\u3000\u3 Shengda Resources Co.Ltd(000603) 369 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) )
Event: the company released its annual report for 2021, achieving an operating revenue of 6.406 billion yuan, a year-on-year increase of 25.1%, and a net profit attributable to the parent company of 2.029 billion yuan, a year-on-year increase of 29.5%. Among them, 21q4 achieved an operating revenue of 1.073 billion yuan, a year-on-year increase of 15.7%, and the net profit attributable to the parent company was 330 million yuan, a year-on-year increase of 30.4%.
Key investment points
In the 21st year, the income and profit increased both, and the structural upgrading proceeded steadily. In terms of products, the company’s special a + category / special a category / a category revenue in 2021 was 4.165/17.14/265 billion yuan respectively, with a year-on-year increase of + 35.7% / + 14.1% / + 4.4%, and the proportion of special a + category products increased from 60.0% to 65.0%; Among them, the revenue of 21q4 special a + class / special a class / a class was RMB 625 million / 3.50 million / 40 million respectively, with a year-on-year increase of + 22.3% / + 14.4% / + 9.5%. The annual revenue and profit at the beginning of the 14th five year plan achieved double growth, and the product structure continued to be optimized. In terms of regions, in 2021, the company’s operating revenue of Huai’an / Nanjing / Southern Jiangsu / Central Jiangsu / Yancheng / Huaihai district / outside the province was 1.271/15.78/8.52/8.69/7.57/6.06/447 billion yuan respectively, with a year-on-year increase of + 18.0% / + 19.8% / + 32.5% / + 32.9% / + 15.0% / + 44.9% / + 36.0%, of which southern Jiangsu, Central Jiangsu, Huaihai and outside the province achieved high growth. In 2021, the company has a net increase of 103 dealers and 88 outside the province. The market outside the province has a stable layout. According to channel feedback, Guoyuan split and four drive pins are basically stable. According to the reference of wine price, Guoyuan’s four opening price is about 395 yuan / bottle, and Guoyuan’s counter opening price is about 260 yuan / bottle. The rating performance is stable.
The gross / net profit margin increased significantly in 21 years, and the cash flow index was bright. In 2021, the gross profit margin of the company increased from + 3.49 PCTs to 74.6% year on year, and the net profit margin increased from + 1.07 PCTs year on year; Sales rate / management rate year-on-year -2.00 / – 0.45pcts; The gross profit margin of 21q4 was significantly increased to 83.7%, the net profit margin was + 3.43pcts year-on-year, and the sales rate / management rate was -5.08 / -1.04pcts year-on-year. The gross profit margin and net profit margin of the company increased in the whole year of 21 years, mainly due to the continuous optimization of product structure and accurate investment of expenses. The contract liabilities at the end of 21q4 were 2.067 billion yuan, an increase of 1.206 billion yuan month on month compared with the end of the third quarter, mainly due to seasonal factors and dealers’ positive payment.
The upgrading of product structure can be expected to help achieve the objectives of the 14th five year plan. In early 2022, the company put forward the “13445” plan for marketing work: focusing on the main line of “developing high quality and new wine margin”, grasping the keynote of “good luck and quick pursuit”, following the development direction of “543” wine industry, focusing on strategic guidance, steadfast quality first, focusing on Baijiu main industry, and deepening the strategy of differentiation, high-end and nationalization of “three”, effectively promoting the V critical battle of the national border and the promotion of national relations. Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) brand activation war and breakthrough war outside the province are “four battles”. It is expected that the market share of the company will continue to expand in 22 years, and the product sales revenue will achieve steady growth. From the perspective of implementation path, it is expected that the fourth five-year development conference in 22 years will continue the trend of high growth in 21 years; At the same time, V series is expected to take over and open the system to become the next growth point in the future. The + fourth five year plan aims to achieve a high target of 2 billion, the proportion of revenue is expected to reach 20%, and the CAGR in 20-25 years is about 50%. In the future, under the background of continuous promotion of equity incentive, the company will have sufficient endogenous power, clear marketing strategy, further boost the enthusiasm of the sales team, and the company has the potential and power to release performance. At the same time, the company plans to invest 9.08 billion yuan to actively expand production, and is expected to add 18000 tons of high-quality Luzhou flavor base liquor, providing sufficient capacity guarantee for the company’s long-term development strategy. In the medium and long term, the logic of “upgrading product structure + increasing market share” in the province is expected to continue to be fulfilled; Through the accelerated cultivation of key markets outside the province, the proportion of income may steadily increase to more than 10%.
Based on the company’s investment growth trend of RMB 19.87 billion / 2022, we suggest that the company’s profit growth rate should be RMB 19.87 billion / 2022, with a year-on-year growth of 22.9% and a slight increase of 22.8% respectively. The net profit attributable to the parent company was RMB 2.534/31.16/3.819 billion, with a year-on-year increase of 24.9% / 23.0% / 22.6%. The corresponding EPS is 2.02/2.48/3.04 yuan respectively. Considering the high growth of the company under the background of upgrading in the province and expansion outside the province, the company was given a 23-year pe25x valuation and maintained the company’s “buy-b” rating.
Risk tip: under the repeated epidemic situation, the performance growth is less than expected, the product upgrading is less than expected, and the industry competition is intensified.
