Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) (002304)
The third quarterly report met expectations and the reservoir accelerated
The company’s revenue from 2021q1-q3 was 21.94 billion yuan, an increase of 16% at the same time; The net profit attributable to the parent company was 7.21 billion yuan, an increase of 16% at the same time; Deduct non net profit of RMB 6.85 billion, an increase of 21.6% at the same time. Among them, the revenue of 2021q3 was 6.4 billion yuan, an increase of 17% at the same time; The net profit attributable to the parent company was RMB 1.551 billion, with a decrease of 13%; Deduct non net profit of RMB 1.68 billion, an increase of 23% at the same time; The decline in profit in the third quarter was due to the loss of about 440 million yuan in fair value caused by holding Boc International (China) Co.Ltd(601696) . At the end of 2021q1-q3, the contract liabilities were RMB 6.510 billion, with a month on month increase of RMB 993 million and a year-on-year increase of RMB 2.641 billion. The reservoir is accelerating, and the company has ushered in the dawn. The gross profit margin of 2021q1-q3 was 74.93%, an increase of 1.73pct; Among them, 2021q3 was 76.15%, with an increase of 4cpt, and the upgrading and optimization trend of product structure was good; The net interest rate of 2021q1-q3 is 32.90%, with a decrease of 5.1pct; Deduct 31.22% of non net profit, with an increase of 1.43pct; The net interest rate of 2021q3 is 24.27%, with a decrease of 8.31pct, which is caused by the loss of fair value.
The product upgrade continues, and the double channel performance is brilliant
Since its listing, the company has achieved legend by relying on blue classics. Since the adjustment in the second half of 2019, despite many difficulties, we believe that the proportion of blue classics is still about 75%. At present, M6 + has excellent performance, m3 crystal bottle is on track, and the revival of Shuanggou old famous wine is in progress; In terms of products, we expect that the annual M6 + sales target of 6 billion has been completed, and the growth rate of M6 + is expected to exceed 50% in the third quarter. Crystal dream has achieved positive growth with growth, and dream blue series accounts for 35% – 40%; Tianzhilan’s new listing in July caused a single digit decline in 2021q3, and haizhilan, as the basic plate, steadily achieved a double-digit growth; Shuanggou, which the company focuses on building, also has a brilliant performance. In 2021q1-q3, Shuanggou brand has increased by 38%, Shuanggou tou paisu wine has increased by 218%, Lvsu wine has increased by 80%, and high-end wine sales have increased by 114% year-on-year. During the 14th Five Year Plan period, Shuanggou will build 8 sales markets of more than 500 million and 15 sales markets of more than 200 million.
Accelerated product adjustment, four highlights in the future
The company has implemented the equity incentive plan and put forward the assessment requirements of no less than 15% of the revenue in 2021 and 2022, so as to accelerate the return to the right track. At present, M6 + is the leading strategy and M3 crystal bottle is the following strategy. The sky blue upgraded product has been listed. After the Mid Autumn Festival National Day test this year, it is expected to recover about 60%. It will be tested in the second peak season in the Spring Festival in 2022. Considering that the potential energy of Dream Blue has been formed, the volume of M6 + has been accelerated, the recovery of M3 crystal bottle has been accelerated, Haitian inventory is benign and the price is stable, we believe that it is natural for haizhilan and M9 to be upgraded next, the drag of haizhilan on the company’s growth potential has been weakened, and the company has accelerated into a benign development track.
Four highlights of the company in the future: first, M6 + is the future power engine of the company, and two goals are achieved through M6 + in large quantities: the sales caliber and financial caliber exceed 10 billion yuan; Second, the price band of 400-500 yuan for M3 crystal bottle is expected to accelerate the recovery, Haizhilan and tianzhilan ensure the basic stability of the market and move up the price band (it is estimated that haizhilan’s card position is 150-200 yuan and tianzhilan’s card position is 300-400 yuan); third, revive Shuanggou brand and its sales are expected to exceed 10 billion in the future; fourth, Guizhou’s expensive wine is hot with Maotai flavor (the Yanghe River’s acquisition in June 2016) is expected to get a slice of the cake and get a fast development. With M6+ becoming a new engine of the company, it will continue to consolidate the top three position of Baijiu liquor, and also provide certain opportunities for the company to enter the high-end liquor camp.
Profit forecast
We believe that the company has entered a new stage and continue to be optimistic about the company’s accelerated return to the right track and accelerated marginal improvement. It is estimated that the EPS from 2021 to 2023 will be 5.07/6.44/7.92 yuan respectively, and the corresponding PE of the current stock price will be 34 / 27 / 22 times respectively. It will be covered for the first time and given a “recommended” investment rating.
Risk statement
Macroeconomic downside risk, epidemic drag on consumption, M6 + growth less than expected, m3 crystal bottle peak season less than expected, sky blue peak season less than expected, sea blue adjustment less than expected, Shuanggou brand growth less than expected, etc.
