\u3000\u3 Shengda Resources Co.Ltd(000603) 369 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) )
Events
According to the announcement issued by the company, during the Spring Festival in 2022, the sales of the company’s products increased well and achieved a “good start”. According to the preliminary accounting of the company, from January to February 2022, the company achieved a total operating revenue of about 2.45 billion yuan, an increase of about 25% year-on-year; The net profit attributable to the parent company was about 940 million yuan, with a year-on-year increase of about 26%.
Key investment points
The performance from January to February was in line with expectations, and the high growth of V9 led the structural upgrading
From January to February, the company’s performance met expectations, and V9 maintained a rapid growth trend. During the Spring Festival, the company’s dynamic sales performance is excellent. According to the products: 1) V Series: the growth of V series doubled in 21 years. Under the outbreak of 22q1 gift demand, V9 contribution is expected to increase significantly. V3 is still in the period of market adjustment, and it is expected to release profits after the price is stable. 2) At present, the growth rate of dankaili and other high-end brands has increased significantly, driven by the third or fourth year growth rate of dankaili, such as Zhongya and dankaili. At present, it has become the fourth year growth rate of dankaili, which is driven by the third or fourth year growth rate of dankaili.
3) Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) series: Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) activation war continues, and Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) secondary high-end strategic new products D20 & d30 increased by 235% in the first three quarters of 21 years. At present, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) series maintains a steady growth trend.
The performance “made a good start” was successfully realized, and the long-term “13445” plan helped to promote high-quality development
The “good start” of short-term performance has been achieved successfully, and the replenishment after the festival is obvious. It is expected that the growth rate of Q1 will not decrease: according to the calculation of the revenue growth of about 25% from January to February, the proportion of payment during the spring festival may be 35% – 40%. At present, the inventory level is benign. It is expected that the replenishment volume in March may exceed the same period last year. Therefore, it is expected that the Q1 revenue may exceed 3 billion yuan and the profit may exceed 1 billion yuan, The performance “made a good start” was successfully realized.
The long-term “13445” plan contributes to high-quality development: it was first proposed by the company at the Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) development conference in 2022
“13445” marketing work plan is to grasp one main line, follow the three modernizations strategy, enhance four confidence, deepen four campaigns and strengthen five guarantees. Specifically, the four campaigns are as follows: 1) V-series battle: strive to improve the potential energy of V9 brand, build V9 into a representative product of 2000 yuan + price band in the industry, and successively establish V9 business division V99 alliance to help the development of V-series; 2) Open system promotion war: improve the control and profit sharing system and continue to promote regional intensive cultivation; 3) Collection activation War: create an excellent wedding banquet promotion mode, upgrade the old products, expand the scene, supplement the new products and simplify the number; 4) Breakthrough wars outside the province: coordinated layout of dual brands (National edge takes the lead in nationalization, main promotion system, local highland layout V9), creation of diversified sectors (peripheral, sector, 100 City breakthrough project, tackling 10 “quasi billion yuan” provincial sectors), and cultivation of innovative consumption.
Growth source of the latter 10 billion: V series maintains rapid development and builds a sector market outside the province
We think that the Baijiu market capacity in Jiangsu is over 60 billion yuan, and the mainstream price band takes the lead in the whole country. Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) relies on the steady development of the market in the province and can be expected to grow. The growth of the latter 10 billion comes mainly from the rapid development of the V system and the focus of breakthroughs outside the province.
Growth source of the latter 10 billion: 1. Stable opening of the basic sector, and rapid development of the V-series. 1) Rapid development of V Series: clear structure of high-end products (V9 seizes the price band of 1000 yuan and V3 forces the sub high-end upgrade price band) + empowerment of organizational structure (establishment of V9 business unit and V99 alliance) + rich channel profits. It is expected that V series can still maintain a doubling growth trend. During the 14th Five Year Plan period, V series revenue may reach 5 billion yuan, or exceed market expectations. 2) The opening system is basically stable: four opening and two-way opening still have advantages in Nanjing and other markets. At present, the wholesale price of four opening in the province is stable at about 450 yuan. Driven by the brand power, elegant Guoyuan has developed into the third largest single product.
Source 2 of the growth of the latter 10 billion: refocusing outside the province to create a sector market. 1) In the province: the growth rate of mature markets such as Huai’an and Nanjing may slow down slightly, and the market in Xuzhou increases significantly. Southern Jiangsu is expected to become another growth pole in the province. 2) Outside the province: Shanghai, Shandong, Zhejiang and other markets have begun to take shape and have a good growth momentum. In the future, the opening of the system will be the focus of development outside the province, focusing on the concentration of resources to build the sector market. At present, the foreign edge of the province accounts for 50%, and the revenue outside the province is expected to account for more than 20% in the 14th five year plan.
Promotion of equity incentive: the company plans to launch equity incentive in 2020 and has completed the share repurchase plan by the end of 2021. Equity incentive may be officially implemented in 2022, which will effectively stimulate the enthusiasm of management and employees and accelerate the development and potential release of the company.
Profit forecast and valuation
We believe that the 14th five year plan of the company is rational and positive (strive to achieve revenue of more than 10 billion yuan and strive for 15 billion yuan in 2025), the goal of 10 billion yuan is expected to be achieved in advance, and the equity incentive is expected to be implemented in 2022, which will effectively improve the enthusiasm of management and employees. We are optimistic about the long-term growth of the company. It is estimated that the company’s revenue growth from 2021 to 2023 will be 26.6%, 25.5% and 24.7% respectively; The growth rate of net profit attributable to the parent company was 30.0%, 26.6% and 26.4% respectively; EPS is 1.6, 2.1 and 2.6 yuan / share; PE was 28.5, 22.5 and 17.8 times respectively. Considering the strong certainty of the company’s annual performance, the current valuation is cost-effective, and the buy rating is maintained.
Catalyst: Baijiu demand exceeds expectations; Guoyuan moving pin continued to improve.
Risk warning: Overseas epidemic affects China’s two outbreak or prevention and control upgrade, affecting Baijiu‘s overall sales recovery. The situation of Guoyuan movable pin was less than expected.
