Kweichow Moutai Co.Ltd(600519) (600519)
Event: the company announced the production and operation in 2021. In the whole year, it produced 56500 tons of Maotai base liquor, a year-on-year increase of 12.5%, and 28200 tons of series base liquor, a year-on-year increase of 12.8%; It is expected to achieve an operating revenue of 109 billion yuan, a year-on-year increase of 11.2%, and a net profit attributable to the parent company of 52 billion yuan, a year-on-year increase of 11.3%.
The set goal of 2021 was successfully completed, and Q4 accelerated month on month. The annual revenue of the company is expected to be 109 billion yuan, an increase of 11.2%, and successfully achieve the revenue growth target of 10.5%. Among them, the revenue of Maotai liquor is 93.2 billion yuan, a year-on-year increase of 9.87%. We analyze that the main reason is the increase in ton price caused by the price increase of non-standard Maotai liquor such as high-quality products and zodiac animals and the increase in the proportion of direct sales. The revenue of series liquor is 12.6 billion yuan, an increase of 26.11%, and the reform of series liquor of the company has achieved initial results, Focus on core items such as the golden prince, with obvious structural upgrading. In Q4 alone, the company expects to achieve revenue of 28.418 billion yuan, an increase of 12.42% and net profit attributable to the parent company of 14.724 billion yuan, an increase of 14.48%. Compared with the third quarter, the growth rate of revenue and profit increased by 2.43 PCT / 2.13 PCT month on month.
Looking forward to 2022: the marginal acceleration of performance and the simultaneous rise of volume and price are worth looking forward to. Considering the five-year storage cycle of Maotai base liquor, the output of Maotai base liquor in 2017-2018 was 42800 tons and 49700 tons respectively, with a year-on-year increase of 8.94% and 15.98% respectively. Considering the weighted average loss, the output of base liquor available for sale in 2022 is about 37000 tons, which is expected to increase by about 8% compared with 34300 tons in 2020. In terms of ton price, the company continued to upgrade non-standard Maotai and launched new treasures at the end of 2021; According to the wine report, since January 1, 2022, the retail guide price of Maotai new treasures has been raised from 4499 yuan to 4599 yuan, and the aged wine 15 has been raised from 4999 yuan to 5999 yuan. Even without considering Feitian’s direct price increase, by increasing the proportion of direct sales and improving the non-standard Maotai, we expect that the ton price of Maotai liquor will increase by more than 5%, and the company’s revenue growth may accelerate in 2022.
The market-oriented reform is advancing steadily, and the price dividend will be realized gradually. Since chairman Ding Xiongjun took over, the company has actively promoted the market-oriented reform, adopted a series of measures such as canceling the unpacking policy, launching 1 * 12 packaging to ensure the supply of bulk bottles, and canceling the liquor purchase policy of Maotai hotel. The wholesale price of the whole box has gradually dropped to around 3300 yuan, and the bulk bottles have maintained 2800 yuan. The consumption of Maotai liquor tends to be benign. The reform is gradual and the future can be expected.
In the long run, the price of Maotai liquor is supported by the ultra-high brand power and the increasingly strong consumption power of Chinese residents. Under the market-oriented reform, the interest chain of manufacturers and dealers will be reshaped. In the future, the company may enjoy more price dividends by increasing the construction of direct channels, building a cloud business platform and adjusting the price system.
Investment suggestion: as the first brand of Chinese Baijiu, the company has a strong leading position in the industry. We estimate that the operating revenue of the company from 2021 to 2023 will be 109.058 billion yuan, 124.823 billion yuan and 155.796 billion yuan respectively, the net profit attributable to the parent company will be 52.40 billion yuan, 60.150 billion yuan and 76.159 billion yuan respectively, and the EPS will be 41.43, 47.88 and 60.63 yuan respectively. According to the company’s performance in 2022, considering that the average PE (TTM) of the company in the past two years is about 48 times the valuation, the target price is RMB 2298 and the “recommended” rating is maintained.
Risk warning: the weakening of the macro-economy affects Baijiu consumption, and the outbreak has repeatedly affected Baijiu consumption.
