\u3000\u3 Shengda Resources Co.Ltd(000603) 919 Jinhui Liquor Co.Ltd(603919) )
Event:
The company released its annual report for 2021, and achieved a revenue of 1.788 billion yuan in 2021 (the same as + 3.34%); The net profit attributable to the parent company is 325 million yuan (the same as – 1.95%); Deduct non net profit of RMB 322 million (the same as – 2.58%); EPS0. 64 yuan / share.
Key investment points:
1. The epidemic affected the performance of 2021q4, but did not change the trend of structural optimization throughout the year. 2021q4 company achieved a revenue of 447 million yuan (year-on-year – 34.74%), and a net profit attributable to the parent company of 82 million yuan (year-on-year – 52.61%). The sharp decline in revenue / profit year-on-year was mainly related to the epidemic in Lanzhou, Xi’an and other core sales areas of the company in the fourth quarter, which had an impact on terminal dynamic sales. However, on the whole, the company’s products and regional structure will continue to be optimized in 2021: 1) driven by the consumption upgrading in the western region and the marketing mode of “key customer operation + deep distribution”, the company’s product structure will continue to upgrade. Among them, the top grade liquor (100 yuan or more products, such as gold emblem, soft star H3/H6, etc.) grew by 26.2% over the same period, and realized a revenue of 1 billion 100 million yuan, and the share of revenue was +11.1pct to 61.2%, which led to 14% increase in Baijiu business. 2) The proportion of revenue in the growth market continued to increase (the same as + 6.1pct in the central and western parts of Gansu Province and outside the province). In 2021, the markets in Central Gansu and outside the province increased by 13.3% / 35.7% respectively year-on-year; At the same time, with the help of Fosun Group, the company has accelerated the market development outside the province, set up sales companies in Shanghai and Jiangsu, and created a number of model markets in Shaanxi, Inner Mongolia and Xinjiang, with about 158 new dealers outside the province.
2. The investment of marketing expenses has put pressure on the profit side, and the company has a good rhythm of collection at the end of the year. Affected by the epidemic, the gross profit margin of 2021q4 company decreased by 5.8pt year-on-year (it is expected to be caused by the damage of dynamic sales of high-end products) and the management expense rate increased by 5.1pct year-on-year (it is expected to be caused by rigid expenses such as employee wages), which together led to the year-on-year decline of 6.9pct to 18.24% in the net profit margin in a single quarter. Throughout the year, the company’s net interest rate fell by 1.0cpt to 18.15% year-on-year, which is expected to be related to the increased investment in marketing, the implementation of channel model and the increase of publicity expenses, resulting in the same sales expense rate of + 2.7pct to 15.55%, which is a drag on profitability. In addition, the net operating cash flow in 2021q4 decreased slightly by 9.5% year-on-year, but the contract liabilities at the end of the period increased by 157 million yuan year-on-year and 186 million yuan month on month compared with the end of the third quarter. The company’s payment collection is in good condition, and there is still room for revenue in 2022q1.
3. Profit forecast and investment rating: as one of the few listed private liquor enterprises, the company has a stable senior management team, flexible mechanism and sufficient incentive. At present, the trend of upgrading the Northwest market to the price band of 100300 yuan remains unchanged. The company continues to fulfill the three logics of “increasing share in the province, secondary high-end development and pan regional expansion outside the province”. Under the synergy of Fosun Group, the more active layout outside the province will also contribute to the increment, and it is optimistic about the steady realization of the planning objectives. It is estimated that the company’s EPS from 2022 to 2024 will be 0.93/1.18/1.42 yuan respectively, and the corresponding PE will be 31 / 24 / 20 times respectively. The company will be rated as “overweight” for the first time.
4. Risk tips: 1) repeated epidemics lead to the inhibition of consumption; 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.
