\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 702 Shede Spirits Co.Ltd(600702) )
Event: the company released the first quarterly report of 2022. From January to March 2022, the company realized an operating revenue of 1.88 billion yuan, a year-on-year increase of + 83.3%; The net profit attributable to the shareholders of the listed company was 530 million yuan, a year-on-year increase of + 75.8%. Compared with the company’s previous forecast, the revenue slightly exceeded expectations, and the net profit attributable to the parent is also close to the upper edge of the forecast. At the same time, the company announced that it expects to invest a total of 7.054 billion to build an increase in production and capacity expansion project. After the completion of the project, it is expected to increase the annual output of about 60000 tons of raw wine, increase the energy storage of about 342500 tons of raw wine, and increase the annual koji production capacity of about 50000 tons.
The strategy of old wine continued to advance and achieved a good start in the first quarter. During the reporting period, the company continued to promote the strategy of old wine, and the quality of old wine was further recognized by consumers; At the same time, in the first quarter, the company actively arranged the dynamic sales market in the peak season of the Spring Festival and made a good start. Taking advantage of the rapid expansion of secondary high-end products, the company has steadily promoted the “shede + Tuopai” dual brand strategy, and the liquor sales revenue will increase significantly in 2021. Specifically, the sales volume of shede series was 8054 tons, a year-on-year increase of + 60%; The sales volume of Tuopai series was 31082 tons, a year-on-year increase of + 192%. The revenue of medium and high-grade liquor (shede, Tuopai Tianqu) / low-grade liquor (Tuopai Daqu, gaogaoguang bottle, etc.) increased by + 81.9% / + 218.7% year-on-year. Taste, wisdom and ultra-high-end all grew rapidly. The low-end OEM development products achieved rapid development under the low base.
7 billion yuan investment to expand production capacity, aspire to high-speed development. The company expects to invest a total of 7.054 billion to build an increase in production and capacity expansion project. After the completion of the project, it is expected to increase the annual output of raw wine by about 60000 tons, the new storage capacity of raw wine by about 342500 tons, and the annual production capacity of koji making by about 50000 tons. The continuous expansion of production capacity will help the company further optimize the production and storage structure, improve production efficiency, improve the quality rate of base liquor, promote the enterprise operation to enter a new stage, and provide a later guarantee for the national layout of the company’s old liquor strategy.
The nationwide layout was accelerated and the channel control was refined. In terms of sub regions, the company’s revenue within / outside the province in 2021 was + 128% / + 81% year-on-year, mainly due to the continuous sinking of channels in the province and the increase of investment and distribution outside the province. During the reporting period, the company accelerated the nationwide layout. By 2021, the company had 2252 dealers, with a year-on-year increase of 491, including a net decrease of 24 in the province and a net increase of 515 outside the province. The company implemented the “3 + 6 + 4” marketing strategy of old wine, actively changed its marketing thinking, reduced the occupation of dealers’ funds, improved the profitability of dealers, and further consolidated the relationship between manufacturers by establishing eight shared warehouses and reducing the requirements of dealers for single payment.
Fosun has high aspirations and leads high-quality development. The company has sufficient reserves of high-quality base liquor, orderly promotion of old liquor strategy and dual brand strategy, and gradual deepening of consumer cultivation. At the national level, while deeply cultivating core markets such as Sichuan, Hebei, Shandong and Henan and northeast and northwest, we will increase the layout and break through high potential markets such as East China and South China. Considering that Fosun’s presence is expected to further release the driving force of the mechanism, we believe that the company is expected to achieve high-quality and rapid growth.
Investment suggestion: it is estimated that the company’s earnings per share in 20222023 will be 5.79 and 7.64 yuan, with a 40x valuation in 2022, a target price of 232 yuan and a Buy-A rating.
Risk warning: downward pressure on the economy; Possibility of recurrence of epidemic situation; The promotion of old wine strategy was less than expected.
