\u3000\u3 Shengda Resources Co.Ltd(000603) 919 Jinhui Liquor Co.Ltd(603919) )
Events
The company issued the annual report of 2021
In 2021, the company achieved an operating revenue of 1.788 billion yuan (+ 3.34%); The net profit attributable to the parent company was 325 million yuan (- 1.95%). In Q4 single quarter, the company realized an operating revenue of 447 million yuan (- 34.74%); The net profit attributable to the parent company is RMB 6.1 billion (- 8.2%).
Brief comment
The product structure has been continuously optimized, and the cost investment in developing the market has dragged down the profit growth. The reason why the annual profit growth of the company (- 1.95%) is lower than the revenue growth is due to the rise of the sales expense rate and management expense rate. In 2021, the company increased consumer interaction and brand building. In terms of marketing, on the one hand, the company did a good job in the accurate operation of consumers, and the marketing organization of each sales company evolved and upgraded. On the other hand, the company established Shanghai and Jiangsu sales companies to officially layout the East China market; In terms of brand building, the positive energy of the Golden Emblem was transmitted through new media, high-end media resources, high-end theme activities, core customer appreciation meetings and other ways. The annual sales cost was 278 million yuan, with a year-on-year increase of 25.09%. In terms of management, the company is also determined to reform, continue to promote the reform of “secondary entrepreneurship”, and introduce leading international consulting companies such as Boston (BCG) and Mercer to carry out changes in strategy, marketing, management and human resources. The management fee rate has increased from 9.46% in 2020 to 10.05%.
Continuous optimization of product structure. In terms of products, the company’s sales revenue of high-end products above 100 yuan increased by 26.24% year-on-year to 1.095 billion yuan, accounting for 62.11% (+ 11.25 PCTs). The improvement of high-end product structure led to the increase of gross profit margin of wine business by 1.11 PCT to 64.00%, while the revenue of medium-grade products and low-grade products decreased by 19.46% and 43.35% respectively. The direct sales revenue is outstanding, and the company’s control is gradually enhanced. In terms of sub channels, the company’s direct sales revenue increased by about 60% to 102 million yuan from more than 64 million yuan in 2020, far exceeding the growth rate of the company’s overall revenue, highlighting the smooth development of its direct sales channels and the success of the two wheel drive strategy of “key customer operation + deep distribution”. In addition, the company announced that it would invest and set up a full-time company mainly responsible for Jinhui Liquor Co.Ltd(603919) Internet sales business in Beijing. This measure is expected to further expand the scope and platform of product sales, enhance brand competitiveness and influence, and form a new performance growth point.
Fosun empowers, and the expansion outside the province continues to advance
In terms of regions, the company’s revenue in Gansu Province was 1.371 billion yuan, a year-on-year decrease of 3.22%, or it was repeatedly affected by the epidemic in the fourth quarter; With Fosun’s empowerment, the company has actively expanded its business outside the province. 1) the market channels and consumer recognition around northwest Gansu have been continuously improved, and many model markets have been created in Shaanxi, Inner Mongolia and Xinjiang, forming a high-end brand and cohesion effect; 2) Shanghai and Jiangsu sales companies were established to officially layout the East China market, deeply integrate into Fosun ecology, cooperate with Nanjing Iron and steel, Wanbang medicine, Fufa real estate and other companies to build Fosun ecological sales, and remarkable results were achieved in market development outside the province. The operating revenue in other regions reached 392 million yuan, a year-on-year increase of 35.71%%, accounting for 22.24% (+ 5.30pcts). March into East China, restart of “Longnan spring”, Gansu Baijiu will grow in the future.
① as a leading liquor enterprise in Gansu Province, the company still has great room to improve its share in the province. At the same time, benefiting from the consumption upgrading trend in the province, the product structure is gradually upgraded to the price of more than 100 yuan, which is expected to continue to improve the profitability of the company in the local market. ② After Fosun took a stake in the company, it guided the company to discuss the key layout of the East China market. The company established sales companies in Nanjing and Shanghai last October to be responsible for Jinhui Liquor Co.Ltd(603919) sales in East China and Fosun ecosystem, expand the East China market and form new performance growth points. ③ Longnanchun, the company’s high-end Maotai flavor product, is expected to be launched and listed this year. Longnanchun was once a famous liquor brand in Gansu. It has high consumer recognition and praise in the northwest and even the whole country. It is expected to rise rapidly by taking advantage of the Maotai flavor heat, help the company’s high-end product layout and enhance the brand influence.
Profit forecast:
It is estimated that from 2022 to 2024, the company will realize revenue of 2.512 billion, 3.090 billion and 3.800 billion yuan, net profit attributable to parent company of 476 million, 629 million and 770 million yuan, corresponding EPS of 0.94, 1.24 and 1.52 yuan / share, corresponding PE of 30.2x, 22.8x and 18.6x, and maintain the “buy” rating.
Risk tips:
The market expansion outside the province is less than expected, the epidemic situation is repeated, food safety risks, etc.
