\u3000\u30 Shenzhen Fountain Corporation(000005) 68 Luzhou Laojiao Co.Ltd(000568) )
Event:
The total operating revenue is expected to be 20.028 billion yuan, with a year-on-year growth of 20.028 billion yuan; The net profit attributable to the parent company was 7.849 billion yuan, a year-on-year increase of 30.70%; EPS 5.36 yuan / share.
Key investment points:
The performance of the whole year is in line with expectations. It is expected that 1573 will continue its high growth, and the low-grade national cellar will benefit from the expansion of secondary high-end capacity. The net income of the parent company increased by 22% year-on-year / 31% year-on-year in 2021; 2021q4 is expected to achieve revenue of RMB 6.274 billion (with an increase of about 24.14%) and net profit attributable to the parent company of RMB 1.574 billion (with an increase of about 32.21%), and the performance is in line with expectations. The company’s revenue growth is expected to be mainly driven by medium and high-end products. We expect that Guojiao 1573 will continue to increase both volume and price in 2021, of which Gaojiao 1573 will gradually rise in the markets of East and South China and continue the process of nationalization; The price band of 600700 yuan for low-grade national cellar card space will maintain a high growth in North China, and will continue to enjoy the bonus of secondary high-end capacity expansion in the future. At the same time, the price sector and channels of medium-grade liquor Tequ series are basically sorted out, and the terminal price of the tenth generation Tequ basically exceeds 300 yuan / bottle. It is expected to achieve restorative growth in 2021, and it is expected to enter the stage of scale increment in the future.
The profitability has been steadily improved, and the profit elasticity will continue to be released. Since the recovery of the industry in 2015, the profitability of the company has improved steadily, and the net interest rate reached a new high in 2021 (with an increase of 2.7pct to 38.5%). We expect the company’s profitability to improve mainly due to 1) the increase in the proportion of medium and high-end products, driving the year-on-year increase in gross profit margin. 2) As the cost rate is reduced as scheduled, Laojiao belongs to the brand franchise mode with low sales cost rate in high-end liquor enterprises, which has a large space for cost optimization, and can gradually release the profit elasticity in the future.
Incentive landing, and the company accelerates energy release. In September 2021, the company issued the equity incentive plan, which was approved by the SASAC in December. The incentive market has been waiting for a long time, and the scheme has established a long-term incentive mechanism. The problem of insufficient incentive for senior executives that the market has been worried about for a long time has been better solved, and the enthusiasm of senior executives and core backbone teams of the company has been significantly improved. At the same time, the company comprehensively sets assessment objectives in the three dimensions of shareholder return, performance growth and cost. The objectives are reasonable and positive, pay attention to development quality and have a high degree of completion, which is expected to better release the business vitality of the company.
Profit forecast and investment rating: we believe that the company has outstanding core competitiveness in the channel and brand side, management and employment can be promoted and demoted, the salary system is highly market-oriented, and the marketing team has strong combat effectiveness. After the equity incentive is implemented, it is expected that the brand potential energy and profit elasticity of the company will be released rapidly and continue to be optimistic about the long-term growth of the company. It is estimated that the company’s EPS from 2021 to 2023 will be 5.36/6.68/8.23 yuan respectively, and the corresponding PE will be 39 / 31 / 25 times respectively. The company will be given a “buy” rating for the first time.
Risk tips: 1) repeated outbreaks lead to consumption inhibition; 2) Increased market competition leads to increased costs; 3) the sharp fluctuation of the economy caused the price of Baijiu to slide; 4) The pace of product upgrading is less than expected; 5) Food safety risks. In case of any difference between the relevant data and information and the contents published by the company, the contents published by the company shall prevail.
