Maotai: a perfect ending in 21 years and entering the fast lane of reform in 22 years
Analysis of the annual report: in 21 years, the operating revenue reached 106.19 billion yuan, a year-on-year increase of + 11.9%; The net profit attributable to the parent company was 52.46 billion yuan, a year-on-year increase of + 12.3%, basically in line with market expectations. The proportion of direct sales increased to 22.7%, and the expense rate was basically stable. Benefiting from the price increase of series liquor, the overall product maintained the trend of simultaneous increase in volume and price.
Forecast and analysis of the first quarterly report: the company announced that the revenue and net profit attributable to the parent company from January to February of 22 were about + 20% year-on-year. We judge that the progress of payment collection in Q1 is relatively complete (the pace of payment and delivery in Q1 last year was slow). After the Spring Festival, sales of Baijiu sales fell off in March, and the overall shipments were expected to decrease compared to the Spring Festival. Since December 21, the price of non-standard products has increased and the profit has increased. It is expected that the gross profit margin and net profit margin of 22q1 have increased significantly (year-on-year + 0.3 / + 0.6pct respectively). Therefore, we expect that the total operating income / net profit attributable to parent company of 22q1 will be + 17.5% / + 19.0% year-on-year respectively.
22 year Outlook: the operating revenue target announced in 22 years will achieve about + 15% year-on-year. At the same time, the ex factory price of non-standard products has increased, and the product structure has been continuously optimized. The new products “Maotai treasures” and “Maotai 1935” have been listed one after another to supplement the product lines of various price segments, strengthen marketing digitization and channel reform, increase channel control and reduce the fluctuation range of product wholesale price. Therefore, we believe that Maotai’s profitability is still increasing. It is expected that the year-on-year growth rate of net profit attributable to the parent company in 22 years will exceed the growth rate of income, reaching 16.5%.
Investment strategy: 1) we believe that in the first year of chairman Ding’s office, Maotai has no difficulty in achieving the target of + 15% year-on-year revenue, and the performance improvement brought by the price increase of non-standard products has been expected by the market; 2) Under the current unstable external economic environment and rising prices of bulk commodities, we judge that the purpose of Maotai’s accelerated reform is to strengthen channel and marketing control and reduce the impact of external environment, public opinion and other factors on its own stable development; 3) in the long run, Moutai is still the most robust company in the Baijiu industry. Since the beginning of the year, due to the uncertainty of external economic environment and the market’s worries about the consumption of high-end Baijiu liquor in a large scale, the closing price of April 15, 2022 has been 180599 yuan corresponding to 22 years PE37X has reached 35-40X reasonable valuation range. The market is short of confidence in the Baijiu industry, but Moutai still has PEG1.. 8-2 premium space. It is recommended to hold it for a long time or build a position when it falls to 30-32x to maintain the buy rating.
Risk warning: the epidemic continues to exceed expectations; Economic downturn leads to weakening demand; Food safety issues.
From the perspective of Baijiu’s long cycle, it is recommended to hold long-term.
We believe that the growth momentum of national famous wines will remain strong in the future, and this round of rising cycle has not yet ended.
From the Baijiu Baijiu industry’s overall perspective, the two core driving forces of the liquor industry growth in the past history are volume increase and price increase. But after 2015, Baijiu production has gone through a clear process of eliminating the shortage of the goods, and a large number of backward low quality production capacity has been eliminated, and the total capacity has been declining year by year, but the price has been rapidly lifted with the improvement of liquor quality. On the premise that China’s economy is still growing steadily, although the price upgrading speed may be gentle year by year, the trend will continue for a long time.
From the perspective of Baijiu listed companies, the two core driving force of this round of growth is price upgrading and industrial concentration, and these two logics have not changed at present. In addition to having absolute confidence in China’s economy, Baijiu listed companies are excellent representatives in the industry. The brand height determines that their liquor pricing ability is very strong. In the future industry, they still enjoy the majority of the dividends in the process of price upgrading. At the same time, at present, the second and third tier real estate liquor still has a market share of more than 30% in most provinces and a higher proportion in Shandong, Henan and other places. There is still great room for the concentration of famous liquor.
From the investment perspective, China’s Baijiu market is the top quality industry in 28 first-class industries in the A share market. High scale profit (excellent performance), deep brand moat (high barriers to competition, great first mover advantage), simple products without shelf life (stable and controllable cost), strong brand side (strong anti risk ability). After two rounds of complete bull bear, the market has already been relatively clear about the Baijiu industry. For the quality enterprises in the high quality industry, the market has a high tolerance on its valuation, so it is difficult to appear the absolute bottom of the double profit of the last round of adjustment period, especially the valuation of the round of the second round of the epidemic. At present, after a round of killing, the industry valuation has been at a relative bottom. It is recommended to buy and hold for a long time.
