Review of Baijiu: the profitability of 22q1 has been steadily improved, and the differentiation trend continues
Revenue and profit side: the revenue and net profit of Baijiu industry in 21 years changed by 18.05% and 77.17% year-on-year respectively; The revenue and net profit of Q1 in 21 years changed by + 19.40% and + 26.26% respectively year-on-year. Specifically (revenue side), the 22q1 Baijiu sector was less affected by the epidemic, of which the overall performance of high-end liquor was stable (+16.88%), and the secondary high-end second tier liquor (+47.68%) benefited from the accelerated superposition structure upgrading of national expansion, and 22q1 continued its explosive growth trend; Regional leading liquor (+ 24.82%) benefited from the superposition and upgrading trend of consumption expansion in the base market, and both Hui liquor and Su liquor performed well. Profitability: in 22q1, the gross profit margin and net profit margin of Baijiu industry changed by +1.40 and +4.36 percentage points to 80.25% and 39.85% month on month, respectively. Among them, the net profit of secondary high-end liquor increased the most (+61.58%), followed by regional liquor (+29.50%); Expense rate: in the past 21 years, the sales expense rate of liquor enterprises generally decreased, and the increase of income promoted the decrease of management expense rate; 22q1 affected by the epidemic, the sales expense rate generally increased slightly; Advance collection end: the advance collection / collection of high-quality wine enterprises increased significantly year-on-year, the absolute value of advance collection of many wine enterprises reached a new high in recent years, and the performance of reservoirs was excellent.
Thinking and Prospect: under the post epidemic situation, which liquor enterprises have strong pressure resistance & growth?
Four Highlights – 1) under the irreversible trend of consumption upgrading, the high-end and sub high-end wine landscape continues. The profit growth rate of 13 liquor enterprises in 22q1 is higher than the income growth rate, which shows that the upgrading trend of the industry structure continues. At the same time, the high-end liquor single products in 21 years / 22q1 are still super explosive: 2) the internal differentiation is further intensified, and the trend change of the structure of revenue proportion is obvious. We believe that the Baijiu industry shows strong differentiation among price bands, sub high-end liquor enterprises and regional liquor; 3) Liquor enterprises pursue high-quality growth, and the proportion of large and old merchants has gradually increased. Whether it is to adopt the market strategy of taking root in the base or to adopt a national liquor enterprise, the channel operation quality of high-quality liquor enterprises has been continuously improved to varying degrees under the condition of healthy inventory and rating. We believe that behind the increase in the proportion of large and old merchants of high-quality wine enterprises means the increase in the market scale of the base / the scale of mature large single products (with strong anti risk ability). Considering the epidemic or the investment at the important investment promotion time point of Q2, we are optimistic about the wine enterprises with high proportion of large and old merchants / mature single products in the pursuit of high-quality growth; 4) Excellent pre harvest quality, or increase the performance certainty of liquor enterprises. As a reservoir, the performance of advance collection 22q1 is good, in which high-end liquor and sub high-end liquor generally perform well, and the advance collection of many liquor enterprises reaches a new high. Considering the epidemic situation or certain impact on the operation of liquor enterprises, the advance collection of reservoirs may enhance the performance certainty of liquor enterprises.
A big prediction – the wind is coming, and we are optimistic about the elastic opportunities of Baijiu sector after the epidemic. Considering: 1) the industry is still in the stage of capacity expansion, and the high-end liquor is secondary to the high-end or meets the expected development; 2) The epidemic has little impact on the payment collection of liquor enterprises. At present, the payment collection of major liquor enterprises is smooth, the inventory remains healthy, the price is stable, and the performance of 22q2 high-quality liquor enterprises can still be expected; 3) The valuation is cost-effective (the current valuation of Baijiu sector / Kweichow Moutai Co.Ltd(600519) 5 is about 59.22/65.53 in the past five years) and the market sentiment will pick up with the easing of the epidemic. We believe that there is still a structural market in 22q2 Baijiu sector, Among them, the targets with strong business strength and anti risk ability & the main base markets are less affected by the epidemic & the performance driving force comes from mature single products rather than investment promotion & the targets with excellent performance in 22q2 compared with 22q1 deserve special attention.
Investment advice
Considering that in the early stage, the sector has experienced a decline of “basically facing the good trend unchanged, mainly disturbed by the emotional side” & the valuation of the sector has also been cost-effective, and the epidemic may usher in an inflection point, which is expected to boost market sentiment, it is suggested to make a positive layout. At present, we believe that: it is preferred to have strong business strength and anti risk ability & the main base markets are less affected by the epidemic; the performance driving force comes from mature single products rather than investment promotion & the performance growth rate of 22q2 is still excellent compared with 22q1. Related objects: Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , Anhui Gujing Distillery Company Limited(000596) , Shede Spirits Co.Ltd(600702) , Anhui Yingjia Distillery Co.Ltd(603198) , etc.
Risk tips: 1. The epidemic affected the recovery of Baijiu sales; 2. The price rise of high-end liquor was lower than expected.
