Kweichow Moutai Co.Ltd(600519) (600519)
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On December 31, 2021, Kweichow Moutai Co.Ltd(600519) issued the announcement on production and operation in 2021: after preliminary accounting, the company produced about 56500 tons of Maotai base liquor and about 28200 tons of series base liquor in 2021; It is expected to achieve a total operating revenue of about 109 billion yuan (including about 93.2 billion yuan for Maotai liquor and about 12.6 billion yuan for series liquor), an increase of about 11.2% year-on-year; The net profit attributable to the shareholders of the listed company is expected to be about 52 billion yuan, a year-on-year increase of about 11.3%.
Ping An View:
After preliminary accounting, the company expects to achieve a total operating revenue of about 109 billion yuan, a year-on-year increase of about 11.2%, including about 93.2 billion yuan of Maotai liquor and 12.6 billion yuan of series liquor; It is estimated that the net profit attributable to the parent company will be about 52 billion yuan, with a year-on-year increase of about 11.3%, which is in line with the performance expectations, exceeding the business target of 10.5%, and opening a new chapter of the “14th five year plan”.
Invest in packaging logistics engineering to meet Baijiu capacity. In recent years, the company has continuously invested in capacity construction. After preliminary accounting, in 2021, the company produced about 56500 tons of Maotai base liquor, a year-on-year increase of + 12.55%, and about 28200 tons of series base liquor, a year-on-year increase of + 13.25%. The “13th five year plan” Maotai liquor technical transformation project was fully completed and put into operation, with a new design capacity of 4032 tons of Maotai liquor base, and the base liquor reserve increased year by year, providing effective support for the steady growth of the company. On December 10, 2021, the company announced that the 12th meeting of 2021 passed a resolution that in order to meet the company’s product packaging, warehousing and logistics needs, the company invested 7.833 billion yuan to implement the phase I project of packaging logistics park project. The construction site of the project is located in Tanchang street, Renhuai City. The construction period is 24 months. After completion, it is expected to alleviate the pressure of logistics and transportation and meet the capacity storage of Maotai flavor wine.
The chairman of Maotai changed his command and actively carried out market-oriented reform. On September 25, 2021, Ding Xiongjun, former director of Guizhou Energy Bureau, was elected as the chairman of the Kweichow Moutai Co.Ltd(600519) third board of directors. Since taking office, chairman Ding has repeatedly released reform signals in public to promote the reform of marketing system and price system. His main measures include increasing investment during the Mid Autumn Festival, carrying out “empty bottle exchange” and pilot “bottle opening consumption”, canceling the “room reservation and wine purchase” activity of Maotai International Hotel, canceling Feitian unpacking order, etc. In the medium and long term, with the implementation of Maotai market-oriented reform, the company’s management system is becoming more and more perfect, which is expected to achieve the goal of becoming the first world top 500 enterprise in Guizhou Province.
Cancel Feitian Maotai unpacking order and adopt HP policy. In order to meet the market demand and reduce channel corruption and market speculation, the company cancelled Feitian Maotai unpacking order in December and increased the sales specification of 12 bottles / box, which is specially used for unpacking and retail. At the same time, this year, Maotai company adopted HP policy and gave most dealers quota out of plan, instead of the previous ones, only excellent dealers and new dealers are qualified. After the introduction of the policy, the wholesale price of box loaded Maotai fell and returned to a reasonable range. As of January 2, the wholesale price of box loaded Feitian fell to 3270 yuan / bottle and that of bulk bottles fell to 2740 yuan / bottle, and the price difference between the two gradually decreased.
The new rare Maotai liquor is on the market, and the super high-end new products are comprehensively upgraded. On the evening of December 29, Ding Xiongjun, chairman of Maotai Group, announced the official listing of Kweichow Moutai Co.Ltd(600519) liquor (treasure) at the “treasure night” and 53% vol 500ml Kweichow Moutai Co.Ltd(600519) liquor (treasure) press conference in Maotai. Treasure Maotai liquor is the first high-end Maotai liquor launched by Maotai distillery in 1986. The quality and packaging of the new rare Maotai liquor have been comprehensively upgraded, and the packaging continues the original packaging style and main tone. The new rare Maotai liquor is the first high-end new product released by Maotai in the new period of “high quality and strong industry”, which has laid the main tone of upward brand value of the company.
Both volume and price rise, and the future can be expected to maintain the “recommended” rating. Since the change of command, Maotai has continuously promoted market-oriented reform and achieved remarkable results. We are optimistic about the reform determination of the management. We believe that the company will continue to achieve ton price growth by increasing the proportion of direct sales and raising the price of non-standard products in the future. After superimposing the increase of base liquor storage after the company’s capacity expansion, it is expected to achieve a simultaneous increase in volume and price in 2022. We have adjusted our profit forecast, The EPS forecast from 2021 to 2023 is 41.39, 48.85 and 56.74 respectively (originally 41.18, 48.45 and 55.79 yuan from 2021 to 2023), maintaining the “recommended” rating.
Risk hint: 1) Baijiu industry downturn risk. Baijiu industry boom and price trend is highly correlated, if Baijiu prices decline, may cause the enterprise revenue growth slowed sharply. 2) The change of management is likely to lead to business fluctuation risk. Baijiu enterprises are influenced by business strategies, such as changing management level, which may lead to a sharp fluctuation in revenues and profits. 3) Policy risk. Baijiu industry demand and tax rate are greatly influenced by policies, such as changes in relevant policies, which may have a greater impact on the company’s revenues and profits.
