The performance in 2021 is higher than we expected.
The company released its 2021 results: revenue / sales / home net profit increased by 21.2% with 6.9% of the same rate of increase; gross profit margin reached 36.0%. 4Q21's revenue / return net profit increased by 8.4%, which was higher than we expected, mainly due to the increase in sales in 21 years.
Trend of development
The company continues to focus on large single product strategy, adhere to high-end product leadership. The company develops the three high-end series markets of "national brew, good wine, blue and white drunk", trying to strengthen the high end, strengthen the waist, stabilize mass products, and create brand cluster advantages. In 21 years, the company's revenue of medium-and high-grade wine / ordinary wine / glass products and other products reached 11.0 billion yuan, with an increase of 27.4 percent, 2.4 percent, and 136.6 percent, achieving a faster growth rate. In the middle of 21 years, the sales of high-end wine / ordinary wine reached 49,000 tons, an increase of 12.4% and 3.5%, and the optimization of product structure improved significantly.
Under the trend of low alcohol development, channel layout and healthy drinking, the regional bondage is expected to be broken. The production and consumption of yellow rice wine are mainly concentrated in Jiangsu, Zhejiang and Shanghai regions. In recent years, consumer education has created an atmosphere for yellow rice wine consumption, laying channels outside the province under differential competition, and breakthroughs have been made in the surrounding non-traditional areas. In the past 21 years, direct sales (including group buying) / wholesale agents / international sales channels achieved revenue of 3.35 billion yuan, 10.7% year-on-year, and sales revenue outside Jiangsu, Zhejiang and Shanghai reached 520 million yuan, accounting for 34.7%, an increase in 2.9ppt compared with the same period last year. Under direct sales, group purchase customization, e-commerce, major customers +, cross-border cooperation and other sales models, we expect the company's nationalization process is expected to gradually speed up.
Under the rising cost of raw materials and labor, the consumption pressure of yellow rice wine category in the past 22 years is greater. The epidemic situation has been repeated in the past 22 years. Shanghai, as a relatively important yellow rice wine market, has been greatly affected, and the overall consumption trend is still in the process of slow recovery. The company will implement the product price adjustment plan disclosed in the previous announcement for 22 years. The price of blue and white drunk series will be increased by 10-20%, pure (alcohol) series by 4.65-12%, storage series by 5-15%, fruit wine and other products by 5-20%. We expect that a larger price increase and product coverage will help to improve the overall ASP and hedge some of the cost-side pressure.
Profit forecast and valuation
Due to the better-than-expected performance of the company and the recovery of yellow rice wine in 2021, we raised our profit forecast for 2022 by 19.0% to 270 million yuan, and introduced a profit forecast of 380 million yuan for the first time. Maintain the target price of 11.33 yuan, the target price corresponds to 2022 38/28xPE 23, and the current share price corresponds to 2022 33/24xPE. The current stock price has 15.0% upward space compared to the target price, maintaining a neutral rating.
Risk.
The epidemic repeatedly affected the scene of alcohol consumption; other kinds of wine launched aggressively and continued to seize the market share of yellow rice wine; high-end competition intensified; food safety.
