\u3000\u3 China Vanke Co.Ltd(000002) 304 Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) )
The two ups and downs laid the foundation for Yanghe, timely changed and started the second entrepreneurship. The company started the “soft and soft” Baijiu through independent research and development, launched the blue classic series products in 2003, completed the change from a local distillery to a national Baijiu enterprise in the next ten years, and established a multi-level and complete price system. In 2012, with the shock adjustment of the industry, the development of the company slowed down, but in terms of channels, the company comprehensively promoted the “1 + 1” deep distribution model, quickly spread out the national market, and the performance returned to steady growth. The rapid development of the company has gradually exposed a series of problems, including product aging, channel inventory problems, lack of dealer confidence and so on. In 2019, the company started active adjustment, launched the upgraded version of product dream 6 +, and gradually established a channel structure of “one business is the main business and multiple businesses are matched”. The relationship between manufacturers has improved, the profits of dealers have increased, and a new stage of secondary entrepreneurship has been opened.
Focus on core multi brand efforts, accurate positioning, and continuously improve brand awareness. Yanghe is located in Suqian City, Chinese Baijiu, the capital of liquor making. Its two major brands “Yanghe” and “Shuanggou” have a history of at least 1300 years and have a deep Baijiu heritage. With the continuous upgrading of the company’s products, Yanghe brand has been recognized by more and more professional evaluation institutions and consumers. At the same time, the company actively carries out brand marketing and establishes the brand awareness of “new national liquor”.
The price band is clearly distributed, and the quality of soft cotton is gradually upgraded, accounting for the second high-end. The company’s products are divided into dream blue, Suzhou wine, sky blue, treasure square, sea blue, Yanghe Daqu, Shuanggou Daqu, guijiu, xingdesi red wine and other series. It adheres to the “one body and two wings” brand development strategy of “double famous wine, multi brand and multi category”, covering high, secondary high, medium and low price bands. Relying on abundant capacity reserves and strong technological R & D capability, the quality of mianrou has been continuously and steadily upgraded, creating a variety of upgraded products such as dream 6 +, crystal version, dream 9 and manual class, steadily occupying the second high end.
Channel innovation continues to make breakthroughs, “one business is the main business, and many businesses are called” profit making channels. The company began to explore the “disk in disk” mode in 2003, and then continued to reform and innovate according to the performance, successively put forward the “4×3” mode, “1 + 1” deep distribution, digital transformation and “522” extreme project, and put forward the channel strategy of “one business first and multiple business matching” in 2019 to keep up with the changes of the market pattern in all aspects. In 2019, the channel reform coordinated with the strategic adjustment and achieved remarkable results in promoting innovation. The company’s upgraded products such as dream 6 + and dream 3 crystal version have performed well, the channel inventory level is healthy, the dealer’s profit is improved, and the confidence is also increased.
Investment suggestion: at present, the price performance of meng6 + has been strong since its launch. It has successfully entered the price band of Tian Jin Bohai Chemical Co.Ltd(600800) yuan, and the layout in the province has been basically completed. It continues the good momentum and focuses on the layout of markets outside the province. We believe that with the continuous promotion of dream 6 +, dream 3 crystal version, Haitian upgraded version, dream 9 and manual class are expected to bring new growth points to the company by adding the help of brand upgrading to the successful product strategy and channel strategy explored in the early stage. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 9.64/11.67/13.86 billion yuan respectively, with a year-on-year increase of 28.4% / 21.1% / 18.7% respectively. We give Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) 202225x-30x relative PE valuation range, corresponding to the stock price of 159.2-191.1 yuan.
Risk tips: repeated impact of the epidemic, channel reform is less than expected, product upgrading is less than expected, and the company’s operation risk, etc
