\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 58 Wuliangye Yibin Co.Ltd(000858) )
Wuliangye Yibin Co.Ltd(000858) ‘s dilemma: making money vs. diversion. Appearance: Wuliangye Yibin Co.Ltd(000858) channel profit is low and dealers’ sales enthusiasm is not high. The lower confidence of channel dealers is reflected in: ① continuously reducing inventory, dealers can not change according to the contract tasks, there is no reluctance to sell, and they will not hoard goods; ② Dare not increase the price; ③ The dealer positioned Wuliangye Yibin Co.Ltd(000858) as a flow product and lost the expectation that Wuliangye Yibin Co.Ltd(000858) could make money. Although Wuliangye Yibin Co.Ltd(000858) sales volume is guaranteed, it is difficult to form a consistent pricing mechanism due to lack of channel confidence, so it has been difficult to increase the wholesale price. The crux is that dealers are positioned as diversion products and pursue turnover rather than profit. To get out of the dilemma, we need to restore channel confidence, change dealers’ cognition, and turn from diversion products to profitable products.
Reason analysis: the cost driven price increase is subject to external conditions, and the channel model needs to be improved. The reasons for the successful stage of price increase (1990s and 20162017) can be summarized as that at this time, the high-end demand is very strong. The company caters to the market demand and launches high-end brands. At the same time, the channel construction is complete and can be conducted. It is a set of combination boxing. The reasons for the wrong stage of price increase (2003 ~ 2011) can be summarized as follows: 1) misjudge that the demand can not be transmitted according to the trend, or the price increase is large and the share is occupied by competitive products; 2) Series of wine drag down the brand; 3) There was a problem with channel management. The market inventory was too high and was disrupted by the dealer’s dumping. Reason summary: weak brand building and insufficient channel control Wuliangye Yibin Co.Ltd(000858) the main reasons for the channel dilemma are brand building (the series of wine is dragged down and the high-end image is diluted) and insufficient channel control.
Business reform: born in the sun, the dilemma is expected to reverse. Channel side: restore channel profits, change dealers’ attitude and usher in opportunities. In terms of channel construction, the plan of “ten thousand stores in one hundred cities and one thousand counties” and the profit distribution mode of controlling the market have reached the sales front, so as to better control the terminal. The digital marketing system optimizes the delivery of dealer quota and matches the real needs of the market. In terms of channel structure, develop group purchase channels and make efforts to innovate channels. Product and brand side: highlight core products and optimize product matrix. Series of wines promote brand slimming and focus on “4 + 4” strategic products. Excavate brand culture in brand construction and promote circle marketing. Management level: manufacturers cooperate and operate in a positive cycle.
Future outlook: dealers return to confidence and enter the positive cycle of price rise. With the recovery of Wuliangye Yibin Co.Ltd(000858) brand value, the wholesale price is expected to rise steadily. It is currently at a low valuation level and is expected to be repaired after entering the positive cycle of price rise.
Investment suggestion: the company’s earnings per share in 2021, 2022 and 2023 are expected to be 6.02, 7.04 and 8.16 yuan respectively. Maintain the Buy-A investment rating and give a six-month target price of 222 yuan, which is equivalent to the dynamic P / E ratio of 31.5x in 2022.
Risk tips: macroeconomic and policy risks, food safety problems, channel confidence recovery is less than expected, and the rise of wholesale prices is less than expected
