Jinhui Liquor Co.Ltd(603919) (603919)
The third quarterly report showed a high increase in profits and a steady improvement in profitability
The company’s 2021q1-q3 revenue was 1.341 billion yuan, an increase of 28% at the same time; The net profit attributable to the parent company was 243 million yuan, an increase of 53% at the same time. Among them, the revenue of 2021q3 was 369 million yuan, an increase of 11% at the same time; The net profit attributable to the parent company was 56 million yuan, an increase of 44% at the same time. The gross profit margin of 2021q1-q3 was 66.17%, an increase of 3.5pct; Among them, 2021q3 was 67.47%, with an increase of 1.8pct. The net interest rate from 2021q1 to Q3 was 18.13%, with an increase of 3PCT; Among them, 2021q3 was 15.1%, with an increase of 3.5pct. By the end of 21q3, the contract liabilities were 172 million yuan, a month on month decrease of 22 million yuan and an increase of 31 million yuan.
High grade liquor accounts for over 65%, and new products are targeted at East China
In terms of products, the revenue of 2021q1-q3 high-grade liquor was 874 million yuan, an increase of 43% at the same time, accounting for 66%; Among them, the revenue of mid-range liquor was 437 million yuan, an increase of 9% at the same time; The revenue of low-grade liquor was 12 million yuan, a decrease of 34%. Among them, the revenue of 2021q3 high-end wine was 296 million yuan, an increase of 35% at the same time; The revenue of mid-range liquor was 64 million yuan, a decrease of 39% in the same period; The revenue of low-grade liquor was 04 million yuan, an increase of 33% at the same time; Specifically, in the third quarter, products with more than 300 yuan such as five stars, 18 years and 28 years accounted for 15%, with a growth rate of more than 40%; Soft, energy and other 100-300 yuan products accounted for 52% of the total revenue, with a growth rate of more than 30%. Regional expansion: in 2021q1-q3, the revenue of western Gansu was 149 million yuan, an increase of 75% at the same time; The revenue of Lanzhou and its surrounding areas was 339 million yuan, an increase of 34% at the same time; The revenue in Central Gansu was 130 million yuan, an increase of 21% at the same time; The revenue of Southeast Gansu was 394 million yuan, an increase of 2% at the same time; The revenue of other regions was 310 million yuan, an increase of 57%.
The expansion of East China outside the province is smooth. In the first three quarters, the sales in Shanghai were 14 million, and Fosun ecology is also building an organizational structure. Aiming at the target group in East China, the company launched the Golden Emblem old cellar 90 / 120 / 180, with a price band of 200-600 yuan. “Longnan spring” products are making preliminary preparations and will be launched at the right time.
Smooth expansion outside the province, four highlights in the future
In 2020q2, Fosun joined the company and injected new vitality into the development of the company, China’s Chinese Baijiu Baijiu company Baijiu insists that its target of five year plan remains unchanged (i.e., 3 billion yuan in 2023 and net profit 600 million yuan). The company strives to achieve the three largest development strategy of “10 of China’s liquor making, build a famous liquor brand in China and build a large scale liquor making base in China” by 2031, and turn Jinhui Liquor Co.Ltd(603919) into a large industrial group taking liquor making as its main business.
At present, the company is constantly consolidating the market in the province and actively expanding the market outside the province in accordance with the strategic path of “layout the whole country, deep ploughing in the northwest and key breakthrough”. At present, the market layout of Shaanxi, Ningxia, Xinjiang, Qinghai and Inner Mongolia has set up offices in Beijing, Shanghai, Haikou and other cities. The East China market will be launched through partner recruitment in 2021. Qinghai and Inner Mongolia outside the province are cultivating and in the initial stage; Xinjiang has also been in operation for several years. It is expected that Shaanxi market is expected to enter the harvest period in the next 2-3 years.
Four highlights of the company in the future: first, it is expected that the market share in the province is expected to increase to more than 30%, which comes from weak areas in the province, such as the western region of Gansu Province, which continues to make up for weaknesses and harvest the share of other small brands in the province; Second, the proportion of products above 100 yuan continues to increase, and is expected to increase to more than 60% in the future; Third, the main strategy of expansion outside the province is “Echelon rolling development and asymmetric marketing”, and the northwest region is expected to accelerate expansion and improve market share; Fourth, the Company re launched the “Longnan spring” brand and positioned the products above the secondary high-end. At present, the wine body has been prepared, and the product is expected to be in large quantity in the future.
Profit forecast
We are optimistic about the development of the company after Fosun takes over, and also optimistic about the continuous improvement of the company’s share of more than 100 yuan and the continuous improvement of the market share in the province. We expect that the EPS from 2021 to 2023 will be 0.73/0.93/1.20 yuan, and the current share price corresponding to PE will be 60 / 47 / 36 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, lower than expected growth of high-grade wine, lower than expected expansion outside the province, etc.
