Oriental brewing is a typical representative, and the concentration of the industry has increased steadily. Yellow rice wine is one of the three ancient wines in the world. Because of its low alcohol content and high nutrition, yellow rice wine has both drinking, medicine and cooking functions. From 2016 to 2021, the operating income of China's large-scale yellow rice wine enterprises decreased from 19.82 billion yuan to 12.72 billion yuan, with a CAGR of-8.5% during the period, showing an overall downward trend; the total profit decreased from 1.86 billion yuan to 1.67 billion yuan, and the CAGR was-2.1% during the period. Affected by traditional habits, the production and consumption of yellow rice wine are mainly concentrated in Jiangsu, Zhejiang and Shanghai, and there is also a certain foundation in Shandong, Shanxi, Shaanxi, Southwest, Northeast and other places. At present, the consumption of yellow rice wine still needs to be further guided and cultivated to improve the total amount of the market. In 2021, the revenue of listed yellow rice wine enterprises increased by 8.9pct to 27.3% compared with 2016, and the total profit increased by 10.4pct to 28.2% compared with 2016.
The company has been in a leading position in the industry for many years, and the product structure before the epidemic is optimized and effective. The company's main brands are Guyue Longshan, Nuerhong, Zhonghong, Shen Yonghe, Jianhu Brand and so on. From 2016 to 2019, the company's product structure was continuously optimized, its revenue increased from 1.54 billion yuan to 1.76 billion yuan, its net profit increased from 120 million yuan to 210 million yuan, the proportion of medium and high-grade alcohol sales increased by 5.2pct to 43.7%, the proportion of revenue increased to 69.5%, and the company's overall gross profit margin increased by 6.2pct to 42.3%. Since 2020, the company has been affected by the epidemic, and its revenue performance has both declined. in 2021, the company insisted on streamlining products and upward structure, and revenue from medium-and high-grade and ordinary products recovered to 91.1% and 78.4% respectively in 2019, and the volume and price of medium-and high-grade products rebounded faster than that of ordinary yellow rice wine.
The reserve of raw wine lays the foundation for long-term high-quality development. High-quality raw wine is the basis for the production of high-end yellow rice wine, but the aging of raw wine takes a long time, so the raw rice wine is scarce, and it is also the foundation to enhance the value of yellow rice wine industry. The company has the country's largest yellow rice wine brewing base, the largest yellow rice wine warehouse and the largest yellow rice wine museum, the existing aged yellow rice wine has reached 288000 tons. As the brewing output of yellow rice wine is close to the upper limit of 140000 tons in recent years, the company actively promotes the construction of the "Yellow Rice Wine Industrial Park (Phase I) Project" to expand the brewing capacity, while also improving the level of production technology and equipment and automatic control. for the future quality upgrading, cost reduction and efficiency.
Break through the regional and pricing restrictions and shoulder the important task of reviving yellow rice wine. On the product side, create high-quality yellow rice wine, develop three high-end series of "national brew 1959", "good wine does not go to the head" and "blue and white drunk", and at the same time strengthen the design and promotion of gift wine, customized wine and commemorative wine with the help of various large-scale activities. On the channel side, the company solidly promotes digital reform, implements the concept of win-win cooperation among manufacturers, further enhances the strength of the sales team, speeds up the mobile sales frequency of mature markets in Jiangsu, Zhejiang and Shanghai, and strengthens the cultivation of peripheral markets such as the north. On the brand side, the company has successfully become a designated supplier of yellow rice wine such as the China Pavilion of the Dubai World Expo and the 19th Asian Games, strengthening the promotion of high-end people and business people. At a time when domestic culture is prevailing, expand new category experience, attract consumers' attention and recognition of yellow rice wine culture with national tide classics, and promote brand rejuvenation and upgrading with the help of new retail models such as "Internet +".
Investment advice and profit forecast. We estimate that the revenue of the company in 2022-2024 will be 1.62 billion yuan respectively, and the net profit of homing in 2022-2024 will be 2.2 billion yuan and 2.7 billion yuan respectively. The predicted value of BVPS in 2022 is 6.0yuan, and the average PB of comparable companies in 2022 is 5 times. Considering that the company's performance is greatly disturbed by the epidemic in the short term, and the category value of yellow rice wine is still seriously undervalued, Guyue Longshan was given a 2.5x PB in 2022, corresponding to a target price of 15 yuan, and was given a "better than big city" rating for the first time.
Risk hint: intensified competition in the industry, epidemic situation affecting demand, cost control risk
