Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (603369)
The third quarterly report grew steadily as scheduled, and the profitability continued to improve
The company’s 2021q1-q3 revenue is 5.335 billion yuan (+ 27%), and the net profit attributable to the parent company is 1.699 billion yuan (+ 29%), with a deduction of 1.702 billion yuan (+ 31%), of which 2021q3 revenue is 1.483 billion yuan (+ 16%), and the net profit attributable to the parent company is 364 million yuan (+ 24%), with a deduction of 369 million yuan (+ 29%) (+ 1.7pct) is due to the continuous optimization of product structure. We expect that the proportion of Guoyuan series has increased to about 80%. The net interest rate from 2021q1 to Q3 is 31.85% (+ 0.5pct), of which 2021q3 is 24.56% (+ 1.6pct), and the profitability continues to improve.
The product structure was continuously optimized and the core products performed well
The gross profit margin of 2021q1-q3 is 72.78% (+ 1.1pct), of which 2021q3 is 78.48% (+ 1.7pct), which is due to the continuous optimization of product structure. We expect that the proportion of Guoyuan series has increased to about 80%. In terms of products, 2021q3 special a + class is 1.011 billion yuan (+ 16%) and special a class is 352 million yuan (+ 18%) is the first time since 2018q3 that the growth rate of special a + category in a single quarter is slower than that of special a + category in a single quarter. We believe that it is due to the impact of the epidemic in Nanjing on the growth of special a + category international products in August. Regionally, the revenue in 2021q3 is 1.376 billion yuan (+ 15%), including 346 million yuan (+ 22%) in Huai’an region and 326 million yuan in Nanjing region (- 1.6%), due to the impact of the epidemic in Nanjing in August; the revenue of Southern Jiangsu is 232 million yuan (+ 24%), Central Jiangsu is 152 million yuan (+ 22%), Yancheng is 175 million yuan (+ 7%); the revenue of Huaihai is 145 million yuan (+ 37%), and southern Jiangsu and Huaihai are expected to become new growth poles; the revenue outside 2021q3 is 104 million yuan (+ 24%), accounting for about 7%. At present, the company has a clear strategy, focusing on building V series and putting V9 advertising. V3 and competitive M6 + jointly cultivate the upper edge of the secondary high-end price of 600-800 yuan. In the future, the price is expected to accelerate the volume.
Equity incentive is expected to accelerate the implementation, and the company’s three highlights in the future
At the end of October, the company plans to use its own funds of no more than 518 million yuan to repurchase 6.6-7.7 million shares, accounting for about 0.53% – 0.61% of the total share capital before repurchase; The company completed the repurchase on November 26, with a cumulative repurchase of about 7.7 million shares, accounting for 0.6138% of the total share capital of the company. The average repurchase price is 56.24 yuan / share, and the total amount paid is about 433 million yuan. We believe that the equity incentive scheme is expected to accelerate its implementation.
Three highlights of the company in the future: first, the 10 billion target of V Series in the next decade, and the price band of 600-700 yuan for V3 and competitive M6 + advance card; Second, the 14th five year plan for Southern Jiangsu is expected to be nearly 4 billion, with large growth space in the future; Third, the proportion outside the province in the 14th five year plan accounts for more than 20%, and the expansion outside the province is a must for the company to open the ceiling.
Profit forecast
At present, the company is deeply promoting differentiation, high-end and nationalization, and fully implementing the national edge V-series battle, K-series promotion war, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) brand activation war and breakthrough war outside the province. Taking the Yangtze River Delta as the center, accelerate the formation of strategic plates; Cultivate key markets with key regions of Beijing, Tianjin, Hebei, Guangdong, Jiangxi, Hunan and Hubei as the core; The market development of prefectures and cities adopts the interactive layout development strategy of cities, counties and districts, and the market development of counties and districts adheres to the “focus law”. Breakthroughs outside the province follow the regional expansion strategy of “comprehensive planning, key breakthroughs, surrounding radiation and echelon development”. We continue to be optimistic about the continuous improvement of the proportion of Guoyuan series, driving the continuous optimization of product structure. V series is expected to become the company’s new power engine and follow Su liquor to build surrounding plates for a long time. It is estimated that the EPS from 2021 to 2023 will be 1.57/2.02/2.59 yuan, and the current share price corresponding to PE will be 37 / 28 / 22 times respectively. It is covered for the first time and given a “recommended” investment rating.
Risk statement
Macroeconomic downside risk, epidemic drag on consumption, less than expected growth in the fourth open, less than expected growth in the V series, less than expected expansion outside the province, etc
