Incident: On January 12, 2024, the company issued an announcement stating that due to the increase in production and operation costs, the company's Niulanshan Distillery plans to adjust the prices of four types of Niulanshan aged wines: 42°125ml, 42°500ml, and 52°500ml. Each box will increase by 6 yuan. This price adjustment will be implemented from February 1, 2024.
The price system for main products has been adjusted again, and the basic market of the liquor business is stable and is expected to increase the company's revenue and profit levels.
This price increase is the fourth time in nearly 2 years that the Niulanshan brand has raised prices. Previously, starting in January 2022, May 2022, and January 2023, the price system was adjusted for the Centennial Niulanshan series, overall fresh/strong flavored liquor, and the Niulanshan Aged Series products, and the pace of price increases continued to exceed expectations. This price increase mainly focuses on the main product, white beef 2 and the main low-grade products in the aged wine series. It has a broad consumption base and coverage throughout the country, and the price increase is expected to smoothly implement and increase the company's revenue and performance level in 24 years.
Based on strong product strength and brand potential, the price increase of the aging series + gold label leads the structural improvement of two-wheel drive upgrades. The brand advantage that Niulanshan has accumulated over a long period of time in the light-bottled wine market has built a moat. In recent years, continuous price increases have been shown in market terminals. Since the launch of the upgraded product Gold Standard Aging in May '22, the price of tonnes of wine has continued to rise, gross profit levels have also improved, and the main line of product matrix structural improvement is clear. In '23, the company actively launched the “Golden Standard Cow Fireworks Restaurant” ranking from top to bottom. Currently, it has been promoted and launched in 6 cities, further deepening the catering channel channel, increasing brand awareness and the speed of delivery of the Gold Standard. It is expected that it will gradually cultivate and develop into another major product other than White Niu 2.
Real estate divestment focuses on the main business, and management improvements can be expected under multiple measures. We believe that the company's state-owned enterprise reform and market-based operations continue to advance. In the countercyclical context of pig price cycle pressure and weak recovery in consumer demand, we are still focusing on structural upgrading and optimization and divestment of non-white businesses, and the long-term thinking is clear. Specifically: In terms of real estate business, the Shunxin Jiayu property rights transfer transaction was officially completed in December '23 to achieve real estate divestment. Starting in '24, real estate disposal will no longer have an impact on the company's statements, hoping to effectively relieve profit-side pressure, and financial expenses are expected to be reduced; the pork business will continue to optimize the business model to focus on “breeding and sales” at the front end of the pork industry chain and “deep processing” and “cooked food” at the back end of the industry chain to raise the profit level of the pork sector; the strategic importance of the main liquor business is highlighted, and structural upgrades continue to advance, and white beef 2 Release the long line under the Golden Standard Bull two-wheel drive Growth momentum.
Profit prediction and investment advice: We believe that the joint drive of real estate business divestment+price increase and structural upgrading shows the company's strategic layout and determination to focus on the main business. Under the K-type recovery favorable light bottle track+real estate divestment and pork business optimization+gold label leading the upgrade to a second growth, the company can expect upward space at the bottom of the company. We expect the company's revenue for 2023-2025 to be 117.25/129.35/14.214 billion yuan, respectively, +0.4%/+10.3%/+9.9% year-on-year, and net profit to mother of -0.54/7.51/1,112 billion yuan, respectively, corresponding to the 24-25 PE 20/13X, respectively, maintaining the “recommended” rating.
Risk warning: macroeconomic downside risk; industry competition increases risk; new product promotion falls short of expectations, etc.