\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 702 Shede Spirits Co.Ltd(600702) )
Events
The company released its annual report for 2021: in 2021, the company achieved an operating revenue of 4.969 billion yuan, a year-on-year increase of 83.80%; The net profit attributable to the parent company was 1.246 billion, a year-on-year increase of 114.35%. 21q4 achieved an operating revenue of 1.362 billion yuan, a year-on-year increase of 44.89%; The net profit attributable to the parent company was 2.76 yuan, a year-on-year increase of 2.12%.
Key investment points
The dual brand strategy has achieved initial results, and the Tuopai structure is expected to be optimized.
In terms of grades, the company’s liquor revenue in 2021 was 4.577 billion yuan (+ 94.8%). In terms of products, the revenue of medium and high-grade liquor (shede and Tuopai Tianqu) increased by 81.9% to 3.87 billion yuan compared with the same period last year, the revenue decreased by 6.0 percentage points to 84.6% compared with the same period last year, and the ton price increased by 10.4% to 335000 yuan / ton compared with the same period last year, of which shede series sold 8000 tons (+ 60.1%), The sales volume of Tuopai series is 31000 tons (+ 192.0%); The revenue of low-grade liquor (Tuopai Daqu) increased by 218.7% to 700 million yuan compared with the same period last year, and the ton price increased by 0.1% to 26000 yuan / ton compared with the same period last year.
In terms of brands, the current revenue share of shede / Tuopai is about 8 / 2 respectively, and shede series is still the main source of revenue. Among shede brands, the proportion of taste shede / shede is expected to be about 65% / 20% respectively. In the past 21 years, the company’s wholesale price has shown a steady upward development trend, and the inventory is at a low level in recent three years. Tuopai series: 21h1 company added Tuopai customized products to restore Tuopai. 21h2 will tighten Tuopai series products. The focus of investment attraction in 22 years is still Tuopai, and will take the route of big business and excellent business.
The performance growth mainly comes from the main sales market and old dealers, with the increase of channel volume and quality
We believe that the growth of the company this year mainly comes from the old merchants / big merchants and base markets. In terms of dealers, the number of big merchants with a level of more than 5 million accounts for about 20% and the revenue accounts for about two-thirds. In 22 years, the company will continue to improve the response speed, high channel profits and innovate Internet marketing by expanding merchants and improving the quantity and quality of channels. In addition, The company continues the strategy of “focusing on Sichuan, Hebei, Shandong and Henan, improving the northeast and northwest, and breaking through the East and South China” to accelerate the national layout of the brand. It is expected that the growth rate of the company in Hebei, Shandong and Henan and other markets will exceed 100% in 21 years. While maintaining a high growth rate in the original core market, the company will contribute to the main revenue. Specifically:
1) in the province: the company’s revenue in the province reached 1.18 billion yuan (+ 127.6%), and the proportion of revenue increased by 0.04 percentage point to 25.8% compared with the same period last year. Although the number of dealers decreased by 24 to 467 compared with the same period last year, the average size of dealers increased by 139.3% to 2.527 million yuan / year, and the stability of dealers is strong;
2) outside the province: in 2021, the market revenue outside the province increased by 80.8% to 3 billion yuan year-on-year. Under the background of accelerating the growth of 515 to 1785 dealers, the average size of dealers increased by 28.7% to 1.678 million yuan / company. In 2022, the company will further strengthen the strategy of excellent business and large business and realize the continuous improvement of channel quality.
3) online: e-commerce revenue has increased rapidly. E-commerce channels increased by 129.4% to 400 million in 2021.
The profitability has been steadily improved and the expenses have been properly controlled
In 2021, the gross profit margin increased 1.9 percentage points to 77.8% (Baijiu business gross profit margin) in the same period last year, and net interest rate increased 3.1 percentage points to 25.6% over the same period last year. The main reason is that the company increased the utilization rate of the cost, the sales cost rate and the management cost rate decreased 2.2, 0.5 percentage points to 17.6%, 12.8%, compared with the same period last year. In addition, the company’s contract liabilities decreased by 190 million month on month / year-on-year increase of 290 million yuan to 660 million yuan.
22q1 has a promising start and is optimistic about its performance in 22 years, maintaining rapid development
From the perspective of 22q1, it is expected that the company’s 22q1 revenue + advance revenue will nearly double compared with last year, and the profit end will be at the upper limit of the growth rate predicted in the previous performance express. Throughout the year, considering that the growth of the company’s performance mainly comes from the main sales market and old dealers, the volume and quality of channels have increased, the expansion of the main sales market ensures sustainability, the contribution of new products may exceed expectations, the channels are willing to upgrade their taste, and the annual performance growth rate exceeds 50% +; With the gradual implementation of the four strategies and the steady expansion of dealers, the company’s performance is expected to accelerate.
Exceeding expectations: the performance growth mainly comes from the main sales market and old dealers, and the contribution of new products may exceed expectations
Market expectation: ① willing growth mainly comes from national investment promotion. The quality level of dealers is uneven, so the growth is unsustainable. ② Although many new products have been added in the past 21 years, it will disrupt the price and the growth of main products.
We believe that: ① the main growth of shede comes from the expansion of the main sales market, rather than the distribution of investment in the country. The main sales market (old dealers + new dealers) contributed 80% of the sales growth and 15% of the new investment promotion in the new area. The annual performance may exceed the expectation, while ensuring the sustainability of the growth. ② Willing to contribute to the performance of new products or exceed expectations. Since Fosun became the owner, although the company has multiple product lines, the product line positioning and layout are reasonable. In terms of products, new strategies are adopted – dual brand strategy, old wine strategy, high-end strategy, etc. among them, the taste and wisdom of the original main single products are willing to continue their excellent performance, while the price of new products is stable and the development is higher than expected. For example, the sales scale of high-speed light bottle wine T68 is more than 100 million, contributing higher profits.
Profit forecast and valuation
The equity incentive system launched at the beginning of September is conducive to stimulate the enthusiasm of employees. At the same time, the executives of Fosun Group have joined the board of directors recently, which is expected to help Fosun Group to embark on the performance improvement channel. With the gradual implementation of the four strategies and the steady expansion of dealers, the company is expected to accelerate the performance. We predict that the revenue growth rate of the company from 2022 to 2024 will be 43.6%, 32.3% and 22.2% respectively; The growth rate of net profit attributable to the parent company was 52.2%, 35.0% and 25.6% respectively, and EPS was 5.7, 7.7 and 9.7 yuan respectively; PE was 31, 23 and 19 times respectively. Considering the accelerated release of the company’s reform dividend, the current valuation is cost-effective and maintains the buy rating.
Catalyst: Baijiu demand is expected to exceed expectations, and prices continue to go up.
Risk warning: 1. Epidemic situation has repeatedly affected Baijiu selling. 2. The landing effect of old wine strategy was less than expected.
