Event:
\u3000\u3 Shengda Resources Co.Ltd(000603) 919 Jinhui Liquor Co.Ltd(603919) )
The company released the first quarter report of 2022, and achieved a revenue of 706 million yuan (the same as + 38.79%) during the reporting period; The net profit attributable to the parent company is 165 million yuan (the same as + 42.78%); Deduct non net profit of 163 million yuan (the same as + 41.86%).
Key investment points:
The product structure continued to be optimized and the market outside the province was developed smoothly. In 2022q1, the company achieved a Baijiu business revenue of 699million yuan (year-on-year +39.04%), which was in line with expectations in the first quarter. The main reason was that the sales in the Spring Festival peak season from January to February exceeded expectations. In March, only a few areas in the Northwest were under control, and the overall impact of the epidemic was small. On the whole, 1) the company’s product structure continues to upgrade. The consumption scene of high-end products in the peak season of the Spring Festival was rigid, and the revenue of high-end products (year, softness, positive energy, five stars of the Century Golden Emblem, etc.) was 438 million yuan, a year-on-year increase of 44.51%; Century Golden Emblem Samsung, four-star and other mid-range products achieved a revenue of 253 million (the same as + 29.20%); The low-grade products such as Century Golden Emblem two stars and Golden Emblem aging were obviously in the low and peak seasons, with a revenue of 7.18 million yuan, a year-on-year increase of 122.92%. Overall, the revenue of high-end products accounted for the same + 2.4pct to 62.7%. 2) The core market performance was stable and the market development outside the province was smooth. In the first quarter, the market outside the province, the market in the southeast of Gansu and the market in the middle of Gansu achieved revenue of 170 million yuan, 220 million yuan and 70 million yuan respectively, with a year-on-year increase of 48.0% / 46.5% / 42.1% respectively; The company’s market development outside the province is smooth, and the market progress in Shaanxi is good. Affected by the epidemic, the speed in East China decreased in March, but the proportion of revenue is small, and about 69 dealers were added outside the province; Other markets, such as Lanzhou and surrounding markets and western Gansu, saw revenue growth of 28.9% and 20.6% year-on-year respectively.
The profitability improved steadily, and the cash flow and advance receipts performed well. In 2022q1, the net profit margin of the company increased from + 0.65pct to 23.3% year-on-year, and the profitability increased mainly due to 1) the gross profit margin increased from + 0.85pt to 66.3% year-on-year, which is expected to be affected by the improvement of product structure; 2) The rate of administrative expenses rose from -1.98pct to 7.5% year-on-year, which is expected to be due to factors such as the high increase of income and the amortization of labor costs; 3) The ratio of taxes and surcharges was – 1.22pct to 13.4% year-on-year. The company’s sales expense ratio increased from + 4.10pct to 15.7% year-on-year, which is expected to be related to the increase of marketing investment, publicity and other expenses. In addition, the company’s cash flow and advance receipts performed well in the first quarter, with a year-on-year increase of 57.16%; Net operating cash flow reached 269 million yuan, reversing losses year-on-year; Advances received increased by 228 million yuan year-on-year and 47 million yuan month on month compared with the end of 2021. There is still room for income in 2022q2.
Profit forecast and investment rating: as one of the few listed private liquor enterprises, the company has a stable senior management team, flexible mechanism and sufficient incentive. At present, the trend of upgrading the Northwest market to the price band of 100300 yuan remains unchanged. The company continues to fulfill the three logics of “increasing share in the province, secondary high-end development and pan regional expansion outside the province”. Under the synergy of Fosun Group, the more active layout outside the province will also contribute to the increment, and it is optimistic about the steady realization of the planning objectives. It is estimated that the company’s EPS from 2022 to 2024 will be 0.93/1.18/1.42 yuan respectively, and the corresponding PE will be 31 / 24 / 20 times respectively, giving a “overweight” rating.
Risk tips: 1) repeated outbreaks lead to consumption inhibition; 2) Increased market competition leads to increased costs; 3) The price of Baijiu fell due to the sharp economic fluctuation; 4) The pace of product upgrading is less than expected; 5) Food safety risks. In case of any difference between the relevant data and information and the contents published by the company, the contents published by the company shall prevail.
