\u3000\u3 Shengda Resources Co.Ltd(000603) 198 Anhui Yingjia Distillery Co.Ltd(603198) )
Events
On April 26, the company released the annual report of 2021 and the quarterly report of the first quarter of 2022. The operating revenue / net profit attributable to the parent company in 2021 were RMB 4.5771382 billion respectively, with a year-on-year increase of 32.58/44.96% respectively; In 2022, Q1 operating revenue / net profit attributable to parent company were RMB 1.576 billion and RMB 550 million respectively, with a year-on-year increase of 37.23/49.07% respectively.
Core view
The upgrading of product structure continued, with high growth in revenue and net profit. In 2021, the company’s operating revenue / net profit attributable to the parent company increased by 32.58/44.96% year-on-year to RMB 4.577/1.382 billion respectively, and in 2022, the operating revenue / net profit attributable to the parent company increased by 37.23/49.07% year-on-year to RMB 1.576550 billion respectively. The substantial improvement in revenue and profit was mainly due to the rapid growth in the revenue of medium and high-grade Baijiu products represented by Dongzang series. In 2021 /2022q1, the operating income of medium and high-grade Baijiu accounted for 71.52/82.34% respectively, an increase of 5.76/8.76 percentage points over the previous year. The increase in the proportion of medium and high-grade Baijiu has also increased the company’s profitability. In 2021 /2022q1, the company’s gross profit margin was 67.54/71.37%, 0.41/1.69 percentage points higher than the previous year.
The cost efficiency was improved, and the cost rate in 2021 / 2022q1 decreased by 3.06/1.30 percentage points respectively. With the starting volume of Dongzang series, the company’s gross profit margin continues to rise, the company’s efficiency continues to improve, and the expense rate continues to decline. The expense rate of the company in 2021 / 2022q1 is 15.10/11.69% respectively, down 3.06/1.30 percentage points respectively compared with the previous year; The sales expense ratio of 2021 / 2022q1 was 9.73/7.77% respectively, a decrease of 2.44/0.50 percentage points respectively compared with the previous year. In 2021, the company held a collection ceremony, an ecological experience tour, an ecological Baijiu tasting and other activities, which made the brand image deeply rooted in the hearts of the people, and the company’s expense rate may decline steadily in the future.
Consumption upgrading continues, and the company’s potential energy is expected to continue. Under the trend of consumption upgrading, Hui liquor and its surrounding markets ushered in a period of consumption upgrading opportunities. In 2021, the sales volume / operating income of the company’s medium and high-grade Baijiu increased by 45.95/44.72% year-on-year, 66.47/52.66 percentage points higher than the previous year. Medium and high-grade Baijiu played an increasingly significant role in driving the operating income. The company adheres to ecological brewing and builds an ecological Baijiu barrier. At present, it has formed a unique ecological category advantage. With the continuation of consumption upgrading and the continuous volume of the company’s Dongzang series, the company’s high prosperity is expected to continue.
Investment advice
Considering that the company’s ecological cave collection series is highly recognized by the market, and the promotion of product structure upgrading strategy is relatively smooth. We expect the company’s EPS to be 2.19/2.70/3.23 yuan and the corresponding PE to be 24.17/19.54/16.33x respectively in 22, 23 and 24 years, maintaining the “strongly recommended” rating.
Risk tips
The economy fluctuates more than expected; Food Safety; The progress of reform was less than expected.
