\u3000\u3000 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) (603369)
Events
The company issued a performance pre increase announcement. In 2021, the company achieved an operating revenue of 6.3 ~ 6.5 billion yuan, a year-on-year increase of 23% ~ 27%; The net profit attributable to the parent company was 1.9 ~ 2.1 billion yuan, with a year-on-year increase of 21% ~ 34%; Deducting net profit not attributable to the parent company of RMB 1.9 ~ 2.1 billion, with a year-on-year increase of 22% ~ 35%; 21q4 achieved an operating revenue of 970 ~ 1.17 billion yuan, a year-on-year increase of 4.4% ~ 26.0%; The net profit attributable to the parent company was 200 ~ 400 million yuan, with a year-on-year increase of – 20.6% ~ + 58.4%; Deducting net profit not attributable to the parent company of RMB 200 ~ 400 million, with a year-on-year increase of – 22.6% ~ + 55.7%.
Key investment points
Sikai and V-series led the structural upgrading, and the annual profit performance was in line with expectations
In 2021, the company achieved a revenue of 6.3-6.5 billion yuan (year-on-year + 23% ~ 27%), and a net profit attributable to the parent company of 1.9-2.1 billion yuan (year-on-year + 21% ~ 34%). In 2020, the company set a revenue target of 5.9 billion yuan in 2021, striving for 6.6 billion yuan; The net profit target is 1.8 billion yuan and strive for 1.9 billion yuan. In 2021, the annual revenue was close to the upper limit of the target, and the net profit attributable to the parent company exceeded the original target. The main reasons were: 1) the product structure continued to upgrade: the annual revenue growth of the company’s special a + products exceeded 35%, accounting for 65% of the revenue, with a year-on-year increase of 5 percentage points. The product structure was further optimized, in which V series and Sikai performed well. In the first three quarters, V series increased by 120%, accounting for 10.7% of Guoyuan brands, The volume and price of Guoyuan Sikai increased simultaneously, driving the growth of special a + category (excluding V Series) by 31.1%, and the growth of Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) secondary high-end strategic new products D20 & d30 by 235%. 2) The excellent performance of the expense side may continue in the first three quarters: in the first three quarters of 2021, the sales expense rate and management expense rate decreased by 1.06 PCT and 0.24 PCT respectively, and the expense control is excellent. Among them, the expense rate in the province is relatively stable, the investment in fixed expenses outside the province is increased, and the expense investment is more accurate.
It is expected to have a good start in the short term, and the long-term “13445” plan will help high-quality development
It is expected to have a good start in the short term: the invoicing of the company’s main products will be stopped at the end of the year, and invoicing has been stopped in some regions after October. At present, dealers are actively promoting the payment before the festival. It is expected that the proportion of payment collection before the festival will be more than 35%, up to 40% – 50% in some regions, which is higher than the payment during the Spring Festival in 2021. At present, the inventory is benign, the approval price is stable and positive, and the channel confidence is positive, It is expected to have a good start.
The long-term “13445” plan helps high-quality development: the company first proposed the “13445” marketing work plan at the Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) development conference in 2022, that is, to grasp one main line, follow the three modernizations strategy, enhance four confidence, deepen four campaigns and strengthen five guarantees. Specifically, the four campaigns are as follows: 1) V-series battle: strive to improve the potential energy of V9 brand, Build V9 into a representative product of 2000 yuan + price band in the industry, and successively set up V9 business division and V99 alliance to help the development of V-series; 2) Open system promotion war: improve the control and profit sharing system and continue to promote regional intensive cultivation; 3) Collection activation War: create an excellent wedding banquet promotion mode, upgrade the old products, expand the scene, supplement the new products and simplify the number; 4) Breakthrough war outside the province: dual brand collaborative layout (National edge takes the lead in nationalization, mainly promotes the system, local highland layout V9), diversified plate building (peripheral, plate, 100 City breakthrough project, tackling 10 “quasi billion yuan” provincial plates), innovative consumption cultivation, and strive to achieve more than 20% of the revenue outside the province in the 14th five year plan.
Higher than expected point: strong growth of V series, and growth in southern Jiangsu and outside the province may exceed expectations
V series is expected to continue its strong growth trend, mainly due to clear sorting of high-end product structure + empowerment of organizational structure (establishment of V9 business division and V99 alliance) + strong impetus for new channel investment promotion. In the first three quarters of 21 years, the V-series increased by 120%. We expect the V-series revenue to increase sharply this year, and the V-series CAGR will exceed 100% from 2019 to 2023. During the 14th Five Year Plan period, the V-series revenue may reach 5 billion yuan, or exceed the market expectation. The upgrading of Guoyuan Sikai is progressing smoothly. In the first three quarters, the special class A + represented by the Sikai (excluding V Series) increased by 31.1%. The wholesale price of the new Sikai is about 440-450 yuan, the terminal transaction price has increased to 450-480 yuan, and some regions have stood firm at 480 yuan. Driven by the quota system + control of the inventory of the old Sikai Guoyuan, it is expected that the price of the subsequent Sikai is expected to increase to more than 500 yuan, Open series is expected to continue to grab the market share of secondary high-end wine.
In the province: Southern Jiangsu is expected to become another growth pole of Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) in the province. The main reason is that the mainstream consumer price belt in southern Jiangsu is higher than the average level + or it is the base camp for developing the markets of Shanghai and Zhejiang. At present, the proportion of Southern Jiangsu’s national edge has exceeded Nanjing. Outside the province: at present, the market outside the province is characterized by structural upgrading and accelerated expansion. Since the dual brand strategy was put forward in 19, the proportion of foreign friends in the province has reached 50%, and it is expected that the proportion of revenue outside the province in the 14th five year plan will reach more than 20%. The expansion outside the province is expected to accelerate and the process of nationalization will be further.
Promotion of equity incentive: the company plans to launch equity incentive in 2020 and has completed the share repurchase plan by the end of 2021. Equity incentive may be officially implemented in 2022, which will effectively stimulate the enthusiasm of management and employees and accelerate the development and potential release of the company.
Profit forecast and valuation
We believe that the 14th five year plan of the company is rational and positive (the revenue target of 5.9 billion yuan in 2021, striving for 6.6 billion yuan / net profit target of 1.8 billion yuan, striving for 1.9 billion yuan; striving to achieve revenue of more than 10 billion yuan in 2025, striving for 15 billion yuan). 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 2021 to 2023 will be 26.6%, 25.5% and 24.7% respectively; The growth rate of net profit attributable to the parent company was 30.0%, 26.6% and 26.4% respectively; EPS is 1.6, 2.1 and 2.6 yuan / share; PE was 32, 25 and 20 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.
