\u3000\u30 Shenzhen Fountain Corporation(000005) 68 Luzhou Laojiao Co.Ltd(000568) )
Event: the company issued an announcement. In 2021, the operating revenue reached 20.642 billion yuan, a year-on-year increase of + 23.96%; The net profit attributable to the parent company was 7.956 billion yuan, a year-on-year increase of + 32.47% and + 31.61%. In 2021q4, the operating revenue was 6.532 billion yuan, a year-on-year increase of + 29.26%; The net profit attributable to the parent company was RMB 1.68 billion, with a year-on-year increase of + 41.14% and + 36.69%. In 2022q1, the operating revenue was 6.312 billion yuan, a year-on-year increase of + 26.15%; The net profit attributable to the parent company was 2.876 billion yuan, a year-on-year increase of + 32.72% and + 32.75%.
The capacity of medium and high-grade liquor continued to expand and the product structure was upgraded. In 2021, the company continued to optimize its product structure, with the rapid growth of medium and high-grade liquor. The proportion of medium and high-grade liquor in revenue increased by 3.6pct to 89.1%, promoting the upgrading of product structure. In terms of revenue, the revenue of medium and high-grade liquor / other liquor reached 18.397/2.018 billion yuan, a year-on-year increase of + 29.22% / – 8.74%. In terms of sales volume, the sales volume of medium and high-grade liquor / other liquor reached 31800 / 46100 tons, a year-on-year increase of + 25.42% / – 51.82%. The sales volume of low-grade liquor decreased significantly, mainly due to the impact of the decrease in the sales volume of Erqu products. In terms of cash flow, the sales collection in 2022q1 was 7.5 billion yuan, a year-on-year increase of 16.3%.
Precision marketing controls expenses and improves profitability. The upgrading of product structure increased the overall gross profit margin of the company’s liquor by 2.34pct to 85.86%, the gross profit margin of medium and high-grade liquor by 0.09pct to 90.34%, and the gross profit margin of other liquor by 4.93pct to 45.09%. In 2021, the company adhered to precision marketing to explore the market, and the sales expense rate / management expense rate / R & D expense rate were 17.44% / 5.12% / 0.67% respectively, with a year-on-year rate of -1.12 / + 0.05 / + 0.15pct. The net interest rate attributable to the parent company was 38.54%, with a year-on-year increase of + 2.48pct. In 2022q1, the gross profit margin increased to 86.43%, and the net profit margin attributable to the parent company increased to 45.6%.
Strengthen brand building and enrich brand details. In 2021, the company continued to focus on the brand strategy of “double brands, three lines and large single products” and continuously improved the brand matrix. In terms of products, Guojiao 1573 ranks among the top three Baijiu in China, and strategic new products such as Luzhou Laojiao Co.Ltd(000568) 1952 and heigai have been listed one after another. In terms of marketing, the company continued to promote core consumer circle cultivation activities, aiming at a new generation of consumer opinion leaders. The frequency of activities and the number of VIP registrations increased significantly year-on-year.
Investment suggestion: in 2022, the board of directors of the company once again set the annual performance target of revenue growth of no less than 15% year-on-year. In the future, the company will give play to the brand leading role of Guojiao series, form a new growth pole with Luzhou Laojiao Co.Ltd(000568) series, accelerate the breakthrough of sales scale and realize large-scale growth. It is estimated that the company’s earnings per share from 2022 to 2024 will be 6.84, 8.52 and 10.33 yuan, maintaining the Buy-A rating, with a 12-month target price of 275 yuan, corresponding to 32x 2023pe.
Risk tip: Maotai flavor and heat will aggravate the competition of medium and high priced wines; Luzhou flavor waist and medium and low-end are under great competitive pressure, and the medium-term performance of the company’s medium and low-end liquor may continue to be lower than expected.
