\u3000\u3000 Shede Spirits Co.Ltd(600702) (600702)
Events
On the evening of January 18, 2022, the company released the performance express for 2021: 1) it is estimated that the revenue in 2021 will be about RMB 4.948 billion, an increase of about 83% at the same time; 2) It is estimated that the net profit attributable to the parent company in 2021 will be 1.23 billion yuan – 1.28 billion yuan, an increase of 112% – 121% at the same time; The net profit deducted from non profits was RMB 1.19 billion to RMB 1.24 billion, an increase of 116% – 125% at the same time.
Key investment points
It is expected to grow steadily in the fourth quarter and end smoothly in 2021
According to the performance express, the company’s 2021q4 revenue was 1.341 billion yuan, an increase of 42.7% at the same time; The net profit attributable to the parent company was 260 million yuan – 310 million yuan, an increase of – 4% to 14.8%. The median net profit attributable to the parent company in 2021 was 1.255 billion yuan, an increase of 116% at the same time; Among them, the median net profit attributable to the parent company in 2021q4 was 285 million yuan, an increase of 5.6% at the same time.
According to the performance express, we believe that the performance is in line with market expectations, and the company will end smoothly in 2021.
With the concerted efforts of two brands, the strategic effect of old wine has begun to show
In 2021, Tuopai ushered in restorative growth and high growth brought by customized development business. Willing to focus on combing the price system and channel expansion, the business division made concerted efforts with dual brands. It has been more than 2 years since the old wine strategy was put forward. At present, the effect is beginning to show. We expect the sales of the old wine division to be about 400 million yuan this year. The old wine strategy continues to cultivate consumer groups. It is expected to usher in high growth in the next 3-5 years, and the annual sales of the old wine division is expected to exceed 2 billion yuan in the future.
In addition, the company recently issued a notice on increasing the ex factory price of taste shede (Collection) and wisdom shede (Collection), and the price increase will be implemented from January 1, 2022. The price increase is also a high-profile promotion of shede brand, improving the market awareness of the company’s old wine products, and contributing to the company’s performance in 2022.
Prove yourself in 2021 and make great strides in 2022
In 2021, the company has proved that two problems criticized by the market in the past have been solved: first, the goal is too high and there is pressure to complete. The revenue growth rate of 83% in 2021 proves this and is ready to make a good start in 2022; Second, the channel fees cannot be fully realized, and the problem will be properly solved in 2021.
We look at the company from three dimensions: short, medium and long term:
In the short term, the company has been on the right track, and the management and dealers are full of confidence; In January, the dealer actively paid for the goods and prepared the goods. The Spring Festival of 2022 has a good start;
In the medium term, the company has proved its ability to achieve the set goals. Next year, the company will continue to strengthen brand publicity, hold high and fight high, increase regional expansion, sink advantageous regional channels, and the investment quality is expected to be optimized;
In the long run, the differentiated competition brought by the company’s old wine strategy has attracted great attention from the market, the cultivation of channel consumers has been carried out, and it will take time to form a deep understanding; In addition, after Fosun takes over, it will basically solve the problems left over by Shede Spirits Co.Ltd(600702) history, promote the company to establish an incentive mechanism, and take “1 Tour” (integrating into Fosun trip) + “1 Platform” (docking platform between shede dealers and Fosun system) + “n product” (exclusive version of Fosun ecological characteristic products, services and rights and interests) as the core system to create a deeply enabling ecosystem for dealers; Finally, Fosun developed and landed Fosun system to jointly create products and broaden the sales channels of ecological BD.
The whole company has made steady progress according to the established rhythm, and the probability of a good start in the first quarter of 2022 is high. We reiterate that we are optimistic about the company’s logic: 1) on the product side, the company focuses on the old wine strategy, adheres to the dual brand strategy of shede and Tuopai, and focuses on building strategic single products such as taste shede and wisdom shede. 2) On the channel side, restore old customers in the old market, develop new customers in new markets, and focus on building key markets and customers. 3) In terms of circle marketing, the company focuses on famous wine, enters famous enterprises and smart clubs, accurately targets the circle, penetrates the head + waist + legs, and focuses on the core target customers. 4) Fosun has been in charge of the company for nearly a year. It is expected to accelerate the subsequent empowerment and promote the company to enter a new stage.
Profit forecast
Under the expansion of secondary high-end capacity, the company enjoys all dividends. We are optimistic about the differentiated competitive advantage brought by the company’s old wine strategy and the acceleration of enabling the company after Fosun takes over. According to the performance express, we slightly adjusted the EPS from 2021 to 2023 to 3.73/5.86/7.60 yuan (the previous values were 3.94/6.01/7.91 yuan respectively), and the corresponding PE of the current stock price was 55 / 35 / 27 times respectively, maintaining the “recommended” investment rating.
Risk tips
Macroeconomic downside risk, epidemic drag on consumption, unwilling growth rate is lower than expected, the promotion of old wine strategy is blocked, the expansion outside the province is lower than expected, and the synergy between Fosun and the company is lower than expected.
