\u3000\u3 Shengda Resources Co.Ltd(000603) 919 Jinhui Liquor Co.Ltd(603919) )
Key investment points
Event: the company released its 2021 annual report, which achieved a revenue of 1.79 billion yuan, a year-on-year increase of + 3.3%, and a net profit attributable to the parent company of 330 million yuan, a year-on-year increase of – 2.0%; Single Q4 achieved a revenue of 450 million yuan, a year-on-year increase of – 34.7%, and a net profit attributable to the parent company of 80 million yuan, a year-on-year increase of – 52.6%. The performance of single Q4 was lower than the market expectation.
The structure was continuously optimized and the growth rate outside the province was bright. 1. In terms of products, the revenue of products above 100 yuan, 30-70 yuan and less than 30 yuan respectively reached 1.1 billion yuan (+ 26.2%), 650 million yuan (- 19.6%) and 20 million yuan (- 43.4%), of which the proportion of products above 100 yuan increased by 11.3 percentage points to 62.1%, and the product structure was significantly upgraded. 2. In terms of subregions, Southeast Gansu, Lanzhou and surrounding areas, central Gansu and other areas achieved revenue of 500 million yuan (- 12.8%), 470 million yuan (- 1.0%), 240 million yuan (+ 13.4%) and 400 million yuan (+ 35.7%) respectively. 21 single Q4 Lanzhou and surrounding markets are affected by the epidemic, and the growth in the province is under pressure; Outside the province, a model market was built in the northwest of Gansu Province, and sales companies in Shanghai and Jiangsu were established to layout the East China market. The growth outside the province continued to be rapid.
The structural upgrading drives the gross profit margin to rise, the cost investment increases, and the profit is under pressure. 1. The gross profit margin of the company increased by 1.1 percentage points to 64.0%, mainly driven by the high growth of products above 100 yuan, the decline of product sales below 100 yuan under the superposition of the epidemic, and the accelerated upgrading of product structure. 2. The company strengthened brand building, launched high-frequency image advertisements of Jinhui 28 products, and increased consumer interaction activities such as tasting meetings. The sales expense rate increased by 2.7 percentage points to 15.6% year-on-year. 3. In 2021, the company’s management expense ratio increased slightly, the financial expense ratio decreased slightly, the revenue was under pressure in the fourth quarter, the investment in brand construction increased, and the company’s net interest rate decreased by 1.0 percentage points to 18.2%.
Fosun enables expansion outside the province and looks forward to the release of performance flexibility. 1. 21q4 is affected by the epidemic situation in Lanzhou, Xi’an and other regions, and the company’s income and performance are under pressure stage by stage; The company’s medium and long-term good trend continues, and 22q1 has achieved benign growth, which is expected to achieve a good start. 2, the current mainstream liquor price belt in Gansu Baijiu from the past 100 yuan to 100300 yuan faster pace upgrade, the company as Gansu real estate wine leader, more than 100 yuan product layout leading, will enjoy the province’s consumption upgrade bonus. 3. Relying on the ecology and channel resources of Fosun Group, the company has established sales subsidiaries in Shanghai and Jiangsu to develop the East China market, and East China is expected to contribute new increment in the future; On the basis of straightening out the product and price system, Longnan spring new products with a price of 1000 yuan are ready to come out, leading the further optimization of product structure. 4. The company further promotes the two wheel drive transformation and development of “deep distribution + key customer operation”, and develops opinion leaders and group purchase channels through the key customer operation strategy. Although the short-term cost investment has increased, the medium and long-term is conducive to the improvement of brand strength and lays a solid foundation for long-term sustainable development.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.96 yuan, 1.20 yuan and 1.46 yuan respectively, and the corresponding PE will be 29 times, 23 times and 19 times respectively. The upgrading of the company’s product structure will continue, and the endogenous growth and extension expansion will be solidly promoted. Fosun is able to maintain the “buy” rating with high quality.
Risk tip: the risk of sharp economic decline and the risk of repeated covid-19 epidemic.
