\u3000\u3 Shengda Resources Co.Ltd(000603) 919 Jinhui Liquor Co.Ltd(603919) )
Events
Jinhui Liquor Co.Ltd(603919) released the annual report of 2021: the company achieved an operating revenue of 1.788 billion yuan (+ 3.34%) in 2021; The net profit attributable to the parent company is 325 million yuan (- 1.95%); Deduct the net profit not attributable to the parent company of RMB 322 million (- 2.58%). 21q4 achieved an operating revenue of 447 million yuan, a year-on-year decrease of 34.74%; The net profit attributable to the parent company was 82 million yuan, a year-on-year decrease of 52.61%; Net profit deducted from non parent company was 88 million yuan, a year-on-year decrease of 47.84%.
Performance review
The 21q4 epidemic affected performance, and the structural upgrading trend of the whole year remained unchanged
In a single quarter, the company was affected by the epidemic (mainly from October to November), and the revenue of 21q4 company decreased by 34.7% year-on-year; Net profit attributable to parent decreased by 52.6% year-on-year. In the whole year, the revenue in the province was 1.37 billion yuan, basically the same as that in the same period last year (accounting for about 80%), and the growth rate outside the province remained 36% to 390 million yuan; Benefiting from the continuous expansion of consumption upgrading in Northwest China and the promotion of key customer operation, the proportion of product revenue above 100 yuan increased by 11.3% to 62%. By grade: in 2021, the company’s revenue from high / medium / low-grade products was 1.10/6.5/0.2 billion yuan respectively, with a year-on-year increase of + 26.2% / – 19.5% / – 43.4% respectively. Specifically:
In the province: 1) Golden Emblem year series: the sales revenue is expected to be 200 million + in 21 years, with a stable growth rate of 30% in recent years; 2) Soft Golden Emblem series: it is operated by a separate business division, with an estimated revenue of 400500 million (30% +) in 21 years, accounting for about 25% of the revenue; 3) Star Series: the 21-year revenue is expected to be 900 million +, accounting for more than half of the revenue. Due to the main medium and low-grade products in the star series, the growth rate has declined. The company has adjusted the price and quality by launching high-quality three-star and four-star products, and completed the gradual replacement of dislocation layout sales.
Outside the province: the revenue growth rate of positive energy series in 21 years is about 40%, accounting for nearly 8%. It is mainly sold in the Northwest market around Gansu and gradually opened in the market layout outside the province.
In terms of sub regions, the revenue of Southeast Gansu / Lanzhou and its surrounding / Central Gansu / western Gansu / other regions in 2021 was RMB 500 / 4.7 / 2.4 / 1.6 / 390 million respectively, with a year-on-year increase of – 12.8% / – 0.1% / + 13.3% / + 0.1% / + 35.7% respectively. The proportion outside the province increased from 17% in 20 years to 22%, and the expansion momentum outside the province continued. In the future, the company will focus on the northwest + East China region, in which Shaanxi, Ningxia, Inner Mongolia and Xinjiang are important markets around Gansu.
The profitability increased steadily, and the sales expense ratio increased slightly
With the continuation of the trend of structural upgrading, the gross profit margin of the company in 2021 increased by 1.2 percentage points to 63.7% compared with the same period of the previous year, and the profitability increased steadily; On the expense side, the company’s management expense rate remained stable, and the sales expense rate increased by 2.7 percentage points to 15.6% year-on-year, mainly due to: 1) increasing the investment in advertising and publicity expenses; 2. Social security and salary increase; 3) Transportation, loading, unloading and storage costs increased. In order to enhance brand influence, it is expected to continue to increase sales expenses this year.
Fosun has accelerated its development, and its product structure and channel expansion may exceed expectations
Highlight 1: make concerted efforts inside and outside, and the high-end speed of products in the province may exceed expectations. External factors: the mainstream price belt of Baijiu in Gansu province is converted from below 100 yuan to 100300 yuan, and all the liquor enterprises are all pushing the high-end, leading the Baijiu liquor price belt to move upward. Internal factors: ① products: Jinhui Liquor Co.Ltd(603919) optimize the product structure by shrinking the low-end product line, launching high-end new products, stopping goods and raising prices. Longnanchun will be launched this year; ② In terms of market: in the future, the company will go deep into the northwest, layout the whole country, break through key points, focus on cultivating consumers with revived resources, and accurately select sites in the eastern region to create model markets and consumers; ③ In terms of marketing: C-end top, actively promote the operation of key customers, and adhere to the basic idea of “focusing on resources, precision marketing and in-depth control”; ④ In terms of production capacity: in terms of production, adhere to both quantity and quality, delegate power and invigorate, and build a competitive team. In 2020, the output of premium wine has increased by 127% year-on-year, laying the foundation for structural upgrading; ⑤ Internal assessment: the company has always adhered to the structure oriented assessment of the marketing team, implemented the survival of the fittest, fully authorized the general trend, implemented internal ranking, and flexibly formulated relevant incentive policies in combination with market dynamics; Protect the interests of stores through the alliance of all merchants.
Focus 2: Based on Gansu, focus on the northwest and accelerate the realization of nationalization. Province: assume that the market share of the company is similar to that of Xinjiang Yilite Industry Co.Ltd(600197) , Qinghai Huzhu Barley Wine Co.Ltd(002646) and other liquor companies (the proportion of the cities in Gansu province is more than 50% in 2019). Taking into account the scale of the Baijiu market in China has always been stable at 6 billion yuan, the scale of the company’s future province will reach 3 billion yuan, and the proportion of the Jinhui Liquor Co.Ltd(603919) province’s market share still has much room for improvement. Outside the province: the Baijiu market reaches 40 billion scale of the Northwest market, which is a new opportunity for the future development of Jinhui Liquor Co.Ltd(603919) . 19 years Jinhui Liquor Co.Ltd(603919) will increase the layout of the six provinces in the northwest by increasing the layout. The company is expected to build a model market in the East with the help of the group purchase channel of Fosun Group, so as to accelerate the nationalization.
Profit forecast and valuation
It is estimated that the revenue growth rate from 2022 to 2024 will be 38.3%, 22.9% and 18.7% respectively; The growth rate of net profit attributable to the parent company was 44.9%, 27.2% and 14.4% respectively; EPS is 0.9, 1.2 and 1.4 yuan / share respectively; PE was 29, 23 and 20 times respectively. In the long run, the company has strong growth, the current valuation has cost performance, and maintains the buy rating.
Catalyst: inventory decline, terminal price increase, continuous upgrading of product structure and accelerated expansion outside the province.
Risk warning: the two outbreak of China’s epidemic situation affects the whole Baijiu sale of liquor. The sales of high-end liquor was less than expected.
