\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 519 Kweichow Moutai Co.Ltd(600519) )
Event:
Kweichow Moutai Co.Ltd(600519) released the first quarterly report, with an operating revenue of 32.296 billion in 2022q1, the same as + 18.43%; The net profit attributable to the parent company was 17.245 billion, the same as + 23.58%; Deduct non net profit of 17.243 billion, the same as + 23.43%.
Key investment points:
1. Q1 performance exceeded expectations and determined the growth center of the whole year. The actual revenue and profit growth rate of the company in 2022q1 was 18.43% / 23.58%, which was higher than the previous performance forecast (the total revenue / net profit attributable to the parent company is expected to be + 18% / 19% year-on-year respectively). The profit side growth was higher than expected, laying the foundation for high growth in the whole year. Among them, the revenue of Maotai liquor was 28.86 billion yuan, a year-on-year increase of + 17.35%, and the series liquor was 3.428 billion yuan, a year-on-year increase of + 29.71%. The series liquor continued the high growth trend, and the growth of Maotai liquor was significantly accelerated, mainly due to the increase in the proportion of direct sales channels, the increase in the contribution of new products, the increase in the proportion of non-standard quotas, and the increase in the ton price. In March, the short-term wholesale price of Maotai fell sharply under the influence of market sentiment, but the demand for consumption, investment and collection of Maotai liquor is strong. Recently, the whole box has fluctuated at about 2830 yuan. We believe that with the steady increase of Maotai liquor supply and the normalization of demand, 25 Jinzai Food Group Co.Ltd(003000) yuan is expected to be the balance point of supply and demand in the long run. Consumer demand is strongly supported below 2500 yuan, and the drop in the wholesale price will stimulate the actual demand for bottle opening, which is conducive to digesting the inventory and making the market run more healthy and sustainable.
2. The proportion of direct channels increased and the profitability improved. In the first quarter, the direct channel revenue was 10.887 billion yuan, a significant increase of 127.88% year-on-year, and the proportion further increased 16pct to 34%. The company continued to carry out channel reform, increased the quota of Direct stores and the supply of direct sales channels in the province, and vigorously invested in e-commerce and business supermarket channels. At the end of March, the company launched a new e-commerce platform “I Maotai”, which is not only conducive to expanding Maotai consumer groups, but also spread Maotai culture, consolidating and strengthening the company’s brand image and market position. Benefiting from the increase in the proportion of direct sales, the company’s gross profit margin in the first quarter increased by 0.7pct to 92.6% year-on-year, the sales expense rate decreased by 0.4pct to 1.6% year-on-year, and the net profit margin increased by 2.2pct to 52.0% year-on-year.
3. The current sales revenue increased sharply, and the net operating cash flow was negative, mainly due to the decrease in the collection of financial companies. The cash received from commodity sales in the first quarter increased by + 41.2% year-on-year to 31.488 billion yuan, with a bright increase, and the net operating cash flow was -6.876 billion yuan, mainly due to the decrease of funds absorbed by financial subsidiaries from other units of the group, and the net cash outflow from financial operating activities was 9 billion yuan (the net inflow in the same period last year was 1.5 billion yuan). The company’s advance receipts at the end of 2021 totaled 14.25 billion yuan, 9.26 billion yuan at the end of the first quarter, a decrease of 4.99 billion yuan month on month. The payment of Baijiu in the Spring Festival peak season has been shortened to two weeks before the festival, and the company has taken the initiative to delay the payment time of dealers, so there is a corresponding dislocation in the cash inflow.
4. We are optimistic that the dividend will be cashed in this year, and the performance will be accelerated with high certainty. This year, the company set a target of 15% growth in total revenue, which is significantly higher than the growth rate of about 10% in the previous two years. We believe that the company’s performance in 2022 shows a trend of low before and high after, and the annual growth rate exceeds 20%, with high certainty: 1) the company’s performance in 2021 remains strong; 2) This year, the supply and marketing volume of Maotai liquor is expected to increase by 10% ~ 15% year-on-year; 3) The company continues to promote channel reform, and direct supply and distribution is expected to increase; 4) The increase in the price of existing products (except Feitian), the shutdown of a series of low-cost liquor products, the introduction of upgraded treasures and Maotai 1935 and other new products can contribute to the incremental income. At the same time, Maotai has the ability and space to raise the price. This part of the dividend has not been released. We think it is still possible to raise the price this year. At the end of March, the launch of the new e-commerce marketing platform “I Maotai” indicates the smooth implementation of another reform measure, and the follow-up operation and management is expected to continue to improve. The report released by Guizhou Province at the beginning of the year clearly pointed out that the construction of Guizhou Maotai flavor Baijiu brand fleet led by Maotai liquor will ensure that the added value of Baijiu industry will increase by more than 20%. In the long run, Maotai’s brand value and business model are very scarce deterministic high-quality targets in the market.
5. Profit forecast and investment rating: the company’s management continues to improve, its performance is highly deterministic and has the expectation of price increase. It continues to be optimistic about the long-term and steady development of the company in the future. It is estimated that the company’s EPS from 2022 to 2024 will be 51.25/61.21/72.64 yuan, and the corresponding PE will be 34 / 28 / 27 times respectively, giving a “buy” rating.
6. Risk tips: 1) the epidemic situation repeatedly suppresses the demand of the industry; 2) The macro-economy fluctuates greatly; 3) Changes in industrial policies; 4) The implementation effect of marketing work does not meet expectations; 5) The market expectation of price increase caused volatility.
