Sichuan Swellfun Co.Ltd(600779) (600779)
After several changes, the management returned to localization. Sichuan Swellfun Co.Ltd(600779) was China Baijiu‘s high-end liquor brand, and is currently the only Baijiu listed liquor company in China. From the perspective of the change of Sichuan Swellfun Co.Ltd(600779) management control, starting from the listing of Quanxing, it has experienced three stages: 1) from state-owned enterprises to private enterprises and renamed Sichuan Swellfun Co.Ltd(600779) ; 2) Since 2006, Diageo has gradually gained the Sichuan Swellfun Co.Ltd(600779) leading power. At the initial stage of foreign investment, it was acclimatized. From 2006 to 2012, the CAGR of revenue and net profit was lower than that of most wine enterprises. 3) At the end of 2015, the management returned to localization, the new management was put in place in July 2021 and the employee stock ownership plan was implemented in September, strengthening the team’s stability and confidence.
The secondary high-end is positive, and the differentiation will continue. 1) with the upgrading of consumption and the opening of price space by Pu five, the second and the top Baijiu undertake the development window. In the 2018-2020 year, Baijiu /600 yuan liquor revenue scale CAGR was 26%/22%, and the total scale of 2020 accounted for nearly 40%. 2) At the top of the secondary high-end price, the price of 300-400 yuan has a deep foundation, and the growth potential of 600-700 yuan is high. Compared with Baijiu Baijiu, the concentration of second high alcohol is more dispersed, and there are many participants in the national famous liquor represent the general trend.
Consolidate the secondary high-end basic market and help the external expansion through channels. Sichuan Swellfun Co.Ltd(600779) : 1) born with the gene of famous wine, spare no effort in marketing and promotion the day after tomorrow, and the sales expense rate ranks in the forefront of the industry. 2) It mainly focuses on the secondary high-end and above price bands, with clear card positions for core products, deep cultivation of zhenniang No. 8 banquet scene, slightly higher well platform pricing, and great potential for business attributes. 3) The channel mode adopts the coexistence of new and old general managers, and the new general manager mode is conducive to the manufacturer’s control terminal and fine management. Core stores guide terminal sales, excavate banquets and other segmentation scenarios. 4) The base Market endows consumers with educational advantages. The company adopts mushroom tactics to deeply cultivate areas with high growth potential, breaks through the core market with the help of channels and core terminal forces, and roughly estimates that Sichuan Swellfun Co.Ltd(600779) has a sub high-end market share of about 7-10% in East China and South China. In the future, the core market is expected to grow rapidly with the company’s increasing resource focus and deep cultivation of channels.
Clarify the high-end strategy and enhance the brand value. 1) Sichuan Swellfun Co.Ltd(600779) explored the way to high-end earlier, but the progress was slightly slow in the past. The reason may be that the creation of large items is insufficient, the development of group purchase channels is limited, and the cultivation of core consumers needs to be strengthened. 2) in 2021, the company again strengthened its high-end strategy, released an upgraded version of the collection in September, priced 1399 yuan / bottle, and operated eight and well independent units in the channel operation. It established the high-end business division and consumer training department inside the company, and set up Sichuan Swellfun Co.Ltd(600779) high-end Baijiu sales company, strengthening the manufacturers’ connection, group purchase channels, and maintaining the high level of cost, but the focus changed. Focus on cultivating brand height and core consumer groups.
Profit forecast, valuation and rating: the new management is in place to lay a stable foundation for development. The core products are expected to enjoy the expansion of secondary high-end dividends. The channel reform and core stores are conducive to intensive cultivation, steady and steady expansion of the core market. The company is forward-looking to upgrade its brand and accumulate strength for long-term development. It is predicted that the net profit in 2021-23 will be RMB 1.160/14.95/1.831 billion, the corresponding EPS will be RMB 2.38/3.06/3.75, the corresponding P / E of the current stock price will be 54 / 42 / 34 times, and the “buy” rating will be given for the first time.
Risk warning: the competition of China’s second high-end Baijiu is intensified, and the cost delivery output is not as good as expected.
