\u3000\u3 Shengda Resources Co.Ltd(000603) 369 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) )
Events
The company released the 2021 annual report: in 2021, the company’s revenue was 6.406 billion (+ 25.12%), the net profit attributable to the parent was 2.029 billion (+ 29.50%), and the net profit not attributable to the parent was 2.033 billion (+ 30.50%); In 2021q4, the company’s revenue is 1.073 billion (+ 15.81%), the net profit attributable to the parent company is 330 million (+ 30.39%), and the net profit not attributable to the parent company is 331 million (+ 29.45%).
Previously, the company expected to achieve an operating revenue of 6.3 ~ 6.5 billion (+ 23% ~ 27%) in 2021; The estimated net profit attributable to the shareholders of the listed company is 1.9 ~ 2.1 billion (+ 21% ~ 34%); Deducting the net profit not attributable to the parent company of RMB 1.9 ~ 2.1 billion (+ 22% ~ 35%), the annual report performance is in line with the previous forecast range and expectations.
Key investment points
V series high growth leads structural upgrading, intensive cultivation and multi-point flowering in the province
1) product side: the revenue of special a + and special a products increased by 35.71% and 14.08% respectively in 21 years, and the revenue of special a + and special a products increased by 22.25% and 14.37% respectively in 21q4. Led by the high growth of V series, the proportion of special a + revenue increased by 5.07pct to 65.29%, and the average price of special a + increased by 11.29% to 451900 yuan / kiloliter. By product: in the past 21 years, V series has doubled, sikaihuanxin has successfully achieved both volume and price increases, folio and elegant Guoyuan, as the second and third largest single products, have maintained rapid growth, and the performance of d10 / D20 in Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) series is better.
2) market side: the key markets in the province continued to grow well, the brand atmosphere in weak markets improved significantly, and the cultivation outside the province was promoted in an orderly manner. Specifically: ① in the province: the revenue growth rate of Huai’an, Nanjing, Southern Jiangsu, Central Jiangsu, Yancheng and Huaihai regions in the past 21 years was 18.03%, 19.80%, 32.46%, 32.85%, 14.97% and 44.87% respectively. The growth rate of Southern Jiangsu, Central Jiangsu and Huaihai regions exceeded 30%, and central Jiangsu still maintained a high growth rate of 31.94% in 21q4. ② Outside the province: in the past 21 years, the market revenue outside the province increased by 36.05%, and the proportion increased by 0.56pct to 7.01%.
3) channel side: the marketing mode has been transformed, and V99 alliance has been established. The operation mode of terminal alliance has been continuously promoted by means of mobile sales visit, manufacturer’s “1 + 1 + n” deep cooperative sales, and the combination of direct distribution, so as to realize channel sinking, terminal control and enhance the emotional stickiness of “factory and store”. In the past 21 years, the number of dealers in Central Jiangsu and Huaihai regions in the province has increased by 21 or 7, and the number of dealers in markets outside the province has increased by 88. Investment attraction outside the province has been smooth.
The profitability was significantly improved, and the advance receipts and cash flows performed well
In 21 years, the gross profit margin and net profit margin of the company increased by 3.49 PCT and 1.07 PCT to 74.61% and 31.68% respectively. The main reasons for the improvement of profitability are as follows: 1) product structure optimization: under the guidance of the doubling growth of V series, the gross profit margin of special a + and special a + increased by 1.25 PCT, 2.43 PCT to 82.60% and 66.22% respectively, and the proportion of special a + with higher gross profit rate increased by 5pct. 2) Expense control: in the 21st year, the rates of sales and management expenses decreased by 2.00 and 0.41pct to 15.10% and 4.50% respectively, and the promotion and prize cashing expenses and the salary of business personnel increased.
In addition, the contract liabilities increased by 1 billion yuan year-on-year in the past 21 years, mainly due to seasonal factors, which showed the strong willingness of dealers to make payments, demonstrating the strong operating ability of the company; The net operating cash flow increased by 170.31% year-on-year, mainly due to the growth of income and the increase of advance receipts over the same period.
22q1 is less affected by the epidemic and is optimistic about the rapid growth in 22 years
In the short term, Q1 is less affected by the epidemic, and its performance has achieved a “good start”. According to the calculation of the revenue growth of about 25% from January to February, the proportion of payment during the spring festival may be 35% – 40%. At present, the inventory level is benign and the structure is stable and upward. March is the off-season for sales and the base market is less affected by the epidemic. It is expected that the Q1 revenue may exceed 3 billion yuan and the profit may exceed 1 billion yuan, and the performance “open door red” will be realized smoothly.
Throughout the year: large single product volume + stable base market. The annual performance is less disturbed by the epidemic and is still expected to grow rapidly. Considering that the company has a base market, the impact of the epidemic is small and does not rely on investment, it is expected to achieve rapid growth throughout the year. The company has set a revenue target of 7.5 billion yuan in 2022 and strive for 8 billion yuan; The net profit target is 2.25 billion yuan, striving for 2.35 billion yuan. According to our statistics for 15-21 years, except that the target affected by the epidemic in 20 years has not been reached, the profit targets in other years have been exceeded. The development momentum of the company in 22 years is good, and the equity incentive is expected to be implemented within the year (the equity incentive plan has been launched since 2020, and the share repurchase plan has been completed by the end of 2021), which will effectively stimulate the enthusiasm of the management and employees, Accelerate the development and potential release of the company, and have the potential to exceed the target in 22 years.
In the long run: the change of management is smooth, and the 10 billion goal is expected to be achieved ahead of schedule. Recently, Mr. Zhou suming retired and resigned, and Mr. Gu Xiangyue took over as chairman of the board. The management change is smooth, which is conducive to the continuation of the company’s strategy and the deepening of reform. We think that the Baijiu market capacity of Jiangsu is over 60 billion yuan, the mainstream price belt takes the lead in the whole country. Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) relies on the market + four opening of the province to maintain the momentum of rapid development. Under the guidance of the “13445” marketing work plan, the target of 10 billion in 14th Five-Year is expected to be reached ahead of schedule, and the growth after 10 billion yuan is mainly from the rapid development of the V system and the focus of breakthroughs outside the province.
1) the growth source of the latter 10 billion: 1. Stabilize the basic market of the system and maintain the rapid development of the V system. 1) Rapid development of V Series: clear structure of high-end products (V9 seizes the price band of 1000 yuan and V3 forces the price band of sub high-end upgrading) + empowerment of organizational structure (establishment of V9 business department and V99 alliance) + rich channel profits + creation of high-end atmosphere (creating a new scene of high-end appreciation meeting and V9 Experience Hall). It is expected that V series can still maintain a doubling growth trend. During the 14th Five Year Plan period, V series revenue may reach 5 billion yuan, or exceed market expectations. 2) The opening series is basically stable: the four opening and two-way opening still have advantages in Nanjing and other markets. After the Spring Festival, the wholesale price of the four opening has gradually rebounded to about 445450 yuan. Driven by the brand power, Danya Guoyuan has developed into the third largest single product, and the 22q1 two-way opening and Danya Guoyuan have increased rapidly.
2) growth source of the latter 10 billion yuan 2: focus and refocus outside the province to create a sector market. 1) In the province: the growth rate of mature markets such as Huai’an and Nanjing may slow down slightly, the market in Central Jiangsu and Huaihai will increase significantly, and southern Jiangsu is expected to become another growth pole in the province. 2) Outside the province: Shanghai, Shandong, Zhejiang and other markets have begun to take shape and have a good growth momentum. In the future, the opening of the system will be the focus of development outside the province, focusing on the concentration of resources to build the sector market. At present, the foreign edge of the province accounts for 50%, and the revenue outside the province is expected to account for more than 20% in the 14th five year plan.
Profit forecast and valuation
We believe that the 14th five year plan of the company is rational and positive (strive to achieve revenue of more than 10 billion yuan and strive for 15 billion yuan in 2025), the goal of 10 billion yuan is expected to be achieved in advance, and the equity incentive is expected to be implemented in 2022, which will effectively improve the enthusiasm of management and employees. We are optimistic about the long-term growth of the company. It is estimated that the company’s revenue growth from 2022 to 2024 will be 24.7%, 25.4% and 25.4% respectively; The growth rate of net profit attributable to the parent company was 24.0%, 26.4% and 26.7% respectively; EPS is 2.0, 2.5 and 3.2 yuan / share; PE was 22, 17 and 14 times respectively. Considering the strong certainty of the company’s annual performance, the current valuation is cost-effective, and the buy rating is maintained.
Catalyst: Baijiu demand exceeds expectations; Guoyuan moving pin continued to improve.
Risk warning: Overseas epidemic affects China’s two outbreak or prevention and control upgrade, affecting Baijiu’s overall sales recovery. The situation of Guoyuan movable pin was less than expected.
