\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 58 Wuliangye Yibin Co.Ltd(000858) )
Ping An View:
The leading brand of Luzhou flavor is strong, and the secondary entrepreneurship is reborn Wuliangye Yibin Co.Ltd(000858) is a famous brand of China Luzhou flavor Baijiu liquor with a long history and culture. The company has won many Baijiu related awards and has been recognized and loved by consumers. In 1988, the most important reason for the success of brand approval was to dilute the price of OEM, which led to the failure of brand approval in 1988. In 2017, Wuliangye Yibin Co.Ltd(000858) through the second venture, adjusted the management team and product channels, focused on the company’s core brand, and achieved the annual revenue of Wuliangye Yibin Co.Ltd(000858) group exceeding 30 billion yuan for the first time, opening a new chapter of development. In February 2022, the group appointed Zeng Congqin as chairman of Wuliangye Yibin Co.Ltd(000858) and concurrently as chairman of the group and Secretary of the Party committee. As the first leader of Wuliangye Yibin Co.Ltd(000858) group and stock “integration” in more than ten years, the group will continue to lead the company to achieve high-quality development.
The trend of volume reduction and price increase is clear, benefiting from the overflow of high-end consumption. Since the adjustment of the “three public” consumption in 2012, Chinese Baijiu has entered the stage of mass consumption and business consumption, and the purchasing power of consumers has been continuously improved. At present, the trend of price reduction and increase in industry volume remains unchanged, consumption shows structural upgrading, wine enterprises above Designated Size continue to decrease, industry concentration accelerates, and price increase contributes to the main growth. Flying Moutai has been making a steady increase in the price of its high-end Baijiu and sub high grade baijiu. As of March 17th, the price of Moutai / Wuliangye Yibin Co.Ltd(000858) is 2.79. We believe that Wuliangye Yibin Co.Ltd(000858) will continue to benefit from the high-end consumption overflow under the supply restriction of Maotai. It will be a high probability event to realize the sale at a favorable price after the price increase, and the company’s revenue and profit are expected to continue to grow.
Core single products lead the growth, and the series product matrix is improved Wuliangye Yibin Co.Ltd(000858) overall strategic policy is based on the principle of “three natures and one time”, which ensures the purity of Wuliangye Yibin Co.Ltd(000858) and series liquor products, maintains the consistency of product packaging, enhances the grade of products, and improves the identification of products. In terms of brand strategy, Wuliangye Yibin Co.Ltd(000858) main brand focuses on the “1 + 3” strategy, and series liquor products adhere to the “4 + 4” strategy. Both of them build the company’s product system at full price to meet the needs of consumers at different levels. Among them, the eighth generation Wuliangye Yibin Co.Ltd(000858) as the core single product of the company, has experienced multiple rounds of upgrading iterations and built the core pillar of the company’s high-quality market share. Classic Wuliangye Yibin Co.Ltd(000858) as the company’s strategic single product with the price of 2000 yuan, will become a new growth point of the company, drive the structural upgrading of products and contribute to the growth of the company’s revenue scale and profitability.
Channel flat, fine management, digital marketing empowerment Wuliangye Yibin Co.Ltd(000858) since its development, its channel strategy has gradually weakened the big business from the early big business system, and introduced the mode of “small business + exclusive store”. In order to realize the vertical flattening and horizontal specialization of the headquarters, Wuliangye Yibin Co.Ltd(000858) adjusted the original 7 marketing centers to 21 marketing war zones and 60 marketing bases, sunk the functional departments and resources into the marketing war zones, and strengthened the ability of intensive cultivation and rapid response of the market. At the same time, the company focuses on the cultivation of core leaders, develops personalized customized wine, deeply cultivates new channels of group purchase, and grasps the terminal dynamic sales in real time with the help of digital marketing management.
Brand transformation, optimize the structure, expand production and ensure the strength of brewing. In the early stage, Wuliangye Yibin Co.Ltd(000858) developed a large number of brands under the OEM OEM OEM mode, with small sales volume but a wide range of categories, confusing consumers’ cognition and overdrawing the brand power of the company. In order to ensure the value return of Wuliangye Yibin Co.Ltd(000858) high-end brand and standardize product management and product quality, the company has issued a series of policies in recent years, focusing on the “1 + 3” and “4 + 4” product systems, eliminating high imitation products and rectifying medium imitation products. At the same time, the company actively expanded its production capacity and launched the 120000 ton ecological brewing project (phase I). It is expected that the overall production capacity of Wuliangye Yibin Co.Ltd(000858) will exceed 400000 tons in the future, including 40000 tons of high-end wine. According to the plan of Wuliangye Yibin Co.Ltd(000858) during the 14th Five Year Plan period, Wuliangye Yibin Co.Ltd(000858) will continue to increase the storage of raw wine, and it is expected that the storage capacity will exceed 1 million tons during the 14th Five Year Plan period.
Investment suggestion: looking forward to 2022, under the trend of consumption upgrading, we are optimistic about the continuous expansion of the thousand yuan price band. As a famous liquor enterprise with all-round leading brand power, product power and channel power, Wuliangye Yibin Co.Ltd(000858) is expected to fully enjoy the bonus of price band expansion, undertake the consumption upgrading of the secondary high end and the super high-end demand overflowed from Maotai, and have high certainty of volume and price growth. We expect the net profit attributable to the parent company from 2021 to 2023 to be 232.78/275.7532199 billion yuan, Year on year + 16.7% / + 18.5% / + 16.8%, corresponding to EPS of 6.0 / 7.1 / 8.3 yuan. For the first coverage, give a “recommended” rating.
Risk tips: 1) 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. 2) The risk of recurrent outbreaks. The epidemic will impact on the consumption scene such as banquets and parties, which will have an adverse effect on the sales of Baijiu. 3) Industry competition intensifies. There is a problem of intensified competition in the Baijiu industry. We should guard against the adverse effects of price war and fleeing goods brought about by the deterioration of competition. 4) Food safety risks. Food safety is the red line. Once food safety problems occur, they will have a great negative impact on the industry.
