\u3000\u3000 Wuliangye Yibin Co.Ltd(000858) (000858)
I. past: Why did the valuation continue to decline in 2021? Why does 2022q1 share price perform mediocrely?
We believe that the decline in valuation in the past year is mainly due to the lower than expected operating results of classic Wuliangye Yibin Co.Ltd(000858) , eighth generation Wuliangye Yibin Co.Ltd(000858) and series wines; Over the past month, the stock price performance was flat, mainly because the overall feedback of the Spring Festival mobile sales was flat and the rated price did not exceed 1000. Even if the payment collection performance was excellent, the market expected the change of management to be imminent, which still suppressed the stock price performance to a certain extent. Specifically:
1.1 from the perspective of the past year
Previously, we analyzed in detail in the Wuliangye Yibin Co.Ltd(000858) update report: marginal improvement under undervalued value, recommended key attention (20220117). The main reasons for the low valuation of Wuliangye Yibin Co.Ltd(000858) in the past year are the following four points:
First, classic Wuliangye Yibin Co.Ltd(000858) : Although the company reformed the classic Wuliangye Yibin Co.Ltd(000858) channel in 2021 (such as launching a platform company) and performed well at the time of launch, the market acceptance / consumer education required for high-priced wine still needs to be improved, As a result, the overall dynamic sales and rating performance are lower than expected (the annual average rating is about 1700-1800 yuan, and the current rating is about 1800 yuan);
The second and eighth generation Wuliangye Yibin Co.Ltd(000858) : the Spring Festival dynamic sales in early 2021 exceeded the expectation, which raised the market’s expectation of volume performance. However, under the background that the actual delivery volume (including the reissued volume in previous years) exceeded the delivery volume at the report end, The approval price has not exceeded the market expectation of 1000 yuan at the beginning of the year (the approval price briefly dropped to 950 yuan in the fourth quarter due to the return of funds from dealers, and the current approval price is about 970-980 yuan, which is basically the same as the latest payment price);
Third, series of wines: behind the steady and positive performance of the report end in 2021 is the slightly higher inventory, and market concerns may put some pressure on the performance in 2022;
Fourth, management: the internal management of the company changed slightly in 2021, which had a certain impact on the stability and the implementation of some policies;
1.2 from the perspective of the past month
January is the peak sales season of the Spring Festival. We believe that the performance of Wuliangye Yibin Co.Ltd(000858) stock price is flat or mainly due to:
It is inferred that the inventory of 858 enterprises is relatively high in the second quarter of the Spring Festival, which is of great significance to the healthy development of the national market. Therefore, it is inferred that the inventory of 858 enterprises is not in line with the observation of the second quarter, and the follow-up market is not in line with the expectation of the second quarter.
We’re thinking – is this answer really less than expected from a sales perspective? If we think more deeply about the actual sales volume behind mobile sales, we will find that some sales volume in the same period last year includes some goods reissued in previous years. Therefore, the sales volume corresponding to the report end this year has actually increased compared with the same period last year.
2) the price has not exceeded 1000 yuan: Wuliangye Yibin Co.Ltd(000858) since the dynamic sales of the Spring Festival last year exceeded the expectation, the market’s expectation of breaking the thousand has intensified, but up to now, the price has not broken the thousand.
We are thinking about the reason why the price can’t exceed 1000 in the past and whether there is a strong possibility in 2022? 2021: the main reason for the failure of the bid price is the large actual delivery volume (the overstocked seventh generation Wuliangye Yibin Co.Ltd(000858) inventory in the channel was gradually released at the time of the launch of the eighth generation general five) + the delivery rhythm is slightly faster than that in previous years, that is, the actual delivery volume in 2021 is expected to increase by 20%. Under the condition, the bid price can still remain at a high level of about 980 yuan. On the one hand, it is not easy, on the other hand, it shows that the actual consumption in the market is growing continuously, It was lower than expected, mainly due to the high expectation of the market in the early stage. 2022: due to the company’s heavy volume strategy in the peak season, it is expected that the price of the Spring Festival does not exceed 1000. Considering that the problems left over by history (inventory) have been basically solved, the company is expected to take measures to control goods and support prices in 2022 to consolidate the position of the eighth generation Wuliangye Yibin Co.Ltd(000858) . Therefore, the price transmission will be smoother and the price of the Spring Festival will exceed 1000.
3) excellent payment performance: up to now, some large businesses have completed the payment of the whole year, and some regions have reported that the proportion of payment before the festival is expected to be 40% + (many places in East China and southwest have reported that large businesses have basically completed the payment, and small and medium-sized businesses have paid 30% +). It is expected that 22q1 company will make a good start.
We are thinking – why is the outstanding performance of the fund not reflected in the stock price? We believe that although the payment performance is excellent, due to the excellent payment collection performance of major liquor enterprises this year, the payment response that did not significantly exceed the expectation has not yet become the point that the market believes to exceed the expectation.
4) personnel changes have been preliminarily expected: at the end of January, the announcement of relevant changes in some leadership positions has made the market have expectations for the company’s personnel changes. Therefore, some investors have the mentality of game time point.
II. Now: the management has achieved a smooth transition and the layout value has emerged
From the perspective of operation, the management changes smoothly, and the stability and execution of internal governance are expected to be improved. Considering that President Zeng, President Zou and President Jiang have worked in Wuliangye Yibin Co.Ltd(000858) group for several years, this personnel change means that the stability of the management will be stronger, and the subsequent formulation and implementation of the company’s policies will be faster and better after the establishment of the new leadership. Under the background that the valuation has fully reflected the current operating state & highly cost-effective (corresponding to less than 30x in 22 years), we believe that the current time point means that although the growth rate of Wuliangye Yibin Co.Ltd(000858) performance in 2022 slows down significantly, the adjustment and landing of the management will accelerate the launch of the giant ship with high quality, and the reform dividend in 2023 may continue to be released (with strong certainty of performance month on month growth), Therefore, the current time point is the inflection point of operation.
In terms of performance, 22q1 has strong performance certainty. 2022q1 company has made steady progress in payment collection, normal dynamic sales and healthy inventory, laying a solid foundation for a good start; In 2023, based on the release of reform dividends, the performance achieved month on month growth with strong certainty.
From the perspective of valuation / stock price: the valuation is cost-effective. The current Wuliangye Yibin Co.Ltd(000858) valuation has been in the 64% quantile of nearly 4 years, corresponding to about 27x PE in 22 years, and the valuation is very cost-effective.
From a macro / policy perspective: the probability of consumption tax landing may be low. 1) We believe that the probability of short-term consumption tax landing is low. Even if it does, the consumption tax has the least impact on high-end wine; 2) Under the trend of higher US bond yields and the enhanced expectation of interest rate hike by the Federal Reserve, the current undervalued target is somewhat defensive.
From the configuration time point of view: the recent callback is a good opportunity for additional configuration. Looking back on the three major adjustments in the past 21 years (after the Spring Festival, July and October), the adjustments triggered by the emotional side have rebounded significantly after being verified with good certainty, and there is a structural excess return market; Based on the strong certainty of 22q1’s good start (at the end of the year 21, the winery’s control of goods + payment rhythm is faster than that in previous years, which lays the foundation for a good start. At present, the payment before the festival is drawing to an end, and the 22q1 wine enterprise’s statements are highly deterministic and basically oriented to the good trend) + the recent sector adjustments are mostly triggered by the emotional / capital level. We believe that the recent adjustment is a good opportunity for additional allocation.
Catalyst: the eighth generation Wuliangye Yibin Co.Ltd(000858) mobile sales performed better & the bid price broke thousands, the classic Wuliangye Yibin Co.Ltd(000858) mobile sales exceeded expectations, the reform measures were proposed & implemented, the introduction of secondary equity incentive, etc.
III. The Future: there is a lot of room for volume and price upward, and the 14th five year plan welcomes the period of high-quality development
3.1 from the perspective of the industry, there is a lot of room for volume and price upward, and high-end wine is still in the stage of steady capacity expansion
Volume: high end liquor is in the stage of rapid capacity expansion, and the speed may exceed the market expectation. The total volume of high-end Baijiu liquor mainly from Mao five Lu increased from 45 thousand tons in 2012 to 70 thousand tons in 2019, and the total volume increased by 55.6%.
In China Baijiu Baijiu Baijiu Baijiu, we believe that the consumption of Chinese mainstream liquor is stable and there is no risk of rapid decline in liquor consumption in the medium term. The demand for high-end liquor is determinate. Under the background of the trend of consumption upgrading, it is estimated that by 2025, the market volume of high-end liquor will reach 100 thousand tons, and the market share of high-end liquor will be increased to 40%. In the next 3 years, the growth of high-end Baijiu capacity is expected to maintain a compound growth of 18%, exceeding the market expectations. Price: the price of 1000 yuan is upward, and the Wuliangye Yibin Co.Ltd(000858) price is the ceiling of the Baijiu industry. When the price difference of Wuliangye Yibin Co.Ltd(000858) in Maotai has nearly doubled, Wuliangye Yibin Co.Ltd(000858) has a large room for price rise, and has the strongest dominance at the price of about 1000 yuan. In addition, the Kweichow Moutai Co.Ltd(600519) ‘s stable price of around 2800 yuan has made it a regular premium system. It has become a super high-end brand. So the price of Wuliangye Yibin Co.Ltd(000858) , not Moutai, is the ceiling of the Baijiu baijiu. The promotion of Wuliangye Yibin Co.Ltd(000858) will open up the price room for other liquor companies.
3.2 from the perspective of the company, the company will continue to maintain double-digit growth in 2022 and meet high-quality development in the 14th five year plan
Looking back on 2021: the volume performance during the eighth generation Wuliangye Yibin Co.Ltd(000858) Spring Festival exceeded expectations. At the end of the year, the price of the whole series of main brands increased, the average cost increased to 969 yuan / bottle, and the overall price increased steadily; The series of wines are more focused, and Jianzhuang 1911 and wuliangchun second-generation new products are released at the same time; Classic Wuliangye Yibin Co.Ltd(000858) has established the “1 + N + 2” mode, and the traditional terminals and group purchase channels are further optimized.
Looking forward to 2022: we will continue to maintain double-digit growth and meet high-quality development
1) 8th generation Wuliangye Yibin Co.Ltd(000858) : it is expected that on the basis of small and large-scale volume, the price will stand at thousands of yuan. Based on the high volume of the eighth generation Wuliangye Yibin Co.Ltd(000858) in 2021 (the volume includes the inventory of previous years) + the rated price can still be stable at 980 yuan + the inventory remains low, which can be interpreted as the continuous release of the company’s strong brand strength. In the direction of volume control, the rated price is expected to stand at 1000 yuan in 2022, so as to open the positive cycle of operation again;
2) classic Wuliangye Yibin Co.Ltd(000858) : it is classic above the eighth generation, which is an important driving force for the increase of ton price. The company once said at the shareholders’ meeting in June 2021: “the main brand will further strengthen the 1 + 3 system, that is, with 501 as the value benchmark, the eighth generation Wuliangye Yibin Co.Ltd(000858) as the core large single product, the classic Wuliangye Yibin Co.Ltd(000858) as the high-end strategic large single product, supplemented by customized wine and cultural wine. Under the clear and complete product structure, the company will not reduce the amount of classic Wuliangye Yibin Co.Ltd(000858) during the 14th Five Year Plan period. It is expected that the amount of classic Wuliangye Yibin Co.Ltd(000858) will exceed 10000 tons (at present, the development of classic 30 and 50 products has been completed to supplement the specifications of classic 10 products), which has become an important driving force to promote the rise of ton price “. At the same time, it was said at the “1218” conference that in the future, we will continue to strengthen the cultivation of consumers, further optimize traditional channels, further expand emerging channels and further improve group purchase channels. It is expected that the classic Wuliangye Yibin Co.Ltd(000858) will achieve small volume on the basis of price increase (the ex factory price increased from 1399 yuan / bottle to 1599 yuan / bottle at the end of last year);
3) wine series: brand upgrading and optimization are ongoing. Based on the completion of brand optimization and upgrading in 2021, the increase of payment collection and dynamic sales as two wheel drive two-point synchronous assessment mechanism, and the average price per ton of wine as an important assessment index, the company will continue to implement the three major sectors of main brand + Series wine + ecological wine in 2022, Build four major single products of the series of liquor (wuliangchun, wuliangchun, wuliangtequ and Jianzhuang, among which wuliangchun is about to launch “mingmenchun” new products and lay out the sub high-end liquor price belt), and make it a regional strong brand. After optimizing and adjusting the income and profit level of Luzhou flavor series liquor sector.
Profit forecast and valuation
From 2021 to 2023, the company’s revenue growth rate was 18%, 14% and 17% respectively; The growth rate of net profit attributable to the parent company was 20%, 18% and 19% respectively, and EPS was 6.2, 7.3 and 8.7 yuan respectively; PE was 32, 27 and 23 times respectively. Considering the accelerated release of the company’s reform dividend, the current valuation is cost-effective, and a buy rating is given.
Catalyst: Baijiu demand is expected to exceed expectations, and prices continue to go up.
Risk warning: 1. Epidemic situation has repeatedly affected Baijiu selling. 2. The price rise of classic Wuliangye Yibin Co.Ltd(000858) was lower than expected.
