Although Baijiu sector stock prices recently encountered deep callbacks, but the overall performance of listed wine companies is still beautiful, and the industry leaders have introduced expansion plans.
On the evening of April 21, Shede Spirits Co.Ltd(600702) announced that it plans to invest in the construction of the project of increasing production and capacity expansion, with an estimated total investment of 7.05 billion yuan, a planned land area of about 1774 mu, and a construction period of 5 years. After completion, the company is expected to increase the annual output of raw wine by about 60000 tons, increase the energy storage of raw wine by about 342500 tons, and increase the annual koji making capacity by about 50000 tons Shede Spirits Co.Ltd(600702) also released the results of the first quarter of 2022, realizing a net profit attributable to the parent company of 531 million yuan, an increase of 75.75% year-on-year.
Previously, Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Luzhou Laojiao Co.Ltd(000568) , Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) , Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) and other liquor enterprises have issued production expansion plans in varying degrees and forms, with a maximum investment of more than 9 billion. In this context, there are concerns about whether the industry will overcapacity in the future. But there are also analysts who say that the expansion is more structural adjustment under the background of total decline, and the demand for high-end high-end Baijiu is still insufficient.
new planned capacity far exceeds existing capacity
According to the announcement, in order to continue to promote the strategy of old wine, based on the in-depth analysis of the Baijiu industry and its own actual situation, Shede Spirits Co.Ltd(600702) plans to invest in building production and expansion projects to enhance the production and storage capacity of the original liquor, and improve the quality of products, so as to better protect the company’s high-quality and sustainable development. The total investment of the project is expected to be 7053695200 yuan, the planned land area is about 177411 mu, and the construction period is expected to be 5 years. Upon completion, the company is expected to increase the annual output of raw wine by about 60000 tons, the storage capacity of raw wine by about 342500 tons, and the annual production capacity of koji making by about 50000 tons.
It is worth noting that the annual report of Shede Spirits Co.Ltd(600702) 2021 shows that the production capacity of shede series is 1045433 kiloliters, the production capacity of Tuopai series is 3226482 kiloliters, and the existing production capacity of the company is 4271935 kiloliters. This time, 60000 tons of raw wine production capacity is planned for the expansion, which is not a big step. In terms of investment, 7 billion yuan is far more than Shede Spirits Co.Ltd(600702) 2021 operating income of 4.969 billion yuan.
The announcement said that the completion of the project will enhance the company’s original wine production and storage capacity, improve the operation efficiency of the company’s production system, and realize the all-round optimization and upgrading of the company’s existing production layout, production equipment and facilities and supporting functions. The project will be invested and constructed by stages with the company’s own funds combined with bank financing, which will not affect the normal production and operation of the company. After the project is put into operation, under the normal operation of the company, the average annual net profit is expected to reach 1.317 billion yuan, the after tax internal rate of return is 23.30%, and the dynamic investment payback period is 8.96 years.
first quarter performance continued to increase
While announcing the expansion of production, Shede Spirits Co.Ltd(600702) also disclosed the first quarter report of 2022.
From January to March this year, Shede Spirits Co.Ltd(600702) achieved an operating revenue of 1.884 billion yuan, an increase of 83.25% year-on-year; The net profit attributable to the shareholders of the listed company was 531 million yuan, an increase of 75.75% year-on-year. The company pointed out in the announcement that the improvement of revenue is mainly due to the company’s continuous promotion of the old wine strategy, the further recognition of the quality of old wine, and the increase of net profit is due to the increase of sales revenue.
From the product structure, the top grade Baijiu contributed 1 billion 575 million of the sales revenue in the first quarter, an increase of 90% over the same period, and sales accounted for 88%. In terms of channels, in the first quarter, the company added 250 new distributors of alcohol products and 93 quit distributors. There were 2409 distributors at the end of the reporting period, an increase of 157 compared with the end of 2021.
With the announcement of the company’s expansion of production and the release of the first quarterly report, securities companies have also updated the performance forecast of Shede Spirits Co.Ltd(600702) .
Everbright Securities Company Limited(601788) Research Report indicates that the nationalization process of the company has been steadily promoted, the “shede + Tuopai” dual brand strategy has continued to make efforts, the “platform + alliance terminal” model has attacked cities and occupied land, and the concept of old wine has gradually taken root in the hearts of the people. It is optimistic about the continuous release of brand and channel potential energy after the restructuring of shede management, maintaining the parent net profit of RMB 1.866/24.83/3.205 billion in 202224, the current share price corresponding to PE is 26 / 20 / 15 times, and maintaining the “buy” rating.
Although Ping An Securities maintained the “recommended” rating, it lowered its profit forecast.
It said that the company’s 22q1 has made a successful start. Under the coordination of the four strategies of old wine strategy, double brand strategy, internationalization strategy and rejuvenation strategy, the company’s performance has achieved steady growth. It is expected that the company is expected to continue to enjoy the secondary high-end and old wine expansion dividends in 22 years. Considering that if the epidemic situation continues, it will have an impact on the consumption scene, the EPS forecast for 20222024 is adjusted to 5.53, 7.57 and 10.15 yuan (the original forecast for 20222024 is 5.66, 8.01 and 10.68 yuan), and the corresponding PE of the current stock price is 26.8x, 19.6x and 14.6x, maintaining the “recommended” rating.
In terms of share price, Shede Spirits Co.Ltd(600702) fell into wide shock after opening high and going low this morning, and showed no obvious performance under the weak market. Since the high of 265.5 yuan in December last year, the biggest decline of stock price in Shede Spirits Co.Ltd(600702) 5 months is close to halving.
recently Baijiu usher in expansion tide
Recently, there are several Baijiu listed companies announced expansion.
On March 16, Shanxi Xinghuacun Fen Wine Factory Co.Ltd(600809) announced that the company plans to invest 9.102 billion yuan to build and implement the expansion project of original liquor production and storage of Fenjiu 2030 technical transformation (phase I). After the completion of the project, the company is expected to increase the annual output of original wine by 51000 tons and the energy storage of original wine by 134400 tons. In addition, 1.058 billion yuan will be invested in the plant bathroom reconstruction project, the construction project of new electric bicycle storage shed, sorghum storage project, the new production capacity project of health wine Park, the reconstruction and expansion project of Baiyu distillery, etc.
In February this year, Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) announced that it plans to invest 9.076 billion yuan to implement the project of intelligent brewing and storage center in the South plant area, which is expected to add 18000 tons of high-quality Luzhou flavor original wine and 20000 tons of high-quality elegant Maotai flavor original wine, with an average annual net profit of 1.045 billion yuan.
At the end of January, Kweichow Moutai Co.Ltd(600519) announced that it had decided to invest 4.11 billion yuan to implement the phase I construction project of Maotai flavor liquor Xishui tongminba in the 14th five year plan. After the completion of the project, a series of liquor production capacity of about 12000 tons, koji production capacity of about 29400 tons and liquor storage capacity of about 36000 tons could be formed. The construction period was 24 months.
In addition, Wuliangye Yibin Co.Ltd(000858) also announced that it would expand and transform the koji making workshop and increase the original wine production capacity. The main construction contents include koji making workshop and relevant supporting facilities, which will be constructed in two phases. The estimated total investment of the project is 2.75 billion yuan.
At the end of last year, Luzhou Laojiao Co.Ltd(000568) also used land to expand production The Luzhou Laojiao Co.Ltd(000568) announcement said that the Luzhou Laojiao Co.Ltd(000568) Liquor Making Co., Ltd., a wholly owned subsidiary of the company, purchased the land use right of the Baijiu Industrial Park in Luzhou, Sichuan, with its own funds not exceeding 570 million yuan, and used it for production and construction projects. Previously, an additional 1.463 billion yuan was used for the technical transformation project of brewing engineering.
In the face of a new round of expansion of liquor enterprises, some people in the industry are worried about the phased overcapacity in the next few years.
Shen Kong Securities Research Report believes that under the background of the decline of Baijiu’s total production and sales volume, the current expansion boom is not expected to reverse the downward trend in the whole industry, but more like a structural adjustment. Correspondingly, the Baijiu market will be more competitive.
Shengang Securities said that in recent years, the output, income and profits of core production areas such as Guizhou and Sichuan have continued to grow, and the output of non core production areas has declined. From the perspective of Sichuan liquor, the proportion of Sichuan liquor has continued to increase, and the goal of “one of two bottles” has been achieved. With the influx of more funds, the production capacity of wine enterprises with high-quality production area resources, high brand and product recognition will also be improved.
