\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 99 Jiugui Liquor Co.Ltd(000799) )
Cultural famous wine, after finishing, start again Jiugui Liquor Co.Ltd(000799) formerly known as Jishou distillery founded in 1956, the company has been established for more than 60 years. Due to the frequent changes of the senior management, the company missed the golden period of Baijiu development. In addition, the company’s plasticizer, the disappearance of RMB 100 million deposits and other black swan events occurred, and Jiugui Liquor Co.Ltd(000799) fell into a low period. Since 2014, COFCO has taken the lead to stimulate new vitality and Jiugui Liquor Co.Ltd(000799) comprehensively started fine management. After years of reform and development, Jiugui Liquor Co.Ltd(000799) product matrix is clear, the company’s strategic objectives are clear, and brand awareness has increased sharply. In 2021, the company is expected to achieve a revenue of about 3.4 billion yuan, with a year-on-year increase of about 86%, and Jiugui Liquor Co.Ltd(000799) is expected to accelerate its return.
The consumption of Baijiu industry has been upgraded, and there is large room for expansion of high-end liquor and sub high-end liquor. The Baijiu industry has bid farewell to the era of volume driven, with volume reduction and price increase, and the market share has been continuously concentrated to the top liquor enterprises. In the context of consumption upgrading, the volume and price of high-end liquor rose at the same time. In terms of volume, the CAGR of high-end Baijiu capacity in recent four years was 8.9%, and the certainty of capacity expansion increased. In terms of price, the momentum of consumption upgrading continued, the price of high-end Baijiu continued to rise, and the famous liquor enterprises started a tide of price increase. At the same time, the price increase of high-end wine makes the secondary high-end wine more cost-effective, providing space for the expansion of secondary high-end wine. There are many secondary high-end liquor brands, and the market concentration is far lower than that of high-end Baijiu. Its market share also tends to gradually concentrate on famous liquor. The market of high-end liquor and secondary high-end liquor has great growth potential in the future.
The company’s product matrix is clear, and the positioning of internal reference and drunkard is clear, which helps the company grow at a high speed. The high-end positioning of the internal reference series is solid. The unique fragrant tulip technology and Huang’s cultural endorsement help it win the “fourth ticket” of high-end wine. Under the new model of the internal reference sales company, it has deeply cultivated Hunan, laid out strategic markets such as Beijing, Hebei and Guangdong, closely tied the interests of dealers, and achieved high growth. The structure of drunkard series products continues to be optimized, focusing on the distribution of excellent and large businesses in channels, developing group purchase channels with the help of large business resources, continuing to carry out the construction of core terminals in Hunan base market and key markets outside the province, and starting the layout of national specialty stores. Internal reference and drunkard complement each other in potential energy, jointly promote Jiugui Liquor Co.Ltd(000799) high-speed growth, and continuously open the growth space of the company.
Investment advice
Considering the strong growth momentum of the company’s internal reference series and drunkard series and the steady progress of the company’s national expansion strategy, we expect the company’s EPS to be 2.90/4.28/6.14 yuan respectively in 2021, 2022 and 2023. Based on the closing price of 154.16 yuan on April 28, 2022, the corresponding PE is 73.30/36.02/25.11x respectively. It is covered for the first time and given the rating of “strongly recommended”.
Risk tips
The economy fluctuates more than expected; Food Safety; The progress of reform was less than expected.
