Jiugui Liquor Co.Ltd(000799) (000799)
Investment suggestion: COFCO empowers the company’s management, and internal participation leads the brand revival. After several major shareholder changes, Jiugui Liquor Co.Ltd(000799) company finally started stable development after 2016. COFCO dispatched a number of senior executives within the group to serve as the company’s core management positions, and successively carried out reforms in management structure, team building, salary mechanism, budget management, market price management and production standardization management, which greatly improved management efficiency. In 2018, the company established an internal sales company, adopted the equity trader model, set the goal of doubling for three consecutive years and basically achieved it, successfully established a high-end brand image and activated the brand potential. In five years, the company has walked out of the trough and created a record high revenue. It has continuously cultivated and refined in the province, accelerated the process of nationalization outside the province, and worked hard to build a grand plan of 10 billion yuan in the “14th five year plan”. We expect that the EPS from 2021 to 2023 will be 3.04 yuan, 4.48 yuan and 6.17 yuan respectively, corresponding to 72 / 49 / 36 times of the closing price (219.69 yuan / share) on November 25, 2021. We give a “buy” rating for the first time.
The fragrant national standard is implemented to create a high-end business card of internal reference. “Multi grain granular raw materials, saccharification of Xiaoqu culture, fermentation of Daqu fermented grains, quality improvement and aroma enhancement in mud cellar, cave storage and aging, steamed and burned fermented grains, and careful combination and blending” have created a unique fragrance of Jiugui Liquor Co.Ltd(000799) . With the active promotion of the company for several years, Fu Xiang has officially become the eleventh largest national standard of Chinese Baijiu flavor, giving the company exclusive flavor track. At present, the company has three major brands of drunkard, neishen and Xiangquan, focusing on building a medium and high-end product line dominated by neishen and drunkard series, and accelerating the expansion of the market share and profitability of core strategic large single products. Since Jiugui Liquor Co.Ltd(000799) was once the most expensive Baijiu in 90s and has the high-end wine gene, it should transport the high-end product line. The drunkard series takes the purple altar, red altar, inheritance and yellow altar as the core products, and the layout of the sub high-end mass consumer price belt. In 2020, the sales proportion of 52 degree internal ginseng wine, red altar drunkard and inheritance drunkard will increase to 26%, 12% and 7% respectively, and the strategic large single product has taken shape.
Manufacturers’ Alliance and internal sales companies empower channels. In 2018, more than 30 high-end liquor Baijiu merchants jointly invested in the establishment of the internal reference sales company, which is responsible for the national market operation of the internal reference, and formed an alliance community dominated by alcoholic liquor companies and core distributors. Different from the Hunan sales company established in 2010, the internal sales company has no Jiugui Liquor Co.Ltd(000799) company’s participation in the equity level, and the dealer’s shareholding is more flat. In this mode, the ex factory price of Jiugui Liquor Co.Ltd(000799) company to the internal sales company is low, and the internal sales company sells to the dealers at a unified strategic price. The channel promotion fee is borne by the internal sales company, and the cost investment no longer needs the approval of Jiugui Liquor Co.Ltd(000799) company. The flexibility is greatly improved, and the channel thrust is significantly enhanced. At the same time, equity dealers also have dividend income. The use efficiency of sales expenses is directly related to the profits of internal sales companies, the price stability is improved, and the behavior of disorderly price is reduced. It is with the joint efforts of manufacturers that the internal reference high-end brand started and the scale increased rapidly.
Promote the construction of “cultural drunkard” and build the core value of the brand. Since its establishment, the company has the gene of cultural famous wine. The three brands Xiangquan, drunkard and internal reference are exclusively designed and packaged by art master Huang Yongyu. Baijiu China’s China Baijiu company has been relying on the resources of high-quality central enterprises to continuously empower its brand value. It has released the strategic vision of “making the first brand of Chinese culture liquor” and “making the reference wine into one of the four high-end liquor brands in China”. At the marketing level, the company held high and raised its brand awareness through the naming of CCTV programs and the appearance of state events; At the same time, through the “Hall of fame”, the internal reference wine value seminar and “fuyuhui”, carry out accurate circle marketing to continuously convey the beauty of fragrance to the market, realize the long-term communication between internal reference wine and core consumers, and continuously improve Jiugui Liquor Co.Ltd(000799) and internal reference brand value.
Looking forward to the future, the province has been deeply cultivated and refined, the process of nationalization has been accelerated, and the “14th five year plan” strives to realize the grand goal of 10 billion. At the end of 2020, the company proposed at the dealer conference that the sales target should exceed 3 billion, exceed 5 billion, strive to move towards 10 billion, and create the “1379” strategic plan to help the high-quality development during the “14th five year plan”. Through intensive cultivation in recent years, the company has basically realized a flat layout in the province, and there is still much room for improvement in the volume of the local market; In 2021, with the unique taste of fragrant tulip and the market recognition of the high-end image of internal reference, the company accelerated its investment outside the province, formed a certain atmosphere and re purchase dynamic sales in Henan, Hebei, Shandong and Guangdong, and the nationalization is accelerating.
Stock price catalyst: expansion of secondary high-end market
Risk factors: macroeconomic uncertainty risk; Market development is less than expected risk; Industry competition intensifies risk
