000 tons. Although the slowdown of 4q21 has caused the market's concern about the sustainability of Wusu's growth, we believe that the slowdown of 4q21 is mainly due to changes in the external environment (repeated outbreaks, forced closure of existing drinking channels) and a high base, which has nothing to do with Wusu's brand strength and the adjustment of the company's channel structure. We believe that Wusu is still in the stage of rapid growth at this stage, and there is still much room for growth in the future. With the continuous expansion of product matrix, the continuous enrichment of marketing means and the continuous promotion of big city plan, we predict that Wusu will continue to maintain a rapid growth rate in 2022.
Product price increase in progress: the company began to raise the price of its products in September 2021, with an overall price increase range of 4-8% (the price increase range in Xinjiang is greater than that outside Xinjiang). The management said that the price increase in Xinjiang is currently going on smoothly. The management expects that the whole process of price increase will be completed before the off-season turns into the peak season in 2022, and hopes to fully cover the pressure on the profit margin caused by the rise of raw materials.
Maintain the target price and "buy" rating unchanged: until the full 2021 annual results are released, we will maintain the profit forecast unchanged for the time being. We use 23x2022eev / EBITDA (the premium level of 100% relative to the average valuation of international brands) as the valuation of Chongqing Brewery Co.Ltd(600132) and maintain the target price of 180.6 unchanged. Heavy beer currently trades at 16.8x2022eev/ebitda, lower than the level of China Resources beer and Tsingtao Brewery Company Limited(600600) A shares.
