\u3000\u3000 Anhui Kouzi Distillery Co.Ltd(603589) (603589)
The rise of industry and the rapid development of GDP provide strong support for the upgrading of consumption and market expansion in the region: benefiting from the iterative upgrading of industry, the province’s GDP in 2021 was 4295.92 billion yuan, an increase of 8.3% over the previous year and an average increase of 6% in the two years. Among them, the added value of the primary industry was 336.06 billion yuan, an increase of 7.4%, with an average increase of 4.8% in two years; The added value of the secondary industry was 1761.32 billion yuan, an increase of 7.9%, with an average increase of 6.3% in the two years; The third industry added value of 2 trillion and 198 billion 540 million yuan, an increase of 8.7%, an average of 5.8% growth over two years, providing strong support for the expansion and expansion of Baijiu consumption in the region. Since 2018, the 200+ price of Anhui market has accelerated growth. It is estimated that the Baijiu market capacity in 2021 has exceeded 30 billion, and the next 2-3 years is expected to exceed 40 billion yuan.
In terms of competition pattern, Huijiu brands Gujing, Anhui Kouzi Distillery Co.Ltd(603589) and Yingjia are firmly locked in the top three. Products such as gu8, gu16 and GU20 have made a rapid breakthrough at the price of 200 +. While expanding the “market cake”, they have broken through the ceiling of 500 + traditional price of real estate brands and successfully expanded the growth space of real estate brands. The regional barrier of “not entering Anhui in the East and Sichuan in the west” is gradually broken, Brand has become the core of competitive advantage construction. In the future, in the price breakthrough war, the requirement of transforming channel advantages into brand potential energy will become more and more urgent. The company’s “big business agent” model is more stable and less offensive. In the market competition in the past two years, the disadvantage of insufficient brand and product cultivation ability has been amplified, and the brand transformation efficiency is far lower than that of competitive brands. Reform is imminent.
Reshape the relationship between “1 + n profit sharing” manufacturers, introduce dynamic assessment indicators of dealers, control channels and cultivate new products: pilot the “one place, one business, separation of production and marketing” to the “1 + N, market co construction and profit sharing” manufacturer cooperation mode, focus on new products, require the establishment of new companies to operate independently, add secondary suppliers and operate by products in the same region, Strengthen the dynamic assessment of dealers and mobilize the initiative of channels.
The establishment of Hefei marketing center and the expansion of backbone marketing team have gradually institutionalized the company’s marketing talent echelon. Share repurchase and predictable equity incentive plan are expected to release the dividends of mechanism reform: on the one hand, the company opens middle-level recruitment to enrich business backbone, on the other hand, the company recruits basic salesmen locally, and reasonably matches the salary according to local prices; It is expected that the company’s key regional marketing team will be established within this year to form combat effectiveness and channel control. Considering that the company has completed share repurchase in April 2021, with a total of 3.13 million shares, accounting for 0.522% of the company’s total share capital, and the average repurchase price is about 47.52 yuan, we believe that the predictable equity incentive plan for the backbone of the core team is expected to be implemented after the team is full, To encourage employees to grow together with the company.
Investment suggestion: as the leader of Huijiu liquor, the company will fully benefit from the consumption expansion brought by the high economic growth in the region, and the brand accumulation and fragrance quality have high cognitive barriers in the province. The year type products have been deeply cultivated in the price band of 100 yuan for 5 and 6 years, the market base is stable, the price of 200-500 yuan for 10 and 20 years has a large-scale basis, and the price of 518 new products is 500 + card, In the first year of listing, the sales volume exceeded 100000 boxes, the price and group purchase first channel strategy, benchmarking the development paths of Gu 16 and Gu 20, and the scale and volume of new products can grow. It is estimated that the company’s revenue from 2021 to 2023 will be 5.12/63.8/7.31 billion yuan, a year-on-year increase of + 27.5% / + 24.6% / + 14.7%; The net profit attributable to the parent company was RMB 1.62/2.04/2.34 billion, with a year-on-year increase of + 26.9% / + 26.2% / + 14.7%, and the corresponding PE was 26x / 21x / 18x respectively. Optimistic about the valuation repair opportunity of dilemma reversal brought by the company’s reform, cover it for the first time, and give a “recommended” rating.
Risk tips: 1) the economic rise in the province does not meet expectations; 2) Escalation of epidemic control; 3) The channel reform in the province and the market development outside the province were not as expected
