Key points Last week, we went to the company headquarters to communicate with core management. Compared with last year, the company's strategy is more active and clear, and our confidence in future development has greatly increased. At the same time, we conducted a follow-up survey on liquor sales in cities and counties in northern Anhui. The core information is as follows: 1. The company clearly focuses its strategy on sub-high-end prices. The annual puree brand will focus on building an independent high-end sub-brand position and gradually exit the 100 yuan price band. Continue to expand the production capacity and storage cycle of raw wine, and improve the supply and quality of sub-high-end wine. Marketing resources and assessment indicators have been refined to different products, and the next high-end is a top priority. In the future, the vintage puree brand will clearly position itself at a price of 300 to 1000 yuan to increase brand strength. 2. The cost is implemented to the terminal, and the efficiency has improved significantly. The company began to rely on terminals for consumer development. The marketing plan was planned, executed, and verified on a monthly basis, and expenses were directly implemented to the terminal, forming a marketing model similar to the core terminal of Shuijingfang. Direct cost promotion for channels has been drastically reduced, and efficiency has improved markedly. 3. The upgrading of liquor consumption in the province is unstoppable. The price of 100 yuan for everyday drinking in cities and counties has become very common, and business and banquets have rapidly upgraded to the next high-end price. More and more township holiday banquets are choosing the price of 100 yuan, or even 200 to 400 yuan. The high-priced and rapidly expanding Anhui market also attracted Yanghe, Laojiao, and Jiannanchun, and generally increased marketing investment in '17. Company opinion update: The sub-premium price level has driven the company's overall revenue to continue to grow at an accelerated pace for 18 years. The second-high-end vintage puree brand, scale and management advantages are clear, and enjoy the upgrading of consumption in the province. The growth rate is expected to be 51% in 2018, reaching 1.8 billion yuan, driving the annual revenue growth to 19.2%. The price level of 80 to 200 yuan continues to deeply grasp the upgrading of a large number of medium- and low-grade alcohol consumption in the region, and can maintain a steady increase of 10-13%. The decline in the expense ratio is sustainable, and profits are quickly released. The scale advantage brought about by the structural upgrade and the change in the cost investment model. It is certain that the sales expense ratio will be reduced by 1.5 to 2ppt per year for the next three years. Profits will enter a period of rapid release, and the growth rate will remain above 30%. It is proposed to increase 2017/18 revenue by 3.1%/4.8% to $83/98 billion, and net profit by 4.5%/5.7% to $1,57/2.09 billion. The increase in the 12-month target price by 25.3% to 112.3 yuan is mainly due to the increase in profit forecasts and the valuation increase brought about by the accelerated growth of the lower high-end. The target price corresponds to 36/27x P/E in 18/19, and the current price corresponds to 27/20xP/E in 18/19, which is 34% of the target price. Risk that short-term price increases too fast will depress demand.