Shanghai Bairun Investment Holding Group Co.Ltd(002568) (002568)
event:
The company announced that it would adjust the ex factory prices of various series of products. The price increases of main products ranged from 4% to 10%. The new prices will be implemented according to the product price adjustment notice from December 25, 2021.
Key investment points:
The increase in the cost of packing materials and freight drives the whole range of products to raise prices: the price increases include the company’s pre flavoring and flavor series. Since the beginning of this year, the prices of bulk raw materials have generally risen, and the costs of packaging, freight, labor and energy have increased significantly. For example, the price of aluminum cans used by the company for pre mixing wine increased by more than 50% year-on-year at the highest point. Recently, the price has dropped slightly, but it has also maintained an increase of about 20%. In addition, the rise in shipping costs has also led to an increase in the cost of imported base liquor. Since the second half of this year, the price of beer, soft drinks and other industries has increased. Budweiser, Tsingtao beer, China Resources, heavy beer and Coca Cola have also announced price increases recently.
The probability of smooth transmission of price increase is high: 1) the company has basically not adjusted the ex factory price of pre mixed wine before. In the first half of 2020, the online terminal price was adjusted to level the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channel price difference, but the ex factory price was not adjusted. 2) The price increase is only about 0.2-0.4 yuan converted to the price of a single tank, which has little impact on demand; 3) The rising cost is the common pressure faced by the food and beverage industry and even the consumer goods industry. The company has a market share of more than 80% in the pre blending industry and has strong pricing power. There are few participants with a certain scale in the industry, and the industry is in a state of benign competition. It is expected that the price increase can be conducted smoothly.
Push new acceleration + price increase to cover cost pressure, and the high growth attribute continues to appear. Since the second half of this year, due to weak demand and channel changes, the growth rate of mass consumer goods revenue has generally slowed down, and the company still maintains a high-speed growth trend, reflecting good growth. This year, the company further accelerated the promotion of new products. In addition to continuing to enrich the taste of weijiuzi brand, it also launched a series of products such as refreshing and meizhimei, with a higher degree of layout in the field. The double eleven Rio brand won the first place in the sales of low alcohol liquor on the whole online platform, surpassing the sum of the 2nd-10th places, with obvious competitive advantage. In October, the company’s Laizhou distillation plant was also officially put into operation, laying a solid foundation for the company’s long-term development. This round of price increase basically covers the upward pressure on the cost. If the cost returns to the normal level next year, it can contribute more performance flexibility.
Profit forecast and rating: the price increase is beyond expectation, and the marginal decline of future cost will contribute to profit elasticity. In addition, considering that the company may use the increased profits to increase the investment of market expenses in the future, we slightly raise the profit forecast. It is expected that the company will realize the net profit attributable to the parent company of RMB 790 / 11.3 / 1.55 billion from 2021 to 2023, with a year-on-year increase of + 47% / + 43% / + 37%, EPS of RMB 105, 1.51 and 2.06 per share and PE of 59 / 41 / 30 respectively. Give a “buy” rating.
Risk tips: 1) the promotion of new products does not meet expectations; 2) The production capacity launch progress is lower than expected; 3) The industry competition intensifies, and the investment of sales expenses increases; 4) Food safety risks; 5) Risks of continuous rising costs of raw materials, 6) risks of industry demand falling short of expectations, etc.
