\u3000\u3 Shengda Resources Co.Ltd(000603) 198 Anhui Yingjia Distillery Co.Ltd(603198) )
The company has a profound history and rich management team experience. The development history of FuPan company shows band type growth in revenue: 1) band I (19552002): it reached a high point in 1999, and then the company’s revenue fell due to the failure of price reduction strategy due to the adjustment period of the industry; 2) Band 2 (20032014): it reached a high point in 2012. After the industry entered the period of in-depth adjustment, the company cultivated internal skills and laid the foundation for the launch of high-end Dongzang series; 3) Band 3 (since 2015): as the industry goes out of the deep adjustment period, the company has launched high-end product Dongzang series to provide new growth potential energy for the company’s revenue. Besides, the company is a rare private shareholding enterprise in the Chinese Baijiu industry, and its senior executives have been in the company for many years, and have rich experience in marketing and management.
The third consumption upgrade in the province was launched, and Hui liquor showed a misplaced competitive situation. From the perspective of market size, the Baijiu liquor scale is expected to reach 50 billion in 2025, benefiting from the expansion of the second high-end price belt. From the perspective of competition, the secondary high-end is currently the main price band in the competition between gujinggong and Anhui Kouzi Distillery Co.Ltd(603589) with a market share of more than 70%; The middle and high-end Anhui Yingjia Distillery Co.Ltd(603198) performs well. According to our calculation, the market share of Dongzang in 2020 will double that in 2018 in 6 and 9 years.
The company highlights differentiated competition in products and marketing, and has strong channel control. 1) Product side: Dongcang has been the main single product for 6 / 9 years. It competes with the other two leading liquor enterprises in the province at the medium and high-end price band. In the next 16 / 20 years, Dongzang is expected to undertake the dividend of consumption upgrading in the province and take over the power for the provincial capital market, so as to further improve the profitability of the company; 2) Brand side: in terms of marketing strategy, the company highlights the concept of ecological cave storage, which is different from the “vintage wine” of gujinggong and Anhui Kouzi Distillery Co.Ltd(603589) ; Publicity channels, the company adopted a traditional combination of innovative publicity, high and high hit to deepen the brand memory in the minds of consumers, highlighting the determination to build China’s first ecological baijiu. 3) Channel section: compared with gujinggong and Anhui Kouzi Distillery Co.Ltd(603589) main Vintage liquor products, Dongzang series has obvious advantages in channel profits. In addition, the number of dealers and salespeople of the company shows an upward trend, and the channel thrust is increasing.
Both hands within and outside the province, and the process of Pan regionalization has accelerated. 1) Market outside the province: the company takes Jiangsu market as the core and focuses on the introduction of Dongzang series, so as to improve the proportion of market outside the province in the company’s revenue. 2) Provincial market: at present, it has gained a firm foothold in Lu’an and Hefei. In the future, it will speed up the replication of model market and look for new increments of performance.
Profit forecast and investment suggestion: first coverage and “buy” rating. We expect the operating revenue of the company from 2021 to 2023 to be RMB 4.60/59.5/7.29 billion respectively, with a year-on-year increase of 33.4% / 29.2% / 22.5%. The net profit attributable to the parent company was 1.41/19.5/2.57 billion yuan, with a year-on-year increase of 47.7% / 38.4% / 32.0%. The current share price corresponds to 42x / 30x / 23x PE from 2021 to 2023.
Risk tips: the consumption in the province is less than expected, the import of Dongzang outside the province is less than expected, food safety problems, and the risk of measurement error
