Sichuan Swellfun Co.Ltd(600779) (600779)
Born in a famous family, with the gene of high-end wine brand, and the incentive mechanism has been continuously improved. (1) Quanxing Daqu, formerly one of the eight old famous wines, is now known as “six golden flowers of Sichuan wine” together with Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Jiannanchun, Langjiu and tuopaiqu liquor. (2) Diageo, the only listed company controlled by foreign capital in China and the actual controller, is the world’s largest foreign wine company. Diageo has repeatedly increased its holdings of Sichuan Swellfun Co.Ltd(600779) , demonstrating its long-term confidence. (3) The current management has worked in world-class wine enterprises with rich management experience, launched the employee stock ownership plan and encouraged the core backbone above the middle level.
The product structure is upgraded rapidly and fully enjoy the secondary high-end capacity expansion bonus. (1) Driven by the upgrading of consumption and the rise of high-end wholesale prices, the capacity of the sub high-end price belt will be expanded to 300-800 yuan. It is expected that the market scale will maintain a growth rate of more than 20% in the next three years and is expected to exceed 100 billion by 2023. (2) Consolidate the matrix of sub high-end products and increase the number of high-end brands: Jingtai and zhenniang No. 8 contribute the main revenue, and the proportion of collection is expected to increase. At present, the proportion of revenue of Jingtai and Jingtai is close to 90%. With the rapid upgrading of product structure and the upward movement of core product prices, the gross profit margin of high-end wine has increased year by year from 78.3% in 2016 to 84.8% in 2020. With the packaging and sales of Jingtai and collection products With the development of sports upgrading and exclusive brand promotion activities, the proportion of revenue from high-end products such as well platforms and collections is expected to continue to increase.
The channel mode continues to upgrade, the general generation mode operates smoothly, and the high-end wine operation mode increases vitality. (1) After years of exploration, the company’s channel model has adopted the parallel model of new and old managers since 2016, so as to realize the control and development of sales points and strengthen the service and management of terminals. At the same time, the company continues to iteratively upgrade its core stores and has entered the 5.0 generation. (2) focus on the core market and adjust the “5 + 5 + 5” strategy to “5 + 3” , the income of each region accounts for more than 10%, and the development is balanced. (3) Reform the operation mode of high-end liquor, establish a high-end liquor sales company, leverage the resources of high-quality channel providers, realize the dual drive of “brand + channel”, and help the rapid growth of collections and above high-end products.
Valuation
It is estimated that the company’s EPS in 2021-23 will be RMB 2.57, 3.42 and 4.43, with a year-on-year increase of 71%, 33% and 30%. The company will be given a buy rating for the first time.
Main risks of rating
Macroeconomic growth does not meet expectations, industry competition intensifies, new product promotion does not meet expectations, and the progress of channel adjustment is lower than expected. Equity incentive may affect the performance and release power.
