Source: new Wealth (ID:newfortune)
Author: Zhu Weihua
Guizhou Moutai isA-share superstar stock, market capitalizationOnce reached trillions of yuan, rankingThe fourth of A sharesIts every move always attracts the strong attention of the market.Not from the lowest price in 2003, even from the beginning of the current round in early 2014, there has been a 10-fold increase in four years, an amazing increase.
How did Maotai achieve what it is today? New wealth, please.The person in the capital market is called "Zhu Weihua of Zhu Maotai deeply reviewed the road of Maotai's market capitalization of trillion yuan and taught him personally.In the past15Observe Maotai, study Maotai and recommend Maotai inThe experience of the research.
Zhu Weihua is the managing director and group leader of China Merchants R & D Center, and once served as the chief analyst of food, beverage and agriculture. China Merchants Zhu Weihua / Dong Guangyang / Yang Yongsheng team was listed as the best analyst in the food and beverage industry of New Fortune for 13 years in a row. Zhu Weihua won the first place in 2005, 2006 and 2007. Zhu Weihua has been engaged in internal and external research and training for more than 10 years. In 2013, he was awarded the title of model worker for central enterprises by the State-owned assets Supervision and Administration Commission of the State Council. He has a bachelor's degree in economics from Tsinghua University and a master's degree in management from the University of Science and Technology of China. He is also a senior alumni mentor of the accounting and finance major of the School of Economics and Management of Tsinghua University and the Master of Finance of China University of Science and Technology.
Catalogue
01. Hardship to the summit: today's glory, why cast?
02. Great country ingenuity: why is Maotai the best distilled liquor in the world?
03. Ponder and question: what are the disputes in the market? How do we resolve it?
04. Long-term logic: what is the big logic of investing in Maotai? How to analyze the change of volume and price?
05. Bull market gluing: between gains and losses, miss the inspiration of Wuliangye?
06. Structural upgrade: what is the new reservoir?
07. Multidimensional mining: how do we mine grass-roots data?
08. Economic beloved: the ups and downs of liquor, who is the hero?
09. Price kings: price and brand power, price and asset bubbles?
10. Fair valuation: is the expected price increase price-in? What do you think of Maotai's height limit?
11. Persevere: why are dealers willing to go with Maotai wind and rain?
twelve。 Beautiful scenery: why don't we want Maotai's share price to rise too fast?
13. Where is the way: looking forward to the future, the market opportunities and space of Maotai?
14. Longchang Wudao: reviewing the 15 years with Maotai, what are the summaries and insights?
01. Work hard to reach the top
问：Hello, Boss Zhu, you are an old friend of New Fortune. We know that you have followed Maotai for many years, and you should be regarded as one of the first analysts to excavate Maotai in the capital market. If you have any different views on Maotai, you can share it with our readers.
Zhu Weihua:Thank you, New Wealth. Our food and beverage team began to pay attention to Maotai in 2003 and began to strongly recommend it in an official research report at the beginning of 2004. I won three New Fortune Food and Beverage first more than a decade ago. Apart from summing up the research framework of the Food and Beverage Industry Map, I think a large part of the reason is thanks to Maotai. I officially studied food and beverage when I joined the industry in 2001 and SARS in 2003. Luckily, I stepped on it.
Maotai now has a market capitalization of nearly trillion yuan, far ahead of its peers, and everyone envies Maotai for its good endowment. In fact, although Maotai has the endowment of national wine, it is not a decisive factor. In fact, the smell of wine is also afraid of deep alleys. Maotai's success today is inseparable from the spirit of Maotai people, decades of worship and persistence, and tireless exploration. We should know that Maotai's achievements today are not easy to come by. In 1997 and 1998, Maotai's operation was also very difficult, and only 30% of the sales tasks were completed in 7 months. fortunately, the management changed its business philosophy in time and began to build Maotai liquor culture. and from sitting merchants to merchants, and actively open up new dealers on the basis of traditional sugar and wine companies, and work with dealers to analyze and open up the market. Assist dealers to build Maotai stores since 2001, and the sales momentum slowly improved. At that time, Maotai compared with Wuliangye is still a big gap, Wuliangye is the industry leader.
In 2003 and 2004, Wuliangye was significantly ahead of Maotai not only in terms of wine price, production and sales, but also in terms of income, profit and market capitalization. Wuliangye earned 6.3 billion yuan, and when Maotai had a market capitalization of 8 billion yuan in early 2004, Wuliangye had a market capitalization of 17 billion yuan). At that time, Wuliangye was very powerful, and it was only the king of spirits that he was not satisfied. He proposed that the national liquor should not be made for life and wanted to replace Maotai's status as the national liquor. Behind Maotai steadily, step by step to catch up with the sales revenue, to level up in 2008. Wuliangye kept a certain proportion of its income in the group because of its related party transactions. After the sales subsidiary injected shares, Wuliangye's revenue remained in the lead, and Maotai did not level it again until 2012. After the restrictions on public consumption, the sales revenues of other companies were affected to varying degrees, while Maotai struggled to open up the mainland market and maintained a positive growth in revenue and profits, and it took five years to distance itself from its competitors. Of course, Wuliangye is also excellent, and its revenue, net profit and market capitalization have also increased many times in recent years.
Fig. 1 trend chart of liquor sales revenue (unit: 100 million yuan)
Source: wind, China Merchants Research
02、Great power ingenuity
问：In such an industry situation at that time, why did you recommend Maotai?
Zhu Weihua:The period from 2001 to 2005 was a big bear market in the stock market, when the market capitalization of the food and beverage sector was not large, and Wuliangye and Maotai were both outstanding. Maotai was listed in 2001, as a well-known brand, the initial valuation is still high, more than 30 times, the performance growth rate is not fast, especially in the case of SARS, the performance pressure is still relatively large. The best inflection point, and the lowest share price in history, was at the end of the third quarter of 2003. Inflation rose sharply in the fourth quarter, and the prices of many things began to rise. Maotai was in short supply and followed Wuliangye to raise ex-factory prices. At that time, we noticed and wanted to do research, but it was the peak sales season for the company, and the company said that it was too busy to receive it, so we kept the research with the company until after the Spring Festival in 2004.
In the months before the survey, I spent all my time studying the fundamentals of Maotai and learning the knowledge of liquor. I used to study economics and finance, and I had absolutely no foundation in brewing, but I read millions of words in one breath, read all the materials I could find, and raised my awareness of the wine industry to a higher level. Once I know Maotai, I find that Maotai is very good, handmade and somewhat luxurious.Old Mr. Ji Keliang, former chairman of Maotai Group, said at that time that Maotai Liquor is the best in the world.Distilled liquor。After this sentence was made, many people were still criticizing it at that time, and some even mocked that Maotai Town was originally the place of Yelang.
But I can say that Maotai is indeed the best distilled liquor in the world! You can compare the production technology of foreign wine, the production equipment of foreign wine is very good, the fermentation barrel and copper distiller are very beautiful, butTheir process is liquid fermentation.Domestic的Liquor isSolid state fermentationThis isMaximum的A difference.Liquid fermentation requires crushing the raw materials and adding yeast to the aqueous solution for fermentation. Yeast is relatively single, the fermentation power is very strong, the fermentation speed is generally faster, more sufficient, and the food consumption rate is relatively low. But the result is that there are more macromolecules and less aroma components. The result of too many macromolecules is that if you drink too much, you will go to the top. And these famous spirits in our country are so delicate that they won't go to the top if they drink too much, which is a very big difference.
Fig. 2 production process diagram of whisky
Source: Internet pictures, China Merchants research
Let's look at the technology of Maotai. The brewers have to mix the new and old wheat koji well before entering the cellar. In such a solid-state fermentation mode, the fermentation time is long and the food consumption rate is relatively high. Maotai needs 5 jin of raw grain to produce 1 jin of base liquor. but the wine produced by it will be very delicate and the aroma components are much more.European luxury goods always emphasize making by hand.，Our famous Chinese spirits are made by hand.，More suitable for luxury goods。
Fig. 3 Maotai technological process
Source: Guizhou Moutai prospectus, China Merchants research
There are still a lot of exquisite Chinese spirits. Liquor flavor types can be divided into three main flavor types: delicate flavor, Luzhou flavor, Maotai flavor and many other small flavor types. The production volume of Fen-flavor type was the largest in the past, which was encouraged because of the shortage of grain and the low grain consumption rate of Fen-flavor wine in history. After 1980s, its position was gradually replaced by Luzhou-flavor type. Fen-flavor type is now mainly distributed in the three northern areas, and its representative is Shanxi Fen Liquor. It was once called "Fen Boss". The representatives of Luzhou incense are Sichuan Wuliangye and Luzhou laojiao, accompanied by Sichuan cuisine and Hunan cuisine sweeping the country. In recent years, Yanghe and Gujinggong have sprung up one after another. Maotai is the main flavor of Maotai, next to Lang Liquor. When I came into contact with spirits in 2003, the proportion of the three flavor types, namely, delicate flavor, strong flavor and Maotai flavor, was 2:7:1, and now I estimate it is 1:7:2. In addition, it is worth saying that there are great differences in the technology of the three flavor types, and there are also great differences in koji species. Luzhou-flavor type also has a unique mud cellar, in which the pit mud is of better quality.
Due to the open fermentation of Chinese liquor，Pay attention to the harmony of the time, the earth and the people.。
First of all, the wine-making history of Maotai Town is very long, which can be traced back to the Chinese wolfberry wine paid tribute by Emperor Wu of the Han Dynasty (formerly a brewing wine, distillation began in the Yuan and Ming dynasties), thanks to its valley landform on the banks of the Chishui River. the river valley has relatively low air mobility and a relatively high temperature, which is very suitable for the reproduction of microorganisms. If we look at the famous wines in Sichuan, Sichuan itself is a big basin, and Wuliangye and Luzhou laojiao are further located in small basins along the riverside or Sanjiangkou, which determines that the brewing conditions there are very good.
Maotai abides by Tianshi very much, and its brewing process is well summarized, with an average process cycle of five years, that is, one year of production, three years of aging, and then one year of filling and leaving the factory after blending. Maotai is now brewed five years ago. Specifically in the annual production cycle, in strict accordance with the "Dragon Boat Festival koji making, Chongyang feeding", last year's Dragon Boat Festival Maotai Company also made a live broadcast of the trampling event (CCTV International Channel, through the "legendary China Festival: Dragon Boat Festival" column in "China News", live broadcast the wheat sacrifice and trampling qu of the Dragon Boat Festival in Maotai for 15 minutes, unveiling the mysterious koji-making process of Maotai Liquor to the world). The Dragon Boat Festival is coming soon this year.
The real brewing starts from Double-ninth Day, after nine times of cooking, eight times of adding koji, and seven times of taking wine (nine times of cooking, that is, from feeding to the end of seven rounds of production, grain or distiller's grains need to be cooked nine times; eight times of adding koji is between sand and six rounds, after each cooking, the right amount of koji powder is added when the temperature is suitable, accumulation fermentation, cellar fermentation The seven times of wine extraction is that the fermented grains are fermented in the cellar for not less than 30 days, and the fermented grains are distilled from the cellar, each time the wine is called the original wine or the wine in turn, and the wine is extracted for a total of seven times from one round to seven rounds in the whole year. Then, it is divided into three typical bodies to be stored for more than three years respectively, and then put stable for one year before leaving the factory (Maotai original wine is classified as Maotai, mellow and sweet or cellar bottom, and stored for more than three years after being hooked according to the standard plate. The toner first adjusts the samples in the taste, color and aroma type in accordance with the technological standards, and then carries out batch blending to ensure the softness, softness and aroma of the wine body.
The whole blending process is wine hook wine, different rounds of different batches, different years of the original wine according to proportion, without adding any flavor substances). Therefore, the production process of Maotai Liquor is very long, and it takes time to wait. In the first season of Beijing Satellite TV's "extraordinary ingenuity" in April last year, teacher Zhang Guogang led Bai Juigang and Liu Ruilin deep into Maotai to experience brewing technology.Teacher Zhang Guoguo once sighed that "when drinking in the future, I will always remember the ingenuity of how many workers and craftsmen have been polished over the years behind this mellow aroma."The winemaker and hook wine maker of Maotai is the "Renhe" of Maotai liquor.
Later, Maotai also made some scientific analysis of the liquor quality, the ingredient richness is much higher than that of foreign liquor, and there are still many substances that can not be identified. (Guizhou Moutai and the National Chromatography Research and Analysis Center use gas chromatography research results: Maotai liquor has 963 peaks, Luzhou-flavor liquor has 674 peaks, and Fen-flavor liquor has 484 peaks. 873 components of Maotai-flavor liquor, 342 kinds of Luzhou-flavor liquor and 178 kinds of fresh-flavor liquor were identified.
The main aroma substances in Chinese liquor are generally esters such as ethyl caproate and ethyl acetate, but it is not to say that the more these esters, the better, but the effect may be the best in a certain proportion, which is very mysterious.Maotai Liquor is genuine green food and organic food.It is not only rich in substances produced by natural fermentation, but also its high-temperature distillation and high-temperature reception of wine, which volatilizes the low boiling point and volatile substances in the original wine. the original alcohol degree is in the range of 52 degrees to 57 degrees. Maotai Liquor is 53 degrees, which is the smallest and tightest molecular gap between water molecules and ethanol molecules, which is the most perfect combination. The original alcohol content of Luzhou-flavor liquor is as high as 60-72 degrees, 72 degrees of the original wine taste hot, licking the entrance seems to crack, but the aroma is long-lasting.
High raw wine is not suitable for daily drinking, generally need to be mixed with water to reduce the degree of drinking grade wine, strong aroma generally reduced to 52 degrees, etc., fragrance is generally 53 degrees, 42 degrees and so on. It is really not easy to add water to Chinese liquor. If you add it casually, the liquor will become cloudy and the taste will change. Some time ago, a video of liquor and water comparison was circulated on the Internet. However, turbid or not can only distinguish whether edible alcohol has been mixed or not. If we drink foreign wine in the bar, do we mix all kinds of mineral water and tea drinks into it? Never consider the problem of changing the taste of wine, which shows that Chinese solid-state fermentation liquor is really special compared with foreign wine. At that time, Wuliangye in order to expand the sales population to do low-alcohol wine, tested a lot of degrees are not good, and finally use Hua Luogeng's optimization method to come up with a 39 degrees, an experiment was successful. But now many liquor companies are not as fastidious as before, if there is turbidity after the drop, they will use something to clarify the liquor. Really good wine people generally drink 52 degrees, 53 degrees of this relatively high wine, the flavor is enough.
03、Ponder and argue.
问：The point of Maotai is really not high at that time. Will investors approve it when you recommend Maotai?
Zhu Weihua:At the beginning of 2004, although Maotai began to be in short supply, many people in the capital market did not understand it, and many people did not agree with it. When we introduced to investors, we gave back a lot of doubts. For example, some people say that if there are still people to drink liquor, it is all a sunset industry; some people say that Maotai is a bar for people over 50 years old; others say that I have drunk Maotai liquor, but it tastes strange, I can't get used to it, and I don't think it has a market; some people dare not buy or touch it because it is a big bear market from 2001 to 2005; others propose to buy liquor, I only buy the boss, I buy Wuliangye, and I don't buy Maotai. There are all kinds of reasons, and many doubts also prompt us to think deeply.
As for whether there is still no one to drink liquor, we have done a demographic study, and we do feel that people drink the most alcohol when they are the youngest, and gradually decline as they get older. The peak of China's population is the decade from 1965 to 1975, which corresponds to the 1990s when it was young, so it is normal for liquor production to peak in 1997. However, we think that although we drink less and less wine, we will drink it better and better. the proportion of high-end wine is very small and it will develop more and more in the future.
In retrospect, more than a decade later, the development of high-end wine is indeed very good. However, interestingly, and unexpectedly, our total liquor output is now even higher than the high point in 1997, and now the annual output of liquor is 1200 million tons. The possible explanation is that the commercialization rate of liquor has increased. In fact, no matter how the total amount of liquor changes in the future, we are more concerned about the changes in the sales of middle and high-end liquors. Even at present, there is still room for middle and high-end spirits as a lubricant for social socialization. only a few choices such as wine can replace it to a certain extent, and with the enhancement of Chinese cultural confidence, middle and high-end spirits have no disadvantages compared to wine.
Is Maotai just for people over 50 years old? This was true more than a decade ago, but now you can see that the people who drink Maotai are getting bigger and younger, and now the proportion of people over the age of 35 who drink Maotai is also very large. At that time, we told investors that although the customer group of Maotai was older, it was representative to a certain extent. In a word of communication, its consumer group was opinion leaders, and these people would affect the people around him to drink Maotai. I said that Maotai has a business card, that is, the national wine business card, which is very important. Who typed this business card for it? it is our beloved Premier Zhou Enlai. Because Premier Zhou will recommend two things when he visits abroad many times or when he receives foreign guests. He said, I have brought you "two sets", one is "Romeo and Juliet of the East", that is, Liang Shanbo and Zhu Yingtai, and the second is Maotai. So a large part of the brand intangible assets of Maotai Liquor is actually the contribution of Premier Zhou Enlai.
I don't think Maotai is a problem for the strange taste of Maotai. Maotai as a Maotai-flavor liquor, it is true that many people are not used to it at first. Later, by studying many categories of food and beverages, I summed up aAccording to the law of taste and consumption pattern, mellow products are more suitable for high-end products and light-tasting products are more suitable for public drinks. It tastes strangeOf things.Do not think that it is not good, once you drink something strange, your loyalty is quite high, and if you drink something else, you will feel unaccustomed to it.
图4All kinds of food and beverage products are classified according to mellow and light.
At that time, the market environment was indeed a big bear market, and many investors were very pessimistic. From a market point of view, it did not fall through in 2004, and there were 1000 points at the end of 2005. But we found outA bear market is actually a very good thing for value investment.The bear market can be divided into two stages. the first stage is full of mud and sand, and the valuations of the good and the bad are very expensive and everything falls, but it is different in the second stage. The second stage is a differentiated stage, and the good companies will stand out from the independent market. this is the time when we can show our skills in value mining, so I firmly believed that Maotai had such an opportunity.
Who did you buy at that time?I later found out that the liquor industry hasLike thisThe characteristic of it is to enjoy all the glory.、Lose everything and lose everything.However, since 2004, we only recommended Maotai, not the boss Wuliangye. Pushing Maotai alone made our Maotai label impressive. Fortunately, the performance of Maotai in those two years was also much better than that of Wuliangye. Wuliangye rose by a big wave like Maotai in the fourth quarter of 2003 and the first quarter of 2004, but did not rise much in the next two years.
Why was Wuliangye not recommended at that time? There is a background, at that time, Wuliangye was very powerful. As the leader of the industry, it found that demand was in short supply and took the lead in raising the price in September 2003, raising the price by 30% at a time through the listing of triple anti-counterfeiting new packaging. But there was a problem, and many dealers told me that the taste of the newly installed Wuliangye wine had changed. to put it politely, the style of the wine had drifted, in short, the market did not recognize it, and the terminal price did not rise at all. There was a price upside down, dealers lost money, and everyone complained. Maotai raised its price by 17% in October, which is not small, but its original retail price and ex-factory price are lower than Wuliangye. After raising the price, Maotai can still earn 20 yuan per bottle of wine. Don't be too small for 20 yuan, because its ex-factory price at that time was only more than 200 yuan. Let dealers make money, dealers are naturally saying that Maotai is good.
04、Long-term logic
问：Your report at that time put forward a three-step three-to-five-year goal. What logic are you based on?
Fig. 5 share price trend chart of Guizhou Moutai (unrestored rights, 2001-2005)
Source: China Merchants market system
Zhu Weihua:At that time, I found that it was inflation that kept Maotai in short supply. I clung to this point.Inflation isHigh-end consumptionA friend of mine，Standing at that point in time, I don't think inflation will come down for three to five years. Indeed, inflation didn't come down until 2008.I think it should not be too much for Maotai to increase its price by 5% a year in the next five years. In fact, Maotai laterBecause supply falls short of demandRaise the price every yearAverage有Range of 10-15%. How many goods can Maotai sell every year? At the time of my research, Maotai was celebrating the production capacity of 10,000 tons with banners, realizing Premier Zhou's long-cherished wish. After talking about the process for five years just now, these 10,000 tons need to be sold in five years. What was the output in the previous five years? In that Maotai survey, I turned the output data in Maotai history upside down. Earlier data were seen from Maotai Museum, some recent data were found in its internal newspaper, and then it was calculated from its prospectus and previous financial reports. The results are also very exciting.Maotai has been expanding its production capacity in the past few years, with an annual increase of 10% in the past five years.-15%Level.The price can rise, the quantity can increase again, and there are other positive factors, that is, the consumption tax refund of the old wine it buys from the group. This is a problem left over from history. When Maotai was listed, there was a quota limit, its assets could not be fully loaded into the shares, and the group kept the old wine produced before 1995. After the listing of Maotai, it bought these old wines year by year and bought a total of 6100 tons in 2007. These acquisitions have a consumption tax return to further beautify the income statement. In addition, its price-to-earnings ratio was really low at that time. At that time, the consensus price-to-earnings ratio was only 20 times. Later, the results for the fourth quarter of 2003 greatly exceeded expectations, and the return calculation was only 14 times, with a market capitalization of only 8.3 billion.
Make it bigLogicHold on.I've got a long-term focus.actually不用Pay attention to the fluctuations in the middle.The stock price of Maotai fluctuated a lot in 2004 and 2005, coupled with the poor market environment at that time and without long-term guidance, many investors could not hold it. With guidance, you can sleep peacefully no matter how many stocks you take. Of course, in addition to looking in the right direction, we often find new angles to support our judgment. At that time, we found that Maotai was very powerful. Its prepaid accounts grew very fast, constantly reaching new highs, and even the balance of prepaid accounts at the end of each quarter was more than the sales revenue of the next quarter. Accounts received in advance reflect the relationship between supply and demand, so through the observation of this index, Maotai is more at ease. Later, everyone was concerned about the change of liquor accounts received in advance.For us, Maotai report performance is a posteriori, we focus more on the changes of accounts received in advance.
Fig. 6 sales income and accounts received in advance of Guizhou Moutai (2002-2004) Unit: 100 million yuan
Source: China Merchants study
In the face of more and more Maotai raw liquor in 2004, we thought of the idea of inventory revaluation.Maotai raw wine is counted as raw material cost plus brewing cost in the inventory item of the balance sheet, and the original value is very low, while the potential value of raw wine inventory of 50,000 tons at that time, such as the market price of commodity wine, even if it takes time to cash in and a certain discount rate is considered, it is also a bit higher than the stock market value at that time, and Maotai stock is very undervalued. Maotai's gross profit margin was 80% at that time, and the net profit rate was 24%. Now the gross profit margin is more than 90%, and the net profit rate is 40-50%. Inventory is wine and gold. After the concept of inventory revaluation was accepted by the market, Maotai was firm, and the concept was extended to other liquor companies, but we are relatively cautious about the extension of the market. We think that the value of inventory should first be in short supply. Otherwise, a large amount of capital precipitation will become a burden for enterprises. From the perspective of industrial investment, the value of the company can be measured in this way, but the secondary market should still emphasize cash.
05、The bull market is glued
问：Experienced the practice of the bear market, Maotai shares after the reform ushered in the 2006, 2007 two years of bull market, this period of time, the previous market differences have disappeared, right?
Zhu Weihua:After two years of training, the loyalty of Maotai investors is indeed very high, although there are no previous differences, but there are new troubles. At that time in 2006 and 2007, you said that Maotai could increase fourfold, but others did not like it, and many junk stocks rose tenfold and 20 times. Maotai always traded sideways in the first half of the year and only wobbled and rose slowly when it entered the peak sales season in the second half of the year. Some investors in Maotai can no longer sit still. When Maotai exceeded 100 yuan at the end of 2006, someone advised senior executives at the shareholders' meeting that Maotai should give more shares, not to become the highest-priced stock in the two cities, so that more people could buy it. In fact, they just want to use the bull market to grab power and fill in these transactional things.
Maotai shares have not been given much, in fact, I think Maotai this measure is right, why to send shares to stimulate short-term behavior, Buffett's company has such removal? Two or three hundred thousand dollars a share. As a high-end product, the stock price itself is an advertisement. It is also suggested that the wine bottle in Maotai should be changed and made more beautiful, instead of using such a simple white bottle. Maotai has not been changed. Maotai said that porcelain bottles are the best to store wine. In fact, the cost of this porcelain bottle is quite high. We also think that Maotai is not good, simple, low-key and luxurious.
图7Stock price chart of Guizhou Moutai (unreinstated rights, 2004-2007)
Source: China Merchants market system
In 2006 and 2007, I didn't push Wuliangye very much, and the stock price of Wuliangye performed better than Maotai. After the market capitalization of Wuliangye was surpassed by Maotai in 2005, it surpassed back in the bull market in 2007, and the two market capitalization continued to crisscross. Maotai was even better until the end of 2007, and will continue to take the lead. The reason why Wuliangye is very strong is that after two years of rest and recuperation, the sales price is finally in line with the price, and the enthusiasm of dealers to promote Wuliangye has also been mobilized.Parity is a very important indicator.Ten years later, history is reincarnated again. In the past two or three years, our team Dong Guangyang and Yang Yongsheng first pushed Maotai, and then pushed Wuliangye, both hands.Especially Yang Yongsheng's in-depth research and strategic suggestions on Wuliangye.得Attach great importance to the high level of Wuliangye。
The first stage of their recommendation of Wuliangye is based on the substantial improvement of Wuliangye's business policy and positive feedback from dealers. The reason for the second stage is that the price of Wuliangye wine has changed from upside down to selling at a reasonable price. Due to the fact that in 2013 and 2014, after the three public consumption restrictions, the sales situation of liquor was very grim, and the price of liquor was constantly falling. at this time, the wholesale price of Maotai fell to 840. in order not to be too far away from Maotai, Wuliangye began to support the price, reaching more than 700 yuan, and the price was upside down. Wuliangye and Maotai price difference is very small, the brand power is not as strong as Maotai, natural sales are not smooth. However, when the wholesale price of Maotai has risen by more than 1000, 1300 and 1500 yuan since the beginning of 2016, the situation is different. when the gap is 50%, your target population will be very different. Wuliangye benefited from demand at this time, and the retail price also advanced to 1000 yuan. Naturally, the enthusiasm of dealers increased, and the performance and stock price performance of Wuliangye in 2016 and 2017 was very good.
图8Comparison of market capitalization between Guizhou Moutai and Wuliangye (2001-2007) unit: 100 million yuan
Source: WIND, China Merchants research
06、Structure upgrade
问：You just mentioned the white porcelain bottle of Maotai, there are also Maotai aged wine, zodiac wine, as well as a variety of color custom wine, it seems that there are many changes in Maotai packaging.
Zhu Weihua:Yes, Maotai now has some other wines. Maotai aged wine and zodiac wine are important structural upgrades of Maotai, and product structure research is also a very important part of consumer goods research. First of all, let's talk about Maotai aged wine, which is a very important part of establishing a high-end brand image of Maotai. Maotai launched 15-year, 30-year, 50-year and 80-year vintages in the middle and late 1990s, and its production and sales increased gradually. after 2001, the products and base wines of the joint-stock company relied on the old wines collected from the group. In 2005, Mr. Ji Keliang personally wrote "tell you a Real aged Maotai Liquor". We found that by 2006, the sales revenue of Maotai aged Liquor had already had a scale, and the company did not disclose the sales volume, but it was rationed to the specialty store every month. I calculated the total amount according to the number of Maotai stores at that time. Although the quantity is small and the unit price is taken into account, the income of aged wine already accounts for a large proportion. The growth of Maotai aged Liquor more than ten years ago has contributed great value to the promotion of Maotai brand image and the price of Maotai ordinary wine surpassing Wuliangye.
图9Picture of Maotai aged Liquor
Source: Internet data, China Merchants research
Now there is a new structural change in Maotai: born Xiao Liquor. Since the year of the Horse in 2014, the zodiac wine market in the year of the Horse and the year of the Sheep has reached more than 10,000 yuan, the year of the Monkey has reached more than 7000 yuan, and the year of the Rooster is now more than 4000 yuan, which is much higher than the ex-factory price, and the ex-factory price is about 20% higher than that of ordinary Maotai. Yang Yongsheng told me the sales data of zodiac wine over the years, so we can know that zodiac wine has become an important source of income and profits in Maotai in 2016 and 2017. In order to ensure the production of 53-degree Maotai, Maotai proposed to control the production of zodiac wine in the year of the Dog and other kinds of custom-made wines this year. Zodiac wine has become a reservoir in Maotai. If the supply and demand of ordinary Maotai can be alleviated in the future, the volume of zodiac wine will bring greater benefits to the company.
图10Maotai zodiac wine
Source: Internet data, China Merchants research
07、Multidimensional mining
问：The information of "price upside down", "selling at a favorable price" and "dealer enthusiasm improvement" seems to be very critical to liquor stock recommendation. How do you usually get in touch with liquor dealers and get this information?
Zhu Weihua:It is not enough to study what a company says, but also depends on its upstream and downstream, and what its competitors say. Knowing the dealer, we visited the tobacco hotel as a stranger at the beginning, and then I found that there was a sugar and wine party in the industry that had been held for many years and had a great influence. Sugar and wine parties are usually held in spring and autumn, in Chengdu in spring, and often change cities in autumn, with a larger scale in spring. Sugar and wine parties used to be used by manufacturers to show themselves and attract investment. Later, big brands mainly took advantage of this opportunity to have a tea party with existing dealers to understand the market trends. Big brands will do an outreaching meeting before the sugar and wine fair exhibition period. on the contrary, the communication activities are over at the opening time, and the leaders return home, leaving some business staff to receive ordinary guests at the exhibition site.
At the sugar and wine meeting in the spring of 2005, I was too busy with food, beverage and agriculture alone, so I asked a buyer friend to go there first, and the feedback was worth going to. Since 2006, I have been leading a team to attend. Every time I attend, I write "A record of Sugar and Wine parties". These articles are very popular because they are approachable. Later, every year, many friends of buyers and sellers went to the sugar and wine party, and the team grew stronger and stronger, at least 100 people. In the past, the food and beverage company only held some new product launches, then held a meeting with some dealers, and then the listed company held an on-the-spot meeting with our analysts.
How did we get to the sugar and wine meeting in the first place? There were not so many activities at that time, and we were totally grassroots research, that is, we went to the other side of the booth and sat there, listening to what the regional manager talked to the dealers. For example, someone came to the regional manager of Yanghe and said, "where am I from (a county in the mainland) and I want to be your agent?" the regional manager said that we already had an agent in this place, so we would no longer talk about it.
This is a very good signal. Because of the deep distribution of Yanghe, each county is a first-class dealer, and if it has a dealer in that county, it will not give it to a second one. Unless it thinks that your place is one of the top 100 counties with strong economic strength, if you want to separate, add a first-class dealer according to the town, and in some places add a first-class marketer according to the channel. It will arrange dealers in a very systematic way. If we look at the regional manager sitting alone with nothing to do, we will go to the phrases, some people are very cold, some people speculate in the stock market, and they will be willing to talk to you as soon as they see that you are from a securities company. Such a strange visit, brazenly a little to dig grass-roots data, and finally summed up will have a very good effect. We have written dozens of reports over the years, such as the series of reports I wrote after the spring sugar and wine party in March 2009, some of which, such as Gujinggong, Shuijingfang, Yanghe and alcoholics, were basically at very low stock prices in March and May 2009.
图11 Some reports of sugar and wine meeting are listed.
Source: China Merchants study
There are also dealers' meetings of listed companies, which are not external at the beginning. The earliest I remember was at the end of 2005, when I heard that Maotai was going to hold an annual dealer meeting in Kunming. I didn't have time to get there, so I asked a colleague from our Kunming sales department to attend it on my behalf. This colleague was very helpful and helped me a lot by asking for the contact information of a sales supervisor in Maotai. Then, in 2006, I took the buyer's friends to the dealer conference, where we not only met some new dealer friends, but also dug up the provincial data of Maotai liquor sales at the meeting.
More than a decade ago, the total sales of Maotai were not as good as that of Wuliangye, and the sales of Wuliangye were still more in the developed coastal areas, so in the coastal areas, the gap between Maotai and Wuliangye is really quite large. Who is at the forefront of provincial sales in Maotai? Henan, Shandong, Guizhou. Henan and Shandong come according to the most populous provinces, and Beijing still ranks fourth. Later, Beijing ranked second step by step, and Guizhou began to rise to the first place in 2004, because many large customers of group buying direct sales directly picked up goods from Guizhou. It can be seen that coastal provinces and cities move forward step by step. Shanghai ranked 12th in terms of sales in 2005, while Guangdong later ranked fifth. According to the data disclosed at the 2016 annual meeting, in 2017, Maotai will continue to consolidate core markets such as Beijing and Guizhou and create key markets such as Guangdong, Shandong, Henan, Jiangsu, Zhejiang and Sichuan with a capacity of 1000 tonnes. we will support key markets such as Chongqing, Hunan, Liaoning, Hubei, Shanghai, Shaanxi, Hebei, Guangxi and Fujian, and expand other potential markets.
08、Prosperity darling
问：Your research is really very grassroots.
Zhu Weihua:There are more grassroots. We are always trying to find data from various places, for example, we continue to collect the retail and wholesale prices of high-end spirits. Go to the supermarket with a task, take a look at the products of all the major listed companies in the supermarket. In addition to the changes in the price of high-end wine, I also need to see what changes there are in the display of various foods and beverages, what promotions there are, and even compare which production dates of Yili and Mengniu are updated, which is very important for FMCG. Now with e-commerce, often check the data on e-commerce, the favorite is the bad review, except for the packaging damage caused by logistics, only depends on how consumers evaluate the product itself. The research on consumer goods needs to be very grassroots.
问：Collecting alcohol price data should be very useful. Could you tell us more about it?
Zhu Weihua:The change of liquor price is very important for us to study liquor. More than a decade ago, data were very scarce. in 2004, in order to understand how the prices of these wines changed in the 1980s and 1990s, I searched the Internet and finally found a few words in some memoirs. Slowly enrich, piece together a complete pictureIt verifies the initial feeling that "inflation is a friend of high-end consumption".The consumption of liquor is closely related to the prosperity of the economy.。19Prices broke through in 1988, when inflation was very high, when prices loosened to form a two-track system. Liquor is hard to get, and you can't buy it at all. The industry is called a wine shortage. This year, Wuliangye and Maotai both went up in price, and Wuliangye dared to raise its price even more. It became easier to sell and surpassed Maotai to become the king of the wine industry. Luzhou laojiao, as the ancestor of Luzhou fragrance, considered from famous wine to folk wine, did not increase the price, hoped to increase the volume, and then gradually fell behind in the high-end wine competition.
In the twinkling of an eye, seventeen famous wines were not allowed on the table in 1989, which is the same as the current three public consumption restrictions. Then it was a bad time from 1989 to 1992. After Duke Deng visited the south in 1992, the economy suddenly became hot again and there was plenty of liquidity. At this time, liquor rose again, and it was very popular. At that time, another wine was very famous, that is, alcoholic wine. The unique sack bottle packaging designed by Huang Yongyu was priced higher than Maotai Wuliangye and became popular in the 1990s. later, because of the adverse business situation, the superimposed governance problem depressed for nearly a decade, but its once high-end image laid a good foundation for its re-rise after 2009.
In the 1990s, what threatened the position of Wuliangye was Qinchi, which relied on the rapid rise of the king of CCTV, but in the twinkling of an eye, during the Southeast Asian financial crisis in 1997 and 1998, liquor failed again. Qinchi was reported to have bought all the original wine from Sichuan. Suddenly, sales collapsed. Shanxi Fenjiu was badly hit because of the fake wine case in Shuozhou, Shanxi Province. During Zhu Rongji's years as prime minister, we all know that Zhu Rongji hated the three public consumption, and the liquor industry was also suppressed. In 2001, on the basis of the original 25% ad valorem tax, an ad valorem tax was added to the original 25% ad valorem tax. One yuan per kilogram of liquor was added to the original ad valorem tax. As soon as the ad valorem tax came out, low-grade spirits died, forcing everyone to upgrade to high-end.
Shuijingfang came out in Quanxing in 2000, Luzhou laojiao out of the national cellar 1573 in 2001, Tuopai out of the wine in 2002, which is positioned to learn alcoholic wine, which is more expensive than Maotai Wuliangye. Several houses have started a new stove on the basis of the original medium-and low-grade wine to make high-priced wine. Shuijing Fang is positioned as the first wine for business use. Under the banner of 400-year-old cellar and Luzhou-fragrant ancestor, Shuijing Fang emphasizes cultural characteristics and has its own characteristics. After the fourth quarter of 2003, the high-end liquor has entered a stage of great development, and the terminal price of Maotai Wuliangye has also risen. The sales volume of Shuijingfang, Guojiao 1573 and Shandai Liquor has also increased rapidly. First, Shuijingfang reached 1500 tons. Later, Guojiao 1573 surpassed it to reach 3000 tons in 2007. In 2007, the sales volume of Wuliangye was more than 11000 tons, and Maotai was more than 8000 tons.
In the past ten years, liquor has really been a very golden stage. It can be divided into several stages. The period from the fourth quarter of 2003 to the end of 2007 can be regarded as a super-high-end golden period and adolescence, during which the price of Maowu wine has doubled and the stock price has risen many times. During this period, the attitude of the policy towards liquor has quietly warmed up. In the Zhu Rongji era, it was believed that liquor consumption was extravagant and wasteful, and the development of liquor consumption should be restricted. In 2006, under the call of the industry, the consumption tax on liquor was reduced from 25% to 20%. The reason is that sorghum is consumed by sorghum and miscellaneous grains, and sorghum planted on sloping land can not compete with the main grain, and can increase farmers' income. Affected by the financial tsunami in 2008, the wine industry was depressed and wine prices were low. the period from 2009 to 2012 was the youth of super-high-end and middle-grade liquor. The retail price of Maotai exceeded 2000 yuan, opening up the space for liquor prices to rise. During this period, the stocks of ultra-high-end spirits only challenged the highs at the end of 2007, and the ones that really rose sharply were middle-end liquor stocks, secondary high-end alcoholic drinks, middle-and high-end Yanghe, Fenjiu, Gujinggong and medium-and low-grade gold seeds, and so on. Stocks have risen 10-fold and 20-fold in three years. Taken together, the past few years have been a super boom in the liquor industry. After that, the three public consumption restrictions in 2013 and 2014 were a big adjustment period, then slowly digested the channel inventory, and boomed again after 2016. We define the Silver Age as a new starting point with the one-week channel out of stock during the Spring Festival in Maotai in 2016.
After the channel inventory was digested, the wholesale price of Maotai began to rise in the second half of 2016, opening up all the ultra-high-end upside space, followed by sub-high-end spirits. This has a lot to do with our economic situation in the past two years, although we have been debating whether it is a new cycle, I do not want to participate in the debate, how the new cycle first needs a common conceptual definition. I just saw that after the supply-side reform in the economy, the prices of periodic products went up, the performance of many large periodic products recovered, the bad debts of banks decreased, and the society took the initiative to add new inventories after destocking. The devaluation of the RMB in 2016 has also greatly increased the performance of export enterprises, and the technology accumulation of some technology-based enterprises in China has reached the stage of qualitative change, such as 5G and LCD screen, and consumption is also upgrading at the same time of industrial upgrading. This series of factors have brought about the structural prosperity of China's economy and promoted the consumption of high-end wine.
09、The king of price
图12Mao Wushu Wine Price trend Chart (2006-2018)
Source: China Merchants study
问：The prosperity of liquor really has a lot to do with the prosperity of the economy. Apart from reflecting this, what is the connotation of your map of ex-factory price, wholesale price and retail price?
Zhu Weihua:This is the price trend chart of high-end liquor that we have collected for many years, and there is some important information in it.The first piece of information looks at price volatility.，The periodic changes are quite obvious.，And the more expensive it is.、The more violent the fluctuation.。This cyclical fluctuation is not limited to China. We see that several peaks of the Liv-ex price index of the London International Wine Exchange are very similar to the prices of Chinese spirits. The wine in the 100th index is more expensive than the wine in the 500index, so the index fluctuates more. It shows that liquidity has global characteristics.
图13Liv-ex Bordeaux wine index chart (2001-2018)
Source: WIND, China Merchants research
The second piece of information is from the ex-factory price within the variety.、Wholesale price comparison。To make high-end products, we must keep the brand up, either to increase the price directly, or to launch high-end products through the upgrading of product structure, otherwise就会Out of date. IfIf you want to increase the price, you should be very careful. The price should not rise too fast. If the price is upside down, it will be troublesome.，Every time the ex-factory price goes up, we have to put the wholesale price.、The terminal price is good.。Wuliangye digested for two years to solve the problem of price upside down and recovery, it is still Wuliangye as a king of the wine industry is very strong, dealers do not dare to give up dealer qualifications easily, if it is a company with poor brand power, it will be killed immediately. Many medium-and low-end brands are afraid of price transparency, because a transparent, but also can not control the flow of goods, the result is that dealers are unprofitable, immediately change to other brands, so medium-and low-grade brands are often the flag of the changing city. Maotai always makes money in the wholesale link, and in a few years Maotai dealers even make more money on a bottle of wine than the company.
The ex-factory price of Maotai is raised at most once a year, by more than ten percent, and the difference between the prices is all for the wholesale sector to earn. Why doesn't Maotai raise prices quickly? It carefully determines the ex-factory price and the terminal guidance price, which compares with the national minimum wage, saying that even poor people can afford to buy a bottle of Maotai. The wholesale price of Maotai fell sharply after 2013, but did not fall below the ex-factory price like other spirits. Now that demand is picking up, Maotai feels that dealers have suffered for three years before, so it was clear at the end of 2016 that the factory price would not be proposed in 2017, and even if the price was raised in 2018, it would only increase by 18%, leaving a good profit margin for dealers. From the point of view of long-term cooperation and honest management, Maotai has done a very good relationship between manufacturers.
The third piece of informationComparison of terminal prices among several wine brands. twenty07At the beginning of the year, the terminal price of Maotai exceeded Wuliangye.，It is an important business inflection point in Maotai.。Although the stock price of Maotai did not perform as well as Wuliangye in 2006 and 2007, this is a turning point for Maotai at the physical level. Because whether it is a gift or a banquet, consumers will have to buy whose wine is more expensive. Since then, the relationship between supply and demand in Maotai has become more and more tense, and more and more people want to buy Moutai, so the retail price of Maotai has been cut off. Since then, it has also been copied several times in history, one wave in 2007, one wave in 2011 and 2012, and now the third wave, very powerful. I discovered this pattern in 2007.The price of Maotai is on the rise.accelerate中，There is a self-reinforcing mechanism.That is, the higher the price of Maotai, many consumers can not buy it in the peak season, so they buy it in the off-season. Seeing that the price of Maotai is rising, they start hoarding, and the trend of hoarding wine begins. And the more alcohol is hoarded, the more tense the relationship between supply and demand, the higher the price of Maotai, the more appreciation, and the channels are also involved in hoarding. This is a very important self-strengthening mechanism. I wrote a report called "Forever Augustus" ten years ago. At that time, I suddenly understood Soros's reflexive theory in his book Financial Alchemy. At that time, he was talking about the credit cycle, which is actually the continuous self-strengthening process of the value of real estate and the value of collateral. I read it when I was in college 20 years ago, and I didn't understand it very well at that time. I suddenly realized it ten years ago, and when I looked back at his book, I found that it was very good, and Soros's price operation law summed up by practice deserves a Nobel Prize.
问：What is the main content of the report "Forever Augustus"?
Zhu Weihua:This 2007 reportIn fact, the study is a bigger problem, that is, asset bubbles.。We find that asset bubbles are liquidity problems, that is, there are too many currencies.。At that time, we studied the American art collection index, the Memo Index. It began to rise in the 1970s, and continued to rise when the Bretton Woods system collapsed. This is the case with the flood of global liquidity, and all assets are constantly rising. At that time, I studied a lot of bubbles, including Dutch tulip bubbles 400 years ago, bubbles in the South China Sea, and later fried Pu'er tea in China, and summed up the ten characteristics of items that are easy to form hype. One of the most important features of Chinese liquor is that the older it is, the better it is! The longer the storage time, the higher the value. Maotai himself also recognizes that for every extra year of commercial wine, dealers can sell it at an additional price of 10%. Maotai's own aged wine is also a kind of price guide, and the third-party auction price of aged Maotai liquor is a record high.
After all these things have been studied,I found that in a bubble phase, noBe able to completelyBlaming human nature is greed.的BecausePeople at that timeIs byEntangledYou have to participate.。Because you are not involved, when you do not own these assets, your property will suffer losses.。When stir-frying tulips in the Netherlands, if there are no tulips in their home, they will be regarded by others as having no taste, others do not want to associate with them, and will be excluded from the social circle. And a variety of tulips, the rarer the color, the more expensive, forcing everyone to pursue hype. You may know that one day the bubble will burst and the result will be destitute, but you have to participate at that time and can only hope that one day you can leave early.In addition,Foam也It has its bright side.，It is also a kind of resource allocation.。We found that the Dutch tulips, 400 years later, although there are not so many bubbles, tulips have become the most important agricultural product for the Netherlands, earning a lot of foreign exchange. Pu'er tea used to be the most marginal of the six major tea varieties. If it hadn't been for someone to stir it up, there would not have been so much research on Pu'er tea and a whole system.
In the face of a liquidity bubble, since we want to participateWhat we need to do well is to analyze the stage of the bubble.，Only in this way can we avoid the risk.。Pu'er tea collapsed in May 2007 against the background of abundant liquidity. I found that Pu'er tea has a ten-fold relationship between the price of new tea and old tea in ten years, which means that if you hoard a year's new tea, the new tea will appreciate by 26%, which is more than ten times the relationship in this decade. It shows that the value of old tea has been very outrageous, and a collapse may be just around the corner. At that time, it was found that the price ratio of Maotai ordinary liquor (5 years) and 15 years old was only four or five times that of ten years, which was less than a dangerous proportion, and the physical secondary trading market of Maotai liquor was not developed. In addition, we also pay attention to the absolute price and find the right bid. At that time, the retail price of ordinary Maotai was 700 yuan. We thought that Maotai was cheaper than XO, and the price of XO was 1000 yuan at that time, so when the stock price of Maotai adjusted sharply in 2008, we were still recommending Maotai. XO is now 1400 yuan, but Maotai is a little more expensive now. Anyway,Words that are not excessive.，Maotai has real consumption.，If it is too high, it will squeeze out the real demand.Well, the risk is big.
10、Fair valuation
问：Many investors invested in Maotai a long time ago, but adhering to Buffett's value investment philosophy, they thought the valuation was expensive and sold it in early 2007.
Zhu Weihua:Maotai in early 2007 dynamic 50 or 60 times PE, it is true that many people think that PE is expensive, which is very similar to the current pattern, ah, this round also has many people who hold the value of investment at 400 yuan (dynamic PE40 times) to quit. However, the concept of value investment should not be too dogmatic. We find that the price difference between the wholesale factories in Maotai is very large, and even if the ex-factory price is raised by more than 10% at a time, there is still a lot of room for price increase. Dealers have no choice when Maotai wants to raise prices. Once Maotai raises prices again (of course, Maotai will not raise prices so frequently), a lot of profits will flow in, and the price-to-earnings ratio can come down. Maotai's current performance does not reflect its price-raising ability. If we take its price-raising ability into account, the dynamic price-to-earnings ratio at the beginning of 2007 was 30 times. Considering that Maotai's performance will continue to exceed expectations, we continue to strongly recommend it. Now, if you take into account Maotai's ability to raise prices, this year's dynamic price-to-earnings ratio is just over 20 times.2007年We mentioned a word.“Fair performance"to consider the ability to raise prices.Just in 2007, when I was talking about "fair value", I borrowed it and the market recognized it very much. by the end of 2007, when the market value of Maotai reached 210 billion yuan, the price-to-earnings ratio based on financial results was as high as 77 times.
later,One model of investing in Maotai is是Don't look.它Performance而看它Changes in wholesale pricesIf wholesale prices are rising, Maotai's ability to raise prices will be enhanced; if wholesale prices are not good, Maotai's ability to raise prices will also weaken. We have to calculate these things, do not look at the statements, statements, those things are a posteriori.Keeping an eye on wholesale prices or looking at the inventory of dealers is a very important indicator for us to grasp Maotai's investment.。
问：What is the change in the wholesale price of Maotai now?
Zhu Weihua:It was 1200 yuan before the Spring Festival in 2017, fell slightly to 1100 yuan after the Spring Festival, and then quickly rose to 1300 or 1500 yuan. The company saw that the price rose too fast, increased the price limit and cracked down, increased supply in the third quarter and released the information of sufficient supply, pressing the price down to 1300 yuan for a short time, and then rebounded to 1500 yuan. Before the Spring Festival this year, the price exceeded 1600 yuan. Fortunately, it did not exceed the 2012 peak. It began to fall back a week before the Spring Festival and fell as low as 1499 yuan in March. Now the supply of goods in the off-season is still tight, and the wholesale price is rising again. The company has to vigorously limit the price.
问：Maotai investment model can be so simplified, is there any exception?
Zhu Weihua:There are exceptions to everything, and no experience can be dogmatic. The latest round is very similar to the 2007 round, but the 2012 one is not very applicable. During the Spring Festival in 2012, when the wholesale price of Maotai reached 1800 yuan, the market value of Maotai rose back to the range of 2000-220 billion yuan again from the trough at the end of 2008, with a price-to-earnings ratio of only 25 times earnings in 2011, not to mention my "fair price-to-earnings ratio". In January 2012, I was invited by Moutai magazine "drunken of the World" to write "Guizhou Moutai: one drunk in a decade" to continue to recommend. After that, despite the sharp fall in wholesale prices and the signals of three public consumption restrictions at the two sessions in 2012, a group of businessmen are still very willing to buy and hoard goods, first, they have made huge profits and abundant funds, and second, banks are also providing funds to dealers. Maotai's sales are still very strong, and the stock price continues to climb driven by good performance, with a market capitalization of 270 billion yuan in the third quarter of 2012 and a dynamic price-to-earnings ratio of only 20 times 2012 results. So we do not use the downward pricing model to guide investment advice. However, under the influence of the eight rules, there has been a substantial adjustment in the liquor sector in 2013, although we believe that even if the official business demand of Maotai has dropped sharply, Maotai can still ensure the positive growth of income and profits by increasing first-class dealers in the county. In the end, Maotai really did it, but it still could not stop the de-valuation behavior of the market, and Maotai's stock price was halved again as in the 2008 round. The lowest price-to-earnings ratio is less than 10 times.
问：Is it the higher the wholesale price, the better?
Zhu Weihua: no, the wholesale price should not rise too fast. If it rises too fast, it will stimulate more hoarding. There will be negative feedback risk in the future, and it is best to go up slowly. At this point, the leaders of Maotai Company are still very rational. At present,It's already the third in history.轮The limit on the price of wine is high.。In fact, it is very difficult to limit the price of Maotai liquor, because there is a market-oriented mechanism, and the high limit is also very controversial. There is a private equity Mr. Dong Baozhen, who is very insightful. At the beginning of last year, he strongly recommended that Maotai leaders should limit high and increase e-commerce sales. I also strongly support his suggestion that Maotai must limit high, because this is the need of the hearts and minds of the people and social responsibility. Maotai should increase e-commerce sales because e-commerce prices are transparent. As a matter of fact, the method of limiting the height of Maotai is very tough. It has an inspection team to inspect the market and find out which price at the terminal exceeds the price limit, check to the dealer through the number, and inform the dealer to buy it back. But then it didn't work. It was out of stock everywhere, and it didn't work. Maotai will directly check the dealer's account, and the dealer will do two books, or engage in tying. Maotai still checked a lot of dealers who hoarded Juqi or sold at high prices, and made a lot of punishments, ranging from reducing the volume of later plans to directly disqualifying dealers.
Most importantly, MaotaiThe third quarter of last yearMake a very innovative proposal to letThe dealer gives 30% of the planned amount per month.，Put inOfficial website of Maotai Cloud Merchants and APPPress on the platform限价SellReduce offline opaque price transactions, some can be delivered to your door, and some have to be picked upMaotai has virtually realized what many enterprises dream of.O2O mode.However, buying alcohol online has to be limited to each person because of the great demand, and it is regarded as the same person as ID, bank card, phone number, delivery address and consignee. Now it is usually on the shelves at 10:00 in the morning, and it will be emptied very quickly. Maotai this move, including a large amount in advance, Maotai dealers have a great shock, dealers hoarding a lot of goods.
图14Screenshot of Maotai Cloud Merchant
Source: research on APP and China Merchants of Maotai Cloud Merchants
After Maotai raised its ex-factory price by 18% in 2018, it also raised the terminal guidance price by 200 yuan to 1499 yuan, and asked dealers to come up with 40% of the annual planned volume to sell on cloud merchants. Maotai has gradually increased the proportion of online sales and made a steady progress. In the next step, we hope that the company can increase publicity to make the wine purchase channel of Maotai cloud merchant APP more widely known, so that the slogan "buy Maotai, go to Maotai cloud merchant" can go deep into the minds of consumers.
11、Stick to
问：What are the other factors for Maotai's success, apart from the good endowment and the improving economic situation?
Zhu Weihua:There are also many commendable aspects of Maotai management for many years of diligence and continuous progress. For example, they have always adhered to the quality constitution of "upholding the principle, adhering to the craft, storing enough aged wine, and not selling new wine". Always abide by the "four integrity": quality integrity, management integrity, price integrity, promotion integrity, around the brand positioning of "national liquor Maotai, brewing high-grade life" Gradually summarize and stick to the "nine marketing systems" up to now: engineering marketing, cultural marketing, event marketing, service marketing, network marketing, emotional marketing, integrity marketing, personality marketing and wisdom marketing, all these have forged the cultural cornerstone of Maotai.
图15National wineMoutai，Brewing high-grade life
Source: Maotai official website, China Merchants Research
The construction of Maotai channel is also remarkable. There are more and more monopoly stores in Maotai, so that consumers can buy real Maotai through better channels. The leaders of Maotai Company are also very diligent and often visit and develop group customers in person. At the same time, in order to meet the needs of the vast number of new dealers, Maotai is not only independent of the increment every year, but also has to be re-divided by 20% of the large dealers in some years. This flattening has gradually increased the breadth and depth of the market of Maotai sales. Although the big dealers are somewhat unwilling, the price gap between the wholesale factories has widened by more than 20% every year, and they have made a lot of money. In fact, Maotai is very kind to dealers, not only making them a lot of money, but also organizing the second generation of dealers to learn Maotai culture and inherit it. Dong Guangyang was invited to train them on how to view Maotai in the capital market.
图16The proportion of sales and the number of sales personnel of the top five dealers in Moutai, Guizhou
Source: Maotai Financial report, China Merchants Research. Note: we have made adjustments to the rise of Lianfang Maotai e-commerce company in 2016 / 2017.
问：The chairman of Maotai has just been replaced. What do you think of the new team?
Zhu Weihua:Li Baofang, the new chairman, has been working in Maotai as secretary of the party committee and general manager of Maotai Group for nearly three years. He inspects the front line of production and market, discusses with dealers at home and abroad, and has established an exchange of visits with Wululangjian and many other competitors. on the one hand, he inherits the management concept of Chairman Yuan Renguo's "grasping quality and controlling price" and Maotai's management culture that has been precipitated for decades. On the other hand, to cut down ineffective brands and focus on the main products, the sales of Maotai series soared to 30, 000 tons last year, which was on a par with Maotai, with an income of 6.5 billion yuan and a profit of 400 million yuan. it has greatly expanded the market coverage and consumer groups. It can be said that the new chairman's strategic thinking is very clear and the action force is very strong.
12、an exquisite scenery
图17Guizhou Moutai stock price trend chart(reinstatement before 2001-2018)
Source: China Merchants market system
问：After a weak 2013, Maotai has increased tenfold since 2014, and the target price in your report has also been raised constantly and very frequently. Is it due to the passive behavior of the stock price after the rise, or is it adjusted actively because of new research findings?
Zhu Weihua:First of all, it is Dong Guangyang and Yang Yongsheng who have been leading the team in the past five years. Dong Guangyang joined my team after graduating with a master's degree in 2008 and went to UBS Securities for one year. I handed over the stick to him soon after the return, and I was more responsible for internal and external research and training. At the beginning of 2013, Dong Guangyang officially succeeded me as the chief investment promotion food and beverage. He is an authentic food major with a strong strength. The whole liquor industry was depressed in 2013, but Yili began to release profits at the end of dairy consolidation, and Dong Guangyang seized the investment opportunity in Yili. At the beginning of 2014, the team added another strength player, Yang Yongsheng, who also has rich experience in consumer goods research, especially food and beverage. Dong Guangyang and Yang Yongsheng are very excellent teams. they are not only very meticulous in fundamental research, they can carefully grasp the volume and price data of each item of key listed companies, but also accumulate a wide range of industry and dealer resources. they can quickly collect the wholesale price data of several famous wines in dozens of key cities across the country, and more importantly, they also make suggestions to listed companies in various ways. Strive to achieve value creation. The team ranked higher and higher, winning the first place of the new wealth in 2015, 2016 and 2017 in a row. At the beginning of this year, in order to find a new career development space, Dong Guangyang moved to Huachuang Securities as the director of the research institute, while Yang Yongsheng served as the chief of investment, food and beverage, and continued to lead the team forward.
Next, I would like to talk about the process of Dong Guangyang / Yang Yongsheng team recommending Maotai. In the first stage, in the 2014 / 2015 bull market, spirits entered a period of valuation repair. Maotai was stimulated by factors such as the opening of the Shanghai-Hong Kong Stock Connect and the verification of revenue and profit growth, and the valuation was restored to the 2012 high. In the second stage, the study at the beginning of 2016 found that the mobile sales of Maotai improved, and the valuation after considering the encashment of advance receipts was already very cheap; as expected, the wholesale prices rose significantly in the second half of the year, and the accounts received in advance also increased month-on-month. After that, we think that the wholesale price will only be adjusted briefly before and after the Spring Festival last year, and it will continue to rise, and the relationship between supply and demand of Maotai will continue to be tense. at these times, we frequently raise the target price because the price of Maotai continues to rise and the performance of Maotai continues to exceed expectations. In the third stage, starting from the second half of last year, our target price increase was slightly cautious. Although all the positive factors mentioned just now still exist, we have slowed down the pace of raising the target price, becauseIn our hearts, we do not want Maotai's share price to rise too fast, only by rising slowly can the stock price last for a long time.Buffett probably means that he doesn't want the stock price to rise too fast, so he has to decide whether to sell or not, and what can he buy after selling?
问：Now some people argue that the market capitalization of Moutai should not be so large, and it does not represent advanced productive forces.
Zhu Weihua:Maotai's market capitalization ranking is not Maotai's fault. We certainly hope that the market capitalization of those high-end manufacturing and high-tech companies that represent advanced productive forces can grow, but this should not belittle Maotai. Maotai should be regarded as excellent productivity. Input-output ratio and gross profit margin are rarely comparable in A-shares.I think Maotai has three major contributions: first, Maotai makes a great contribution to the capital market.Not only does it bring more than a hundred times the return on capital appreciation for investors, but it only raises 2.2 billion yuan at IPO, while the cumulative dividend for more than a decade (plus the one to be shared this year) will reach 57.5 billion yuan.Second, Maotai makes a great contribution to the economy of Guizhou Province.Over the past 20 years from 1998 to 2017, Maotai achieved a cumulative sales income of more than 380 billion yuan, profits and taxes of more than 290 billion yuan, taxes of more than 140 billion yuan and profits of more than 190 billion yuan, which contributed a lot to the breakthrough of trillion yuan in Guizhou Province. Not only that, Maotai also actively helped many poor and backward counties and townships in Guizhou Province to develop their industrial economy, and at the same time, they were also prepared to help the poverty alleviation work of Zhenxiong County, the birthplace of the Chishui River, in Yunnan Province.Third, Maotai will go abroad on a large scale in the future.、Earning foreign exchange through exportA few decades ago, when the country was in a shortage of foreign exchange, it also pointed out that it was worth exporting 1 ton of Maotai for several tons of steel, but now there is no need to change steel. Is it cost-effective to export 1 bottle of Maotai back to 2 barrels of crude oil? At present, the export volume of Maotai is only one thousand tons, and export will be an important way when the relationship between domestic supply and demand relaxes in the future.
Fig. 18 A bottle of Maotai can be exchanged for about two barrels of crude oil.
Source: China Merchants study
13、Where is the road?
问：Looking to the future, where are the market opportunities for Maotai?
Zhu Weihua:After the three public consumption restrictions in 2012, the demand of Maotai shrank significantly, but still maintained the growth of sales and profits. How did it do that? The first is to continue to develop the group purchase demand of group buying customers, especially private enterprises, the second is to expand the private consumption of high net worth people, the third is to expand the sales area, increase the development of county-level dealers, and compress the sales level. fourth, it has improved the anti-counterfeiting technology and asked for more market space for fake wine. The above work can be continued. For example, at present, Maotai only covers all prefecture-level cities and 30% of counties, and there is still a lot of room for regional expansion in the future.
Investment collection is a very important attribute of Maotai liquor, but it is also a headache to distinguish between true and false in second-hand trading. How can we open up the situation of the secondary market? The revival of the secondary market will also drive the sales of Maotai liquor. At present, there are some third-party liquor exchanges operating, but creditworthiness needs to be endorsed by large organizations. Maotai's anti-counterfeiting traceability system is a good tool, but it has also been revealed that hackers hacked into the server and illegally added hundreds of thousands of tags in 2016. Not long ago, Tencent visited Maotai to explore the method of block chain for anti-counterfeiting and alcohol circulation, which is also a very good angle. Of course, we should also realize that if the secondary market is too active, the market is full of wine hoarders, not consumers, which is not very good for the future development of Maotai, and everything must have a limit.
Another space lies in internationalization, the aforementioned export demand, which is shown in "Wolf Warriors II". In the future, with the continuous spread of Chinese culture overseas, I believe that in the near future, the presidents of Asia, Africa and Latin America will be proud of drinking Maotai. Although they find it strange and unaccustomed to it at first, they will become more and more addictive when they are used to it. They then act as opinion leaders to stimulate consumption in various countries, but it takes time to open up the market and will not be achieved overnight. At present, the most critical problem is that the company does not have much wine to support the development of overseas markets.
问：For the nearly trillion market capitalization of Maotai stock price, what do you think of the future?
Zhu Weihua:How much is the target price? please pay more attention to our report by Yang Yongsheng.Maotai performance is growing steadily, the valuation is not expensive, it is a value stock, long-term investors can continue to hold, investors who want to make quick money do not have to participate.
Of course, we should always be vigilant on the issue of risk, and don't get carried away when anything is successful. The biggest risk of Maotai is that wholesale prices rise too fast. although the increase in wholesale prices is very positive to short-term stock prices, if it is too high, it will bring great risk of callback. We can see that the executives of Maotai Company are very sober. Very conscientious limit to suppress wholesale prices, they do not want to achieve and satisfied, but as if they are in the face of an archenemy and treading on thin ice, it is not easy to cross the minefield this Spring Festival, which depends on next year's Spring Festival.
The second risk is to build a big tree and attract the wind. When Maotai soared last year, we found that there were a lot of unfriendly voices and unobjective statements about Maotai in public opinion. In November last year, Xinhuanet published an article calling on investors to invest rationally in Maotai. However, some of the media immediately used the title of state media to bombard Maotai. In fact, on the one hand, the article of Xinhuanet fully affirms the efforts of Guizhou Moutai at the operational level, especially the measures to limit prices, and on the other hand, it exhorts investors not to act too hastily on the stock price, which is consistent with our hope that Moutai will rise slowly. the text is sincere and earnest, and it is worth our study. Maotai has been adjusted in the first half of this year, and public opinion is still positive. The third risk is the risk of tightening of global liquidity, geopolitics, trade war between China and the United States, such as higher interest rates in the United States, appreciation of the US dollar, and domestic imported inflation caused by rising oil prices. If China has to raise interest rates, it will have an adverse impact on many industries, including high-end consumption, which is the most vigilant risk at present. If this happens, I judge that the performance of Maotai will not be greatly affected, but the valuation will be affected to a certain extent. The fourth risk is that the growth rate of Maotai is too large, which leads to a downward valuation, and if the external environment can remain in its current state, we judge that the supply and demand of Maotai will be in a tight balance until 2020. In this way, there is room for Maotai to raise prices, and the performance growth rate is commensurate with the current valuation level, so there is no need to worry about this risk.
问：If there are great changes in the external environment, can Maotai be left alone and its performance not greatly affected?
Zhu Weihua:The protective pad of Maotai is very thick and the reservoir is very large. Protective pad is the wholesale factory price difference in Maotai, the demand is not good, the wholesale price goes down, but it is not easy to break through the ex-factory price and hang upside down. Maotai wholesalers make a lot of money, have strong capital reserves, and will not cry a big sale. There are two cisterns, one is more than 10 billion yuan in advance accounts, and the other is zodiac wine.
14、Longchang enlightens the way
问：Looking back on the trillion yuan market capitalization of Maotai, what research experience do you most want to tell investors?
Zhu Weihua:Let's sum up a few points.
First, you must fully understand the consumer psychology of these consumer goods and markets, as well as the psychology of investors. Sometimes there will be some differences in expectations, such as the strange taste of wine that I mentioned earlier. Through our research, we believe that these problems will change with time and the growth of wine sales, and further become an advantage. In fact, consumers value the price most, and those with high prices have more face, so we should fully understand such deviations and the time it takes to reverse them. Including investment psychology, we need to understand whether investors fully understand the potential of Maotai. If there is a difference in expectation, it will be more obvious.
Second, we must pay attention to the key points and logic in research and investment.Great logic is the prosperity of high-end wine.度And the prosperity of the economyHeight ofRelated problems。In the past, we may pay more attention to some overall investment growth, but now we also look at some changes in industrial upgrading and consumption upgrading, but in any case, liquidity is a very important reason. Here we imply the factor of enterprise management level, we see that the management of the vast majority of liquor companies are very diligent and dedicated, otherwise they will not be able to achieve these annual income and profits have increased many times. Maotai is very strong, its competitors Wuliangye, Luzhou laojiao and other management team is also very excellent, strong in order to stimulate the potential of the master.
Third, many investors focus on financial reports, performance, valuation, or the extent of ex-factory prices raised by Maotai. I say these things are all a posteriori.All you have to do is watchThree points, one is to grasp the wholesale price的Change. Look.Ex-factory price increaseAbility and spaceSecond,Look at the changes of accounts received in advanceThe third is Shengxiao wine and other good factors.
The fourth is also very important. When stock prices soar, we must pay attention to some risks. Several risk monitoring points have already mentioned, why is there a risk? It is because there is a self-strengthening mechanism of rising wine prices and hoarding demand, which is a double-edged sword. Hoarding leads to a sharp rise and fall in demand in the future, which needs to be actively prevented by the company.
Finally, it should be noted that experience can not be persistent, flexibility is the way to success.
图19 Comparison of the Market value of six Liquors(2006-2018, unit: 100 million yuan)
Source: WIND, China Merchants research
In addition, I would also like to take this opportunity to express my gratitude to Maotai. It should be said that I am very lucky to meet Maotai, an excellent company. Some of my research contributions today are largely due to the light of Maotai. I am grateful to Maotai.
Along the way, I also got the help of many teachers, colleagues and friends, including the careful instruction of many leaders and dealers of listed companies, such as Mao Wuli. Cheng Guofa, Chen Wentao, Wu Zhanfeng, Sun Huaiyu, Zhao Jianxing and other leading colleagues helped me with Maotai's initial investment advice, Yang Hongyu, Kunming colleague, Wang GE, Duan Pengcheng, Zou Yi and more than 100 buyer friends. There is also the sincere cooperation of the investment promotion food and beverage teams Yang Yongsheng, Li Xiaozheng, Ouyang Yu, Yu Jiaqi, Li Zeming, as well as Dong Guangyang, Huang Jun, long Jun and Wang Han of the earlier team.
Finally, I would like to give special thanks to New Fortune. Your analyst evaluation activity is a discovery of the value of sell-side analysts in China, which has made a great contribution to the development and growth of the analyst industry. Thank you!
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