Kweichow Moutai Co.Ltd(600519) (600519)
With the continuous promotion of marketing reform, it is a general trend to increase the proportion of direct marketing channels. At the first extraordinary general meeting of shareholders in Kweichow Moutai Co.Ltd(600519) 2021, the new chairman, Mr. Ding Xiongjun, stressed "promoting the reform of modern management, asset management, marketing system and price system in terms of reform". Since 2016, Maotai has focused on sorting out its distribution channels, which are mainly reflected in: 1) strictly managing channel problems, strictly investigating and punishing illegal dealers, cracking down on malicious hoarding and controlling terminal retail prices; 2) Actively carry out the investment promotion of supermarkets, implement the e-commerce quota plan, vigorously layout direct channels, promote the goal of flat development of the company, and further improve the price control ability of the company. In the first three quarters of 2021, Maotai's direct sales revenue reached 14.69 billion, a year-on-year increase of 74.1%, and the proportion of revenue increased to 19.7%. With the continuous promotion of marketing reform, Maotai price system will gradually become more market-oriented. At present, the unpacking orders of non-standard Maotai have been cancelled, which shows the company's strong willingness to reform. We believe that increasing the proportion of direct channels is the general trend in the company's marketing reform.
The company can improve the price control ability by increasing the proportion of direct sales, and the ex factory price of Maotai will be increased. At present, the ex factory price of standard bottle Feitian is 969 yuan / bottle, while the market price of bulk standard bottle Feitian is about 2600 yuan / bottle. The increase in the proportion of direct channels will increase the company's revenue and profit. When the market retail price is set at 1499-3000 yuan per bottle, the sales revenue of Kweichow Moutai Co.Ltd(600519) ordinary Maotai will increase by 530-2031 yuan per bottle sold under the direct marketing system. The promotion of marketing reform may become an important driving force for the growth of Kweichow Moutai Co.Ltd(600519) profitability in the future.
The leading position of the company will promote the continuous promotion of marketing reform. After the reform, the company's performance is expected to exceed market expectations. On the product side, Maotai liquor production place has a superior geographical environment, forming a unique quality that can not be copied and surpassed. In addition, Maotai production process is very complex and the product quality is high-end; On the brand side, Maotai liquor always adheres to the positioning of "national liquor", and the positioning of high-end rarity has grasped the psychology of consumers and formed a strong brand strength among consumer groups; On the channel side, Maotai has always been in a dominant position in the channel, and has a strong voice on the dealer side, which is conducive to channel control. Analyzing the market share from the perspective of the top ten liquor enterprises in the total revenue of the industry, Maotai accounted for 34.89% in the first three quarters of 2021, ranking first in the whole industry, with a prominent leading position. The three pronged approach of product, brand and channel management and control capability will contribute to the steady progress of Maotai's marketing reform and usher in stronger and more stable performance growth.
Investment advice
We expect the company's EPS to be 41.13/48.01/54.53 yuan in 2021 / 2022 / 2023. Based on the closing price of 1985 yuan on November 29, the corresponding PE is 48.26/41.34/36.40x respectively. The company's valuation has been fully digested this year. The current valuation is in a more reasonable range. Considering Maotai's strong brand ability and continuous innovation in sales channels, the company's future performance growth ability is relatively strong and clear. It is a core asset worthy of long-term layout and maintains the "strongly recommended" rating.
Risk statement
The progress of marketing reform is less than expected; The price increase is difficult to be realized, resulting in conservative performance release; Sales volume does not meet expectations; Social responsibility may cause short-term governance disturbance; Macroeconomic downturn; Food safety issues.
