\u3000\u3 Shengda Resources Co.Ltd(000603) 589 Anhui Kouzi Distillery Co.Ltd(603589) )
Events
The company released the annual report of 2021 & performance of 2022q1: in 2021, the company realized revenue of 5.029 billion yuan (+ 25.37%); The net profit attributable to the parent company was 1.727 billion yuan (+ 35.38%), of which 2021q4 company achieved a total revenue of 1.4 billion yuan (+ 5.72%); The net profit attributable to the parent company was 577 million yuan (+ 39.95%); In 2022q1, the company achieved a total revenue of 1.312 billion yuan (+ 11.80%); The net profit attributable to the parent company was 485 million yuan (+ 15.53%).
Comments
In 2021, the overall product structure remained stable and the profit side performed better
In 2021, the company realized an operating revenue of 5.029 billion yuan, a year-on-year increase of 25.37%; The net profit attributable to shareholders of listed companies was 1.727 billion yuan, a year-on-year increase of 35.38%. The profit growth rate was higher than that of income, mainly due to the increase in sales revenue of high-end products. Specifically——
1) the overall structure is stable and the overall thrust is maintained. In 2021, the growth rates of the company’s sales volume and ton price were 24.28% and 0.86% respectively. The volume increase was the main driving force. At the same time, high-grade Baijiu continued to show a good trend of growth. Specifically, in 2021, high-grade, middle-grade and low-grade Baijiu achieved revenue of 4.777 billion yuan, 101 million yuan and 88 million yuan, with year-on-year growth of 24.48%, 97.94% and 20.13% respectively. Among them, the revenue of high-grade liquor still accounted for the highest proportion (a year-on-year change of -0.67 percentage points to 96.19%), and the year-on-year change of ton price +5.91%, Year on year change in sales volume + 17.53%; The proportion of revenue from mid-range products increased significantly (year-on-year change + 0.75 percentage points to 2.04%), the year-on-year change of ton price was – 26.09%, and the year-on-year change of sales volume was + 167.80%.
2) the proportion of market revenue in the province was further improved, and the channel quality was stable. In 2021, the income inside and outside Anhui province changed by – 17.24% and + 0.77% year-on-year to RMB 3.174 and 788 billion respectively, and the income inside / outside Anhui province accounted for + 2 and – 2 percentage points to 82.1% and 17.9% compared with the same period last year. In terms of the number of dealers, the company adopts the survival of the fittest for dealers. In 2021, the number of dealers inside / outside the province will increase by 29 and 54 to 468 and 297 respectively; In terms of dealer quality, the average size of dealers inside / outside the province changed by – 1.11% and – 12.41% year-on-year to RMB 2.5845 and 579200 respectively, and the quality of channels in the province was stable.
3) in 2021, the structure will be improved, and the superimposed expense rate will go down, driving the profit end up. In 2021, the company’s gross profit margin and net profit margin increased by 1.27 and 2.54 percentage points year-on-year to 73.90% and 34.35%. The company’s profitability improved steadily. The main reasons are as follows: 1) under the background of the launch of Jianxiang 518, the revenue of high-end liquor increased steadily; 2) Strong cost control: in 2021, the company’s expense rate decreased by 1.49 percentage points to 17.97% year-on-year, of which the sales expense rate / management expense rate changed by – 0.90 / – 0.78 percentage points to 12.71% / 5.48% year-on-year respectively. In 2021, the company’s operating cash flow performance was excellent, with a year-on-year increase of 57.51% to 786 million yuan; Contract liabilities increased by 269 million to 677 million month on month (MOM) in 21q3, showing excellent performance.
The profit of 2022q1 was slightly lower than expected, and the proportion of high-end wine revenue decreased slightly
The profit performance of 2022q1 company was slightly lower than expected, mainly due to the decline in sales due to the company’s price support before the Spring Festival + mainly digestion of inventory + significant increase in the cost of code scanning related activities, but behind it was the strong actual sales during the Spring Festival + high-quality long-term development. Specifically——
1) the proportion of high-end liquor revenue decreased slightly, mainly because the company actively supported the superposition of price control and quantity, and made great efforts to digest inventory. In 2022q1, the income of high-grade, middle-grade and low-grade Baijiu reached 1.239 billion yuan, 25 million yuan and 29 million yuan, with year-on-year growth of 11.29%, 17.37% and 20.19% respectively, of which the income of high-grade liquor accounted for -0.25 percentage points to 95.86% compared with the same period last year.
2) the proportion of market revenue outside the province has increased slightly, and the quality of channels in the province has improved. In 2022q1, the revenue inside / outside the province increased by 10.15% and 16.98% year-on-year to 1009 and 283 million yuan respectively, accounting for – 1.01 and 1.01 percentage points, 78.08% and 21.92% compared with the same period last year. The average income of dealers increased by + 2.44%, – 8.55% to 2142500 yuan and 923000 yuan, and the quality of channels in the province improved. 3) 22q1 company continued the good trend of profitability, and the increase of code scanning related expenses was one of the obvious reasons for the increase of expense rate. In 22q1, the gross profit margin and net profit margin increased by 1.45 and 1.20 percentage points year-on-year to 78.03% and 37.00% respectively, of which the sales expense rate / management expense rate changed by + 2.84 and + 0.23 percentage points year-on-year to 14.94% and 4.88% respectively. The significant increase in expense rate was mainly due to the fact that the company began scanning the code of main products in 21h2, and then pushed up the overall cost. The company’s operating cash increased by 157.15% year-on-year to 156 million yuan; Contract liabilities decreased by 329 million yuan to 392 million yuan month on month.
The marketing reform is advancing steadily, and the performance is expected to maintain steady growth in 2022. Since 2021, the company has been continuously promoting reform in many aspects:
1) in terms of product matrix, the company’s product line is clear. Kouzi 5 / 6 / 10 / 20 and Jianxiang 518 are key products, realizing the layout of full price band. Kouzi 5 / 6 products will continue to sink to the township market to realize regional deep cultivation; In the future, the company will focus on products with higher prices, and the new Jianxiang 518 is expected to become the next largest single product of the company (the actual dynamic sales is an important observation point);
2) in terms of market construction, focus on the strategic layout of the national market, and deeply promote the marketing reform around the two strategic points of “group purchase channel as the main channel and government and business wine as the main products”. On the one hand, intensive cultivation, promote the construction of flat channels, accelerate the improvement of market management and operation level, and steadily improve the “basic market” in the province; On the other hand, focus on breakthroughs, focus on Dawan District, Yangtze River Delta and strategic point markets, strengthen investment and business selection outside the province, accurately formulate marketing strategies, and continuously expand the “growth area” of the country;
3) in terms of marketing, marketing is not only the weak part of the company before, but also the focus of the company’s reform. This year, the company will continue to increase the cost investment to strengthen the promotion;
4) in terms of system and mechanism, the incentive plan proposed by the company through repurchase is advancing steadily. Considering that the company has carried out volume control for channel reform, and the reform is being effectively promoted;
5) in terms of production capacity, the company will focus on promoting the construction of automatic packaging workshop and intelligent three-dimensional warehouse in phase I of kouzi Industrial Park, as well as 37000 square meters taotan wine warehouse and base wine warehouse, and strive to put into operation within the year; Accelerate the construction progress of phase II of kouzi Industrial Park and ensure that some intelligent brewing workshops and automatic koji making workshops are put into operation within the year. It is estimated that by the end of the “14th five year plan”, the company’s 65 ° original liquor production capacity will exceed 65000 tons, and the liquor storage scale will reach 300000 tons, forming a leading modern Baijiu production base in China. Based on the above, we believe that Anhui Kouzi Distillery Co.Ltd(603589) 2022 is expected to achieve high-quality and stable development.
Recent profit forecast and valuation
It is estimated that the growth rate of the company’s revenue from 2022 to 2024 will be 19.3%, 18.1% and 17.2% respectively; The growth rate of net profit attributable to the parent company was 20.6%, 19.2% and 18.4% respectively; EPS is 3.5, 4.1 and 4.9 yuan / share respectively; PE was 15, 13 and 11 times respectively, maintaining the buy rating.
Catalyst: the demand for Baijiu recovered more than expected, and the rating continued to rise
Risk tips: 1. The impact of the overseas epidemic has led to a second outbreak or upgraded prevention and control in China, affecting the overall dynamic sales recovery of Baijiu; 2. The price rise was less than expected.
