\u3000\u3 Shengda Resources Co.Ltd(000603) 369 Jiangsu King’S Luck Brewery Joint-Stock Co.Ltd(603369) )
Event:
The company released the report for the first quarter of 2022. In the first quarter of 2022, the operating revenue was 2.988 billion yuan, a year-on-year increase of 24.69%; The net profit attributable to the parent company was 1.002 billion yuan, a year-on-year increase of 24.46%; Deduction of non net profit was 996 million yuan, a year-on-year increase of 24.02%.
Key investment points:
2022q1 made a good start and continued the development trend of high quality. In 2022q1, the company achieved a revenue of 2.978 billion yuan (the same as +24.72%) from Baijiu business. During the Spring Festival peak season, the company’s sales were brisk, and the goal of payment collection was successfully achieved. In terms of capacity expansion, the company’s high-end products and premium products accounted for more than 25.42% of the first quarter of the year, while the revenue growth potential of Q1 + 5A + and premium products accounted for more than 25.2% of the first quarter of the year, with the same year-on-year growth potential of Q1 + 5A + and premium products, respectively. On the other hand, in the first quarter, potential markets such as Huaihai, Central Jiangsu and southern Jiangsu continued to expand, with revenue increasing by 39%, 36% and 28% respectively; Nanjing increased by 27% year-on-year; Huai’an region has achieved steady growth on the basis of a high base. Due to the increase of shipment in peak season, the wholesale price of core single products is slightly loose during the Spring Festival. The market operation is mainly to remove inventory, and the current wholesale price is stable; At the end of March, the epidemic broke out in Jiangsu Province, but the industry is currently in the off-season, the company has not started large-scale payment collection and delivery, the inventory level is low, and the impact of the epidemic is expected to be controllable.
The upgrading of structure drives the increase of gross profit margin. The company continues to maintain investment and excellent cash flow. The gross profit margin of 2022q1 company is the same as + 1.03pct to 74.3%, which is expected to be due to the improvement of product structure; At the same time, the company carried out more promotional activities and increased advertising investment in the first quarter, resulting in the same sales expense rate of + 1.21pct to 13.0%. Under the combined effect, the net profit margin of the company decreased slightly by 0.06pct to 33.5% in the first quarter. The cash flow of the company also performed well. In the first quarter, the sales revenue was 2.56 billion yuan (the same as + 20.95%), and the net operating cash flow was 610 million yuan (the same as + 14.90%); At the same time, the company’s advance receipts at the end of the first quarter were about 1.28 billion yuan, a month on month increase of – 1.05 billion yuan, a year-on-year increase of + 739 million yuan. The decline in advance receipts was greater than that in the same period last year. It is expected that it is mainly affected by the epidemic at the end of March and the company’s slowdown in the pace of collection and delivery.
Profit forecast and investment rating: the company has set the tone of “seeking speed in the best way, taking the best word as the first, and being able to be fast is fast”. The 14th five year plan goal is to be completed ahead of schedule, and various measures are expected to be accelerated in 2022; If equity incentive is implemented, its brand potential energy and profit elasticity will also be accelerated. In the long run, for the problems of unfavorable expansion outside the province and intensified competition in the province that the market has been concerned about for a long time, we believe that in the future, even if we do not consider expansion outside the province, the strengthening of weak areas and channel sinking in the province can also support the rapid growth of the company’s revenue. At the same time, the company’s product structure is accurate, and the sub high-end price band is stuck. Under the background of the continuous expansion of the sub high-end capacity in the Jiangsu market, it is optimistic that the company will continue to expand its revenue scale, do not need to worry too much about the competition in the province in the short term, and continue to be optimistic about the future growth of the company. It is estimated that the company’s EPS from 2022 to 2024 will be RMB 2.02/2.54/3.18 respectively, and the corresponding PE will be 22 / 18 / 14 times respectively, maintaining the “buy” 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.
