Shanghai Bairun Investment Holding Group Co.Ltd(002568) (002568)
The whole pre mixed liquor industry is growing rapidly and the market space is still huge.
China’s pre mixed liquor consumption / market scale has a compound growth rate of 19.7% / 15.2% in recent three years, with a high growth rate in the whole industry.
Although the proportion of pre mixed liquor in the consumption of all alcoholic beverages in China has increased rapidly, with a compound growth rate of 24.5% in recent three years, the proportion in 2020 is only 0.247%, compared with 11.9% in Japan in the same period, China still has great room for improvement.
The consumption of pre prepared cocktails in China is less than 1 / 10 of that in the United States and Japan.
In 2020, China’s per capita annual consumption of pre mixed liquor was 0.09 liters, only 1.45% / 0.72% of that of the United States / Japan. There is great potential to improve the penetration rate.
The industry integration is cleared, the competition pattern is good, and Bairun rides on the dust.
The high growth industry has attracted many competitors. After several years of shock and reshuffle, the industry has been integrated and cleared, entered the stage of oligopoly, and the proportion of Bairun City, which has broken through the siege, has exceeded 80%, with scale advantages and pricing power.
Getting rid of the stage of relying solely on marketing, the sales expense rate decreased by 12.9pct to 22.2% from 2018 to 2020, and the compound growth rate of revenue / net profit in the same period was 25.16% / 108%.
The profitability is far ahead. The gross sales difference of the company increased by 9.7pct to 43.3% from 2018 to 2020, exceeding the average value of 13.8pct in the beverage manufacturing industry.
Brand, product and channel are leading, and the moat is stable.
After years of brand building and consumer cultivation, the company’s Rio brand has almost become synonymous with pre mixed cocktails, with an unbreakable brand moat.
Excellent product quality, more than 50 flavors to meet customer needs, cleverly create consumption scenes, and accurately market personalized products.
The distribution of offline channels is of high quality, the online channels are growing rapidly, and the ready to drink channel has great potential.
Equity incentive stimulates the vitality of employees, and the performance becomes more and more predictable after the price increase of products.
The company grants equity incentive to 277 management and employees, which greatly ensures the consistency of interests of management, employees and shareholders.
The price of offline pre blending has been raised for the first time since its listing. Due to the high market share of the company, it has industry pricing power.
The dealer’s inventory is reasonable, and the feedback on the price increase is optimistic and positive.
Investment suggestion: it is predicted that the company will realize an operating revenue of RMB 2.76/36.3/4.42 billion from 2021 to 2023, with a year-on-year increase of 43% / 31.6% / 21.9%; The net profit attributable to the parent company was RMB 782 / 1102 / 1339 million, with a year-on-year increase of 46% / 40.9% / 21.5%; EPS is expected to be 1.04 yuan / 1.47 yuan / 1.79 yuan respectively, and the corresponding PE is 59.5 / 42.3 / 34.8 times, which is rated as “overweight”.
Risk tips: intensified industry competition, food safety risk, trademark infringement, counterfeiting and shoddy risk, industry reputation risk.
