\u3000\u30 Shenzhen Fountain Corporation(000005) 96 Anhui Gujing Distillery Company Limited(000596) )
Event: in 2021, the company achieved an annual operating revenue of 13.271 billion yuan (YoY + 28.95%) and a net profit attributable to the parent company of 2.291 billion yuan (YoY + 23.54%). In a single quarter, 2021q4 achieved an operating revenue of 3.169 billion yuan (YoY + 42.58%), and a net profit attributable to the parent company of 322 million yuan (YoY + 1.66%).
Key investment points
The annual revenue exceeded expectations, and Q4 profit was slightly lower than expectations. The company’s revenue / net profit attributable to the parent company in 2021 was + 28.95% / + 23.54% year-on-year; 2021q4 revenue / net profit attributable to the parent company was + 42.58% / + 1.66% year-on-year. The revenue in the fourth quarter exceeded the market expectations. We expect that the impact of the epidemic in Anhui in 2021 will weaken month on month, and the recovery of consumption scenarios will boost demand. The company will give more group purchase resources to promote Gu 16 and Gu 20, and the proportion of secondary high-end products will increase. The net profit attributable to the parent company in the fourth quarter was lower than expected. We expect that it is mainly due to the advance of the Spring Festival, coupled with the fierce market competition and the advance of some expenses, which led to the pressure on the profit.
There is a strong driving force for consumption upgrading in the province, and the process of nationalization continues to advance. The company’s high-end and nationalization path remains unchanged. 1) in terms of the province, Anhui’s economic recovery has been improving in recent years, and Anhui’s GDP in 2021 has been about 4 trillion and 300 billion, an increase of 8.3% over the same period last year, and the power of consumption upgrading is strong. Meanwhile, the epidemic situation of Anhui was well controlled during the Spring Festival in 2022, and the flow of large quantities of people returning home, the demand for Baijiu, drinking and other liquor consumption scenes was strong. The upgrading of consumption and the resumption of consumption scenarios are expected to continue to promote the improvement of product structure and the sales of core products. 2) Outside the province, the company continues to accelerate the promotion of “nationalization and secondary high-end”, build large-scale provinces, large-scale markets, large-scale customers, large-scale single products and large-scale outlets, rapidly expand key markets such as Jiangsu, Shanghai and Zhejiang, and continuously improve its brand strength.
We will increase and expand production capacity on a fixed basis and strive to achieve double 10 billion. In 2021, the company will implement the fixed increase, and the raised funds will be used for the intelligent technological transformation project of brewing production. According to the company’s estimation, the project can achieve an average annual sales revenue of 14.806 billion yuan and an average annual net profit of 2.893 billion yuan, which is conducive to improving the company’s high-quality production capacity, accumulating power for national expansion and helping the company achieve the goal of double 10 billion yuan.
Profit forecast and investment rating: we expect that the upgrading of consumption in the province and the expansion of markets outside the province will bring medium and long-term growth power to the company. We predict that the company’s total revenue from 2022 to 2023 will be 16.191 billion yuan and 19.105 billion yuan, with a year-on-year increase of 22% and 18%; The net profit attributable to the parent company is predicted to be 3.0 billion yuan and 3.8 billion yuan, with a year-on-year increase of 31% and 25%, corresponding to the EPS of 5.66/7.09 yuan from 2022 to 2023. The current market value corresponds to PE of 33 / 26x, maintaining the “buy” rating.
Risk tips: the impact of the epidemic is enhanced, the recovery of consumption is less than expected, and the expansion outside the province is less than expected
