Kweichow Moutai Co.Ltd(600519) (600519)
The third quarter reported steady growth and slight fluctuations in profitability
The company's total revenue from 2021q1-q3 was 77.053 billion yuan, an increase of 11% at the same time; The revenue was 74.642 billion yuan, an increase of 11.05%; The net profit attributable to the parent company was 37.266 billion yuan, an increase of 10% at the same time. Among them, the total revenue of 2021q3 was 26.332 billion yuan, an increase of 10% at the same time; The revenue was 25.555 billion yuan, an increase of 10% at the same time; The net profit attributable to the parent company was RMB 12.612 billion, an increase of 12% at the same time, with steady growth under normal conditions. The gross profit margin of 2021q1-q3 was 91.19%, with a decrease of 0.13pct, of which the gross profit margin of 2021q3 was 90.83%, with a decrease of 0.23pct, which was caused by the increase in the proportion of series wines. In 2021q3, the sales expense rate is 2.40% and the management expense rate is 7.32%, with little year-on-year change. 2021q1-q3 net interest rate is 53.02%, with a decrease of 0.32pct; Among them, the net interest rate of 2021q3 was 52.31%, an increase of 1.05pct, which has returned to the level of 2019q3. By the end of 21q3, the contract liabilities were 9.137 billion yuan, a month on month decrease of 107 million yuan and a year-on-year decrease of 274 million yuan. In terms of cash flow, the net operating cash flow of 2021q1-q3 was 36.752 billion yuan (+ 46%), of which 2021q3 was 15.033 billion yuan (+ 20%), which was due to the increase in cash received from commodity sales in the current period and the funds absorbed by the company's holding subsidiary Kweichow Moutai Co.Ltd(600519) Group Finance Co., Ltd. from other members of the group company.
The series of wines continued to grow rapidly, and the direct marketing channels continued to develop
In terms of products, the revenue of Maotai liquor from 2021q1-q3 was 64.992 billion yuan, an increase of 8.1% at the same time; The revenue of series liquor was 9.54 billion yuan, an increase of 36.3%. Among them, Maotai's revenue in 2021q3 was 22.04 billion yuan, an increase of 5.5% at the same time; The revenue of series liquor was 3.48 billion yuan, an increase of 48%. The revenue of 2021q3 series wine accounted for 13.6%, with an increase of 3.5pct. The series wine continued to grow rapidly, and the company walked on two legs more smoothly. In terms of channels, the revenue of direct channels from Q1 to Q3 in 2021 was 14.685 billion yuan, an increase of 74% and 20%, an increase of 8pct; In 2021q3, the revenue of direct channels was 5.18 billion yuan, an increase of 58% at the same time, accounting for 20.2%, and an increase of 6pct at the same time. The proportion of direct channels continued to increase and the profit of the company continued to increase.
Optimization and adjustment is an important aspect of Maotai's new measures to change its commander
At the end of August, Ding Xiongjun became the chairman of Maotai and put forward the direction of the company's reform: marketization and legalization, releasing positive signals. Recently, Maotai cancelled the unpacking order of Pufei and added a 12 bottle specification Maotai wine per box, which is specially used for unpacking and retail to meet the differentiated needs of target groups. We believe that the reform process of Maotai is expected to accelerate in 2022.
During the 14th Five Year Plan period, the optimization and adjustment of Maotai was an important focus, which was mainly divided into price adjustment, product structure adjustment and channel structure adjustment. In terms of price, the company has cancelled the unpacking policy and returned to marketization. The wholesale prices of whole Mao and scattered Mao are expected to continue to narrow. We expect Maotai to raise prices at least once during the 14th Five Year Plan period. In terms of product structure, we believe that the company will continue to adjust the proportion of non-standard products to drive the ton price increase. This is also confirmed by the price increase of non-standard products since this year; The product structure of series liquor will continue to be optimized, the "big single product" strategy will be implemented internally, the "1 + n" big single product group with Maotai Prince liquor as the core, and Han sauce and Guizhou Daqu have become 1 billion big single products. The adjustment of channel structure is another important focus during the 14th Five Year Plan period, and the dealer quota will remain unchanged in the future, The company will focus on developing direct marketing channels (including self-supporting, e-commerce, supermarkets and enterprise group purchase). Since 2018, the company has paid more attention to the investment of direct marketing channels, especially in peak seasons such as Mid Autumn Festival, national day and Spring Festival. It has successively cooperated with national supermarkets such as Yonghui and regional supermarkets such as Better Life Commercial Chain Share Co.Ltd(002251) E-commerce such as tmall, jd.com and other non distribution channels signed Maotai quotas to increase the breadth, depth and frequency of contact with consumers and increase the bottle opening rate of Maotai in that year.
Profit forecast
We continue to be optimistic about the brand moat, the medium and long-term pattern of high-end liquor is still stable, and the role of Maotai sea god needle is still obvious. We expect that the EPS from 2021 to 2023 will be 42.07/48.64/55.72 yuan respectively, and the corresponding PE of the current stock price will be 50 / 44 / 38 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, less than expected capacity expansion, less than expected growth of direct channels, less than expected reform process, rapid upward risk of rating, etc.
