\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 519 Kweichow Moutai Co.Ltd(600519) )
Event:
Kweichow Moutai Co.Ltd(600519) released the annual report, realizing a total operating revenue of 109464 billion in 2021, the same as + 11.71%; The operating revenue was 106190 billion, a year-on-year increase of + 11.88%; The net profit attributable to the parent company was 52.460 billion, the same as + 12.34%; Deduct non net profit of RMB 52.581 billion, the same as + 11.84%; EPS 41.76 yuan / share; It is proposed to send 216.75 yuan (including tax) in October.
Key investment points:
The actual performance of the whole year was better than the previous forecast, and the output of Maotai liquor increased steadily. The company’s annual actual revenue and profit growth were faster than previously predicted. In 2021q4, the operating revenue was 31.548 billion, a year-on-year increase of + 13.89%, and the net profit attributable to the parent company was 15.194 billion, a year-on-year increase of + 18.06%. The revenue and profit increased month on month, slightly faster than expected. Maotai liquor exceeded the planned volume, and the non-standard Maotai price increase combined with the proportion of direct sales increased the contribution price elasticity. The annual revenue of Maotai Liquor / Series liquor increased by 10.2% / 26.1%, and the sales volume increased by + 5.7% / 1.5% to 36200 / 30200 tons. The actual output of Maotai liquor is 472 tons higher than the designed capacity, and it is expected to maintain the trend that the actual output is higher than the target output. The series liquor will maintain elastic growth. In the future, with the continuous promotion of the technical transformation project of 30000 tons of Maotai flavor series liquor, the series liquor will release greater potential. Due to the gradual release of dividends such as the optimization of direct marketing structure and non-standard price increase, the ton price of Maotai Liquor / Series liquor increased by 4% / 24% to 2.58420000 yuan / ton respectively, and the annual parent net interest rate was 47.9%, year-on-year + 0.3pct, Q4 net interest rate was 46.9%, year-on-year + 1.6pct.
Contract liabilities continued to remain high, the proportion of direct sales channels increased, and the performance elasticity should not be fully released. By the end of 2021, the contract liabilities were 14.254 billion yuan, an increase of 3.992 billion yuan over Q3, a decrease of 680 million yuan compared with the end of 2020. According to the market tracking feedback, the company only notified the payment in early January this year. The annual net operating cash flow was 64.029 billion yuan, a year-on-year increase of + 23.92%. At the end of the period, there were 2089 dealers in China, of which 63 were newly added during the year, mainly series liquor dealers, with a decrease of 20, mainly Maotai liquor dealers. The proportion of direct sales channels of the company increased 9pct to 23%, continuously optimized the channel structure and strengthened the terminal control.
Q1 has made a successful start, and the planned goal of 2022 has been accelerated. The total revenue / net profit attributable to the parent company in 2022q1 is expected to be + 18% / 19% respectively year-on-year, laying the foundation for high growth in the whole year. The company has set a growth target of 15% of the annual total operating revenue, which is significantly higher than the target of 10% in the previous two years. This year is an acceleration year. We believe that the company’s performance in 2022 shows a trend of low before and high after, and the annual growth rate exceeds 20%, with high certainty: 1) the company’s performance in 2021 remains strong; 2) This year, the supply and marketing volume of Maotai liquor is expected to increase by 10% year-on-year; 3) The company continues to promote channel reform, and the direct supply quota is expected to increase; 4) The increase in the price of existing products (except Feitian), the shutdown of a series of low-cost liquor products, the introduction of upgraded treasures and Maotai 1935 and other new products can contribute to the incremental income.
The decline of short-term rating is affected by supply and demand. Within the normal range, the rating of about 2500 yuan is the balance point in the long run. The essence of Maotai pricing is the balance between supply and demand, which is determined by the relationship between supply and demand and has nothing to do with the ex factory price. In the first half of 2021, due to the unpacking policy and the limited local supply in the province, the overall supply imbalance led to a sharp rise in prices. Since the second half of the year, the company has conducted large-scale production, and the decline of rated prices is normal and reasonable. Recently, disturbed by pessimism, the wholesale price stopped falling and rebounded after a sharp decline. In the long run, with the steady increase of Maotai liquor supply and the normalization of demand, we expect that about 2500 yuan will be the long-term balance of supply and demand. The support of consumer demand below 2500 yuan is strong, and the decline of wholesale prices stimulates the actual demand for bottle opening, which is conducive to digesting inventory and making the market run more healthy and sustainable.
The reform action continues to be implemented, and we are optimistic about the gradual realization of dividends. After the simultaneous increase of volume and price in previous years, high-end wine has entered a steady growth stage with limited elasticity. However, Maotai’s consumption attributes include more attributes such as collection, investment, finance and gifts, and the price increase expectation has not been fulfilled: Maotai has strong demand and enjoys market pricing power. Over the years, the increase of ex factory price is limited, and the company has the ability and space to increase the price. On the other hand, the new e-commerce marketing platform “I Maotai” was launched, and another reform measure of the company was implemented. The new e-commerce platform plays the role of a breakthrough in market-oriented reform. In the future, the company’s incremental supply, price management and changes facing consumers are also expected to use this platform for layout. In early report released by Guizhou Province, it was pointed out that the Guizhou Baijiu liquor brand fleet, which was guided by Moutai liquor, should ensure that the added value of Baijiu industry increased by more than 20%. We are optimistic about the flexible growth of the company’s performance this year and the continuous release of dividends. In the long run, Maotai’s brand value and business model are very scarce deterministic high-quality targets in the market.
The company’s investment forecast and long-term profit forecast are stable and the company continues to improve. It is estimated that the company’s EPS from 2022 to 2024 will be 50.75/60.65/71.94 yuan, and the corresponding PE will be 34 / 28 / 24 times respectively, giving a “buy” rating.
Risk tips: 1) the epidemic situation repeatedly suppresses the demand of the industry; 2) Large macroeconomic fluctuations lead to weak demand; 3) Changes in industrial policies; 4) The implementation effect of marketing work does not meet expectations; 5) Changes in price increases are expected to trigger fluctuations.
