Anhui Kouzi Distillery Co.Ltd(603589) (603589)
The third quarter reported steady growth and slight fluctuations in profitability
The company’s 2021q1-q3 revenue was RMB 3.629 billion (with an increase of 35.0%) and the net profit attributable to the parent company was RMB 1.150 billion (with an increase of 33.2%). Of which, the 2021q3 revenue was RMB 1.386 billion (with an increase of 24.0%) and the net profit attributable to the parent company was RMB 463 million (with an increase of 22.7%), with a steady growth in the third quarter. The contract liabilities at the end of 2021q1-q3 were RMB 409 million, a month on month decrease of RMB 87 million. The 2021q1-q3 gross profit margin was 74.59% (down 1.88pct at the same time). The gross profit margin of 2021q3 was 74.31% (down 2.44pct at the same time), which was caused by the rise of raw materials and the restorative growth of medium and low-grade wines. The net profit margin of 2021q1-q3 was 31.70% (down 0.44pct at the same time), of which the net profit margin of 2021q3 was 33.40% (down 0.36pct at the same time), fluctuated slightly.
The product structure was continuously optimized, and strong growth was restored in the province
In the first three quarters, the company continued to optimize its product structure, 2021q1-q3 high-grade Middle and low grade Baijiu realized 3 billion 445 million yuan (34.3% increase), 80 million yuan (same increase 96%) and 60 million yuan (same increase 23.6%) respectively, of which 2021Q3 high and low grade products income was 1 billion 321 million yuan (22.9% increase), 35 million yuan (117% 117%) and 17 million yuan respectively. (with an increase of 2.9%). The high-grade liquor zhongjianxiang 518 has made an important contribution to the revenue, and kouzi and other products have ushered in high growth in the past 10 and 20 years. The revenue inside and outside the province in 2021q1-q3 is 2.87 billion yuan and 720 million yuan respectively, with an increase of 41.5% and 14.2% respectively; among them, the revenue inside and outside the province in 2021q3 is 1.123 billion yuan (with an increase of 32.0%) and 250 million yuan (with a decrease of 2.7%), and the province has resumed strong growth.
The gradual reform will be tested by time, and Jianxiang 518 is expected to become a large single product
This year is the first year of the 14th five year plan. The company focuses on the implementation of the “six improvements” plan, continues to promote the construction of phase I and phase II projects of kouzi Industrial Park, and speeds up the realization of the strategic goal of “10 billion kouzi”.
At present, the gradual reform of the company needs time to test: in terms of equity incentive, the company has completed the repurchase of more than 3.13 million shares, accounting for 0.522% of the total share capital, and has paid 149 million yuan. We expect that equity incentive is expected to be implemented next year. In terms of products, the price bands of early summer, mid autumn and Jianxiang 518 supplement and card slot for 6 years, 10 years, 20 years and 30 years are added. Jianxiang 518 takes the group purchase channel and direct sales channel. At present, the market acceptance is good. It is expected that Jianxiang 518 is expected to become another big single product of the company. In terms of organizational structure, the number of terminal push personnel has increased significantly compared with the past. Manufacturers began to go directly to the terminal to grasp the latest market trends, so as to provide a basis for scientific management of the market. In terms of channels, strengthen the management and assessment of dealers, establish a win-win community of interests for manufacturers, and require dealers to set up new teams for channel promotion with the help of new products in early summer and mid autumn. The willingness of large merchants to cooperate is increasing. In terms of market construction, strictly implement the “one place, one policy”, focus on building a market pattern dominated by group purchase channels and supplemented by traditional channels, continuously improve the market share of medium and high-end products and steadily expand the market scale. In terms of regional expansion, the company further implemented channel sinking in the provincial market, improved channel terminal coverage, and stabilized the “basic market” in the province; For markets outside the province, seize the development opportunities of the Yangtze River Delta, Beijing Tianjin Hebei and Dawan District, strengthen the operation of group purchase channels, and constantly expand the “growth area” outside the province.
Profit forecast
We are optimistic that the gradual reform process of the company is expected to be accelerated and the Jianxiang 518 is expected to become a large single product. It is expected that the EPS will be 2.89/3.65/4.42 yuan from 2021 to 2023, and the current share price corresponding to PE will be 28 / 23 / 19 times respectively. It will be covered for the first time and given a “recommended” investment rating.
Risk statement
Macroeconomic downside risks, epidemic drag on consumption, the progress of reform is less than expected, the promotion of equity incentive is less than expected, 518 growth is less than expected, etc.
