Shanghai Bairun Investment Holding Group Co.Ltd(002568) (002568)
Event: on December 8, the company issued a product price increase announcement. Affected by the rising costs of main raw and auxiliary materials, packaging materials, labor, transportation and energy, as well as the rising costs caused by the company’s optimized and upgraded products, the company adjusted the ex factory prices of various series of main products by 4% – 10%. The new prices will be implemented according to the product price adjustment notice from December 25, 2021.
The pressure of rising costs gave birth to price increases.
1) Price of packaging materials: affected by the epidemic, the price of bulk commodities generally rose, and the price of corrugated paper and glass increased with the increase of the price of upstream raw materials. As of November 30, 2021, the price of corrugated paper / glass / aluminum ingot has increased by 43.6% / 57.0% / 67.5% respectively compared with the lowest point in 2020. 2) Price of raw materials: by the end of November 2021, the settlement price of raw white sugar futures had increased by 18.2% compared with the lowest price in 2020. Recently, beverage companies have frequently raised prices. Since November 1, Coca Cola has raised the retail price of 500ml cola to 3.5 yuan and 888ml to 4.5 yuan; Dongpeng 500ml gold bottle, the dealer’s invoice price increased by 1 yuan per case. The beverage industry has entered the price increase cycle. Bairun has complied with the industry trend to increase the price and effectively alleviate the cost pressure.
The scope of price increase exceeded market expectations, and channel expansion was actively promoted.
1) Higher price than expected: previously, the market only had price increase expectations for the company’s new products, and this price increase covers all products. The comprehensive price increase will provide strong support for the cost launch next year. From the recent channel tracking, the new products are fresh and the dynamic sales are good, and the dealer inventory is basically maintained at a normal level. We expect the price probability to be transmitted smoothly. 2) Actively expand channels: due to the high barriers of catering channels, the company adjusted catering channels this year, and added beer dealers to help cut into catering channels; In terms of traditional channels, the number of controllable outlets of the company has increased more this year, and the laying of outlets has been steadily promoted. In general, the achievement of performance objectives next year is highly certain.
The market acceptance of new products is good, so it is recommended to pay close attention to the promotion.
According to estimates, China’s pre mixed liquor market is expected to reach 30-50 billion yuan, enough to accommodate multiple scenarios and diversified products. This year, the company launched the 5-degree refreshing series and the beauty of plum wine and plum, which is in the stage of market promotion. At present, the refreshing market has a good acceptance. It is recommended to closely track the terminal distribution of refreshing and the promotion of catering channels.
Profit forecast, valuation and rating: pre blending is a high-quality track in the food and beverage track. Bairun, as the industry leader, has long-term growth potential. We maintain Shanghai Bairun Investment Holding Group Co.Ltd(002568) the forecast of net profit attributable to the parent company from 2021 to 2023 is RMB 806 / 1093 / 1474 million respectively, equivalent to EPS of RMB 1.07/1.46/1.97 from 2021 to 2023 respectively. The current share price corresponds to PE of 58x / 43x / 32x from 2021 to 2023 respectively, maintaining the “buy” rating.
Risk warning: the intensity of marginal competition in the industry is higher than expected; The rise in raw material costs was higher than expected.
