\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 779 Sichuan Swellfun Co.Ltd(600779) )
Events
Sichuan Swellfun Co.Ltd(600779) released the annual report of 2021 & quarterly report of 2022q1: the annual revenue of 2021 was 4.632 billion, a year-on-year increase of + 54.1%; The net profit attributable to the parent company was 1.2 billion, a year-on-year increase of + 63.96%, of which 21q4 revenue was 1.209 billion, a year-on-year increase of + 14.05%; The net profit attributable to the parent company was 199 million, a year-on-year increase of – 13.43%. 22q1 revenue was 1.415 billion, a year-on-year increase of + 14.1%; The net profit attributable to the parent company was 363 million, a year-on-year increase of – 13.54%
Key investment points
In 2021, it will end smoothly, and the high-end process will continue to perform
Product: the volume and price rise together, and the high-end trend continues to deduce. In terms of revenue, in 2021, the revenue of high-grade / medium-grade wine reached 4.519 (+ 54.33%) / 102 (34.4%) billion yuan, of which the revenue of high-grade wine increased by 0.15 percentage points compared with the same period last year. At the same time, the gross profit margin changed by + 0.27 / – 0.99 percentage points year-on-year to 85.06% / 60.22% respectively. The main reasons for the continuous increase of the revenue proportion / gross profit margin of high-grade wine are as follows: 1) under the implementation of the three development strategies of product upgrading and innovation, brand upgrading and marketing breakthrough, In 2021, zhenniang 8 + well platform + well platform ice and snow increased by 55% year-on-year; Essence + collection 2021 + collection ice and snow + collection Sanxingdui increased by 58% year-on-year. In terms of volume and price, the sales volume / price increased by 45% / 7% on average, and the volume increase was the main driving force of the performance: in 2021, the sales volume of high-grade wine and medium-grade wine reached 10358 (+ 40.44%) / 674 (+ 38.87%) kiloliters respectively; The average price changed by + 9.89% / – 3.22% year-on-year to 43.63151500 yuan / kiloliter respectively. The growth rate of the company in the same quarter is slower than that in the previous quarter due to the dislocation of the main control orders and Q4 in the same period; The slowdown in the growth of net profit is mainly due to the increase in the investment of pre expenses related to high-end and the increase in the expenses related to the employee stock ownership plan.
In terms of market, the eight core markets are deeply cultivated and the six markets are developing at a high speed. In 2021, China / foreign countries achieved a revenue of 4.587/34 billion yuan, with a year-on-year increase of 53.14% / 291.76% respectively; The gross profit margin was 84.61% / 71.16% respectively, with a year-on-year increase of 0.38/1.15 percentage points. Specifically, in 2021, the company’s eight core markets increased by 61% year-on-year (six markets continued to grow at a high speed, Henan was affected by the epidemic and flood / Hunan was affected by the active adjustment, and the overall growth rate was slightly lower), while other markets increased by 44% year-on-year. In terms of finance, the profitability of the company has been steadily improved. In 2021, the gross profit margin / net profit margin of the company changed by + 0.33 / + 1.56 percentage points to 84.51% / 25.89% respectively compared with the same period last year. Under the background of the overall upward trend of expense rate (the expense rate, sales expense rate and management expense rate of the company in 2021 changed by 3.86 / – 1.49 / – 2.33 percentage points to 32.71% / 26.48% / 7.02% respectively compared with the same period last year), the acceleration of high-end promotes the steady improvement of profitability; Operating cash flow increased by 784 million to 1.629 billion respectively over the same period of last year; Contract liabilities changed by 88 million to 959 million month on month compared with 21q1.
22q1 affected by the epidemic, the superimposed cost increased, and the profit was under pressure in the short term
In terms of products, the revenue has maintained steady growth, and many measures have been taken to hedge the impact of the epidemic. 22q1 achieved steady growth in revenue, of which the revenue of high-grade / medium-grade liquor was 1.36 billion yuan, a year-on-year increase of 12.15% / 57.14%, of which the revenue of high-grade liquor increased by 0.80 percentage points to 97.88% compared with the same period last year. The growth rate of net profit in 22q1 was lower than expected, mainly due to the increase of expenses. The company maintained performance growth under the epidemic by means of online press conference / small tasting / code scanning activities / strengthening group purchase. Financial aspect: affected by the increase of expense rate, the profitability is under pressure for a short time. The gross profit margin / net profit margin of 2022q1 company changed by – 0.13 / – 8.19 percentage points to 84.92% / 25.63% respectively compared with the same period last year; During the period, the expense rate / sales expense rate / management expense rate changed by 9.47/7.34/2.06 percentage points to 35.37% / 29.00% / 7.01% respectively compared with the same period last year; Operating cash flow decreased by 218 million to 394 million respectively compared with the same period of the previous year; Compared with 21q4, the contract liabilities changed from – 119 million to 840 million yuan month on month.
Looking forward to the 22nd year: build high-end large single products, deeply cultivate the core market, and achieve a high target of 15% performance growth. In 2022, the company will: 1) strengthen the core, and zhenniang No. 8 will continue to lead the growth of scale; 2) continue to implement three strategies to build well and high quality baijiu. 3) Accelerate product innovation and expand product quality upgrading; 4) Deeply cultivate the eight core markets, accelerate growth and strengthen the growth of e-commerce business; 5) Maintain agility and resilience in times of uncertainty and difficulties. We believe that: the company will continue to focus on the collection and above products, so as to promote the brand value / price of zhenniang No. 8 and well platform, guide the price upgrading, and the high-end effect can be expected. The revenue proportion of collection and above high-end products is expected to increase to double digits. The main reasons are: 1) gene: the company’s high-end gene is the necessary basis for realizing the high-end strategy; 2) Channel: at present, the upgraded collection of new products has been listed and is in the stage of distribution. The establishment of high-end wine platform will effectively activate the channel and make the investment of high-end products more flexible. High end sales companies have joined more than 200 merchants and connected with more than 2000 enterprise customers; 3) Marketing: make up for the weakness of previous consumer cultivation, take consumer cultivation as the current focus, and establish “Lion King Hui” to lock in opinion leaders and match the high-end strategy for circle marketing. Considering that the effect of high-end strategy will gradually appear, the medium and long-term development logic of the company is smooth.
Profit forecast and valuation
Considering that the company’s revenue / net profit targets in 2022 are 15% and 15% respectively, and the actual performance in previous years exceeds the original performance targets, it is expected that this year will still exceed the annual targets set at the beginning of the year. It is estimated that the revenue growth rate from 2022 to 2024 will be 19.3%, 26.8% and 21.1% respectively; The growth rate of net profit attributable to the parent company was 19.0%, 28.7% and 22.7% respectively; EPS is 2.9, 3.8 and 4.6 yuan / share respectively; PE is 27x, 21x and 17x respectively. In the long run, the performance has strong growth, the current valuation is cost-effective, and the buy rating is maintained.
Catalyst: continuous consumption upgrading and smooth introduction of high priced products;
Risk warning: the two outbreak of China’s epidemic situation affects the whole Baijiu sale of liquor. The sales of high-end liquor was less than expected; Management change risk
