\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 197 Xinjiang Yilite Industry Co.Ltd(600197) )
Event:
This week, we went to Urumqi, Xinjiang and Yili to investigate Xinjiang Yilite Industry Co.Ltd(600197) , and had in-depth communication with the company’s management.
Key investment points:
Xinjiang has turned to economic development in an all-round way, and the consumption scene has recovered significantly. The “first wine in Xinjiang” is ready to go. After management in recent years, the development in Xinjiang has become more harmonious and stable; After the new leadership takes office at the end of 2021, the government will actively promote the economic construction of Xinjiang and officially shift the focus of work from “maintaining stability” to “developing economy”. According to our investigation and observation during this visit, at present, the flow of people and goods in Xinjiang is gradually normal, the restrictions on catering and banquets have been liberalized, and the consumption scenes of catering and wedding banquets suppressed by the epidemic in the past two years have recovered significantly; At the same time, this year, Xinjiang will vigorously implement the strategy of revitalizing Xinjiang through tourism, and strive to receive 250 million tourists throughout the year Xinjiang Yilite Industry Co.Ltd(600197) as the “first wine in Xinjiang”, it is one of the most distinctive labels in Xinjiang. The company will fully benefit from the economic recovery and cultural and tourism development in Xinjiang in the future.
The company has steadily promoted marketing reform, and shareholders attach importance to enterprise development. In 2022, the company’s focus will shift to marketing in an all-round way, and market-oriented reform measures will continue to be promoted. Specifically, 1) channel optimization: reform the underwriting mode maintained for a long time in the past and take yiliwang wine into the company; At the same time, assessment indicators will be set for dealers for different products, and incentives will be increased in rebate and expenses for the over completed part. 2) Organization building: the company continued to expand the sales team, promoted a large number of young cadres internally, and improved the enthusiasm of employees by means of basic salary + performance bonus. 3) Brand building: the company has changed the situation of only receiving but not investing. In the past two years, the company has increased investment in high-speed railway airport advertising, military channel advertising, Guanghui men’s basketball team and terminal brand building, and will continue to adhere to it in the future. 4) Layout outside the province: mainly Zhejiang business source + e-commerce company + brand operation center. The company gives incentives and cost support to e-commerce companies. Meanwhile, the actual controller of Xinjiang Yilite Industry Co.Ltd(600197) is the SASAC of the fourth division of Xinjiang production and Construction Corps. The company is also the only listed company on the main board of the fourth division. After the headquarters was relocated to kekekedala City, Ili, Xinjiang, the company became the main tax source of the Corps. At present, the Corps has established a special class, and the leaders hold temporary posts to urge the reform and development of the enterprise, and the strategic position of the company has increased significantly.
In the future, we will focus on yiliwang wine and undertake the dividend of consumption upgrading. According to research feedback, the scale of Baijiu market in 2021 was about 4 billion, and the Xinjiang Yilite Industry Co.Ltd(600197) market share was above 40%. The company owns a billion level single product “Yili old cellar” series. At the same time, it also has well-known single products such as Yili king wine and Tequ at the secondary and medium high end. The products cover the whole territory market from top to bottom. In 2021, the company launched “gilded time” to complete the replacement and upgrading of 46 degree Yili old cellar and enhance the brand value of the old cellar. Meanwhile, in the future, the company will develop yiliwang liquor, a sub high-end core product of 400500 yuan. In July 2021, the company will take back the management right of yiliwang liquor (other core products are currently under the exclusive marketing system); At present, yiliwang liquor’s investment promotion in Xinjiang has been fully implemented, covering all prefecture level states in Xinjiang. The next operation focus is to increase the advertising in Xinjiang, refine the channel operation, activate the terminal, and undertake the bonus of consumption upgrading in Xinjiang. It is expected that the company will carry out investment promotion outside Xinjiang in 2023.
Profit forecast and investment rating: the company is greatly affected by the epidemic in the second half of 2021. It is expected that the performance of 2021q4 and January 2022 will be weak. However, the company feeds back that the dynamic sales end has gradually recovered in February and March 2022. With the arrival of the peak tourism season in Xinjiang, the sales are expected to accelerate the recovery, and it is expected that it will return to the same period in 2019 in 2022. The company is a well deserved leader of Xinjiang real estate wine, and is expected to fully enjoy the dividends of Xinjiang’s economic development in the future. It is estimated that the company’s EPS from 2021 to 2023 will be 0.77/1.06/1.25 yuan respectively, and the corresponding PE will be 36 / 26 / 22 times respectively. The company will be given a “buy” rating for the first time.
Risk tips: 1) the epidemic repeatedly affects the recovery of consumption in Xinjiang; 2) Price increase and acceptance of new products are lower than expected; 3) the macro fluctuation of the economy will affect the consumption demand of Baijiu. 4) Industry competition policy changes; 5) The price of raw materials has risen sharply; 6) Food safety and other issues.
