Company news

The company's recent situation

From June 12 to June 13, company executives increased their holdings of the company's shares through centralized bidding transactions. On June 19, the company held an investor exchange event. The management introduced Shaoxing rice wine culture and the company's recent situation, and exchanged views with investors.

reviews

The company enhances product ASP and expands sales through the path of high-end, nationalization, and rejuvenation. High-end: The company continues to promote high-end on the basis of maintaining good quality of food rations and liquors with a price range of around 25 yuan, with gold five years as the key product. In 2022, green jade became the company's largest high-end product, reaching 20,000 boxes in volume, and the target for 2023 was 40,000 boxes. The company expects high-end sales to grow by more than double digits in 2023 (terminal price over 100 yuan, year over 10 years). Rejuvenation: The company uses daughter red products as a starting point to expand new groups by enhancing product value, developing new flavors, and innovating marketing methods (launching Longshan restaurants, experience centers, etc.). According to Douyin's live streaming data, people aged 25-45 accounted for 60% of the company's consumer portraits in 2023. Nationalization: The company's sales outside of Jiangsu, Zhejiang, and Shanghai accounted for 23.98%/30.24%/31.77/ 34.67%/36.94% of sales in 2018-22, respectively. The nationalization process was ahead of the industry.

Based on the good trend of the company's development and full confidence in future development, company executives increased their shareholding.

In recent years, the overall performance of the rice wine industry has been sluggish. As a leader in rice wine, the company hopes to enhance its confidence in rice wine by taking the lead in increasing shares, leading the development of the industry, and boosting market confidence.

Looking at the long term, the trend of high-end industry has been determined, and the overall development of the company is improving. The company's revenue declined in the first quarter, mainly due to accounting adjustments (sales rebate scale adjustments), and product price increases in the same period last year, which caused dealers to pay and receive goods ahead of schedule. After considering the above factors, the company's performance has returned to pre-pandemic levels. Looking ahead, although the company is facing practical problems such as pressure on consumption power, the industry falling into a downward spiral of declining industry scale, and lack of consumer awareness, the company's high-end confidence is firm and its operation is focused, and industry consensus has been formed (Huijishan launched Lanting Group, Pagai launched this wine, etc.), and the overall positive trend is clear.

Profit forecasting and valuation

We maintain the company's 2023-24 profit forecast of 230/302 million yuan, maintain a target price of 10.4 yuan, corresponding to 2023/24 41.2/31.3x P/E, and the current stock price corresponds to 2023/24 42.6/32.4xP/E, with room for -3.3%, maintaining a neutral rating.

risks

Other types of alcohol are seizing rice wine market share; high-end competition intensifies; food safety.