There are also Baijiu enterprises pushing the expansion plan.
on February 18, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (603369) announced that it plans to invest 9.076 billion yuan to build the South plant intelligent brewing storage center project, which is expected to add 18000 tons of high-quality Luzhou flavor original wine, 20000 tons of high-quality elegant Maotai flavor original wine, 80000 tons of semi open wine storage and 210000 tons of taotan storage, At that time, the production capacity of the company will reach 102000 tons / year.
Baijiu Baijiu get ready for battle in the market competition in recent years. As the liquor enters the era of brand and scale competition, the liquor companies are fighting hard to compete in the market competition. A surge of production is surging in the industry. With the gradual release of capacity, whether the liquor capacity will be overloaded will become a hot topic in the market.
the investment scale reached 9.076 billion yuan
In fact, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) this expansion is not sudden. The company has disclosed it on many occasions before.
looking at the Q & A of investors since Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) 2021, at least three mentioned the capacity expansion plan. It is reported that the company has an existing brewing capacity of 27000 tons and is expected to add 38000 tons of capacity in the next five years. The base liquor inventory, existing and new capacity can support the sales target of the 14th five year plan and longer-term sales demand.
From the perspective of planning scale, the above information is basically consistent with the content of this disclosure. According to the announcement, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) the cumulative production capacity of original wine reached by the South plant intelligent brewing and storage center project to be implemented is just 38000 tons, of which the production capacity of Luzhou flavor and elegant Maotai flavor is 18000 tons and 20000 tons; At the same time, a semi open wine warehouse with a reserve of 80000 tons and a pottery altar warehouse with a reserve of 210000 tons will be built, and the koji production capacity will also reach 102000 tons / year. The above-mentioned capacity will gradually enter the production stage from September 2023 to December 2026.
In terms of investment scale, the total investment is 9.076 billion yuan, which is invested in five years, including 8.52 billion yuan in fixed assets and 556 million yuan in working capital, which will be self raised by self owned funds + other financing methods. By the end of the third quarter of 2021, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) monetary capital balance was 3.135 billion yuan, with another 2.9 billion yuan of trading financial assets, and the operating net cash flow has remained above 1 billion yuan since 2017. From the perspective of the five-year investment cycle of the project, the capital strength of the company should be able to support the project investment.
is the investment plan of up to 9 billion yuan too aggressive? Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) also made a statement: in the 2018-2020 year, the output of Baijiu liquor was 19 thousand tons, 22 thousand tons and 25 thousand tons respectively, and the utilization rate of the liquor was 70%, 81% and 93% respectively. The utilization rate of the capacity in the next five years is expected to further increase to 95%. The state of nearly full production should be a major motivation for this round of production expansion.
On the other hand, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) has previously set a target of more than 10 billion revenue in the 14th five year plan. According to the performance forecast, the company expects the revenue in 2021 to be 6.3-6.5 billion yuan. Although the year-on-year growth rate is 23% – 27%, it is still a fire away from the 10 billion target, and the gradual release of production capacity is obviously helpful to achieve the target. In terms of profitability, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) has always maintained a gross profit margin of more than 70%. It is expected to achieve a net profit of 1.9-2.1 billion yuan in 2021, with a year-on-year increase of 21% – 34%.
Baijiu enterprise expansion tide hits
In recent years, Baijiu liquor like Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) expansion is not uncommon.
in January this year, Kweichow Moutai Co.Ltd(600519) and Wuliangye Yibin Co.Ltd(000858) both released plans for production expansion or technological transformation, of which Kweichow Moutai Co.Ltd(600519) plans to invest 4.11 billion yuan to implement the phase I construction project of Maotai flavor wine Xishui tongminba in the 14th five year plan. After the completion of the project, a series of wine production capacity of about 12000 tons, koji production capacity of about 29400 tons and wine storage capacity of about 36000 tons can be formed. The construction period is 24 months; Wuliangye Yibin Co.Ltd(000858) it is planned to expand and transform the koji making workshop in two phases, with an investment of 2.75 billion yuan. The main construction contents include koji making workshop and relevant supporting facilities.
In 2021, Jiugui Liquor Co.Ltd(000799) after investing 779 million yuan in the construction of phase I project of production zone III in the early stage, start the phase II project again. The proposed investment amount is 1.5 billion yuan, and 7800 tons of base liquor capacity and 4000 tons of liquor storage capacity will be added; Earlier in 2020, Luzhou Laojiao Co.Ltd(000568) announced an additional 1.463 billion yuan for the technical transformation project of brewing engineering. The project was planned and constructed in 2016. The initial planned investment scale was 7.414 billion yuan. After the increase in investment, the project budget rose to 8.877 billion yuan, and the wine storage capacity increased from 300000 tons to 380000 tons after the completion of the project; In that year, Anhui Gujing Distillery Company Limited(000596) disclosed the plan of 8.925 billion yuan intelligent technology transformation project for brewing production, with a construction cycle of five years. It will build a modern intelligent park with an annual output of 66600 tons of raw wine, 284000 tons of base wine storage and 130000 tons of filling capacity; Anhui Kouzi Distillery Co.Ltd(603589) also launched the “Daqu liquor brewing quality improvement and efficiency improvement project for relocation from the city to the district” with a total investment of 1.36 billion yuan, with an annual output of 20000 tons of raw liquor and a construction period of 36 months.
In recent years, Baijiu industry has been upgrading its consumption upgrading and gradually increasing its concentration. Well-known Baijiu enterprises have riveted the market and have no doubt that the production capacity is beyond the brand and channel. From the production and sales data, the output of Chinese Baijiu is decreasing, but the scale of revenue and profit is increasing year by year. In 2021, the output of Baijiu Enterprises above designated size was only 715.63 million liters, down 0.59% compared with the same period last year, which was nearly cut off compared with 2016. However, the total profit of Baijiu enterprises increased by 25.64% in the first 11 months of 2021, up to 166 billion 651 million yuan. In terms of quantity, in 2020 1-11, Baijiu enterprises in China had dropped to 1040 from 1500 in 2015, and the industry clearing further accelerated.
Industry insiders said that most of the production expansion tide in the past two years was dominated by leading enterprises, and overall, the decision-making was more cautious and rational. However, with the release of large capacity, whether there will be overcapacity in the future remains to be tested by the market.
