The price of the eighth-generation Wuliangye increased by 50 yuan, and the factory price entered the era of 1,000 yuan. Starting February 5, '24, the factory price of the company's core single product, the eighth-generation Wuliangye, will be raised from 969 yuan/bottle to 1,019 yuan/bottle, increasing the price by 50 yuan, an increase of 5%, leading the factory price of the main strong flavor products into the 1,000 yuan era. The last time the company raised its price was at the end of '21, raising the factory price from 889 yuan to 969 yuan, an increase of 9%. Previously, Feitian Moutai had taken the lead in raising factory prices to open up room for price increases for high-end liquor. This time, Wuliangye's price increase policy is steady, further clarifying the price increase trend for high-end liquor. In the short term, the window before the Spring Festival price increase will increase the willingness of dealers to pay and purchase goods, and seize channel resources during the peak season. At the same time, it will raise market value-added expectations and enhance social consumers' sense of experience. In the long term, it helps Wuliangye to optimize the product price system and volume-price relationship, and promote brand value improvement in all aspects.
The Group successfully concluded in '23, and strengthened the integrated construction of manufacturers in '24. On January 28, '24, at the 23-year work summary meeting of the 4th Council of the Sichuan Brewers Association, Yang Yunxia, chief engineer of Wuliangye Co., Ltd., said that in '23, Wuliangye Group achieved sales revenue of 177.098 billion yuan, an increase of 13.89% year on year; achieved total profit of 42,579 billion yuan, an increase of 14.13% year on year. The Group achieved double-digit growth in both revenue and profit, and successfully concluded 2023. Earlier, at the 27th Wuliangye 12·18 Joint Construction and Sharing Conference in December 23, Chairman Zeng Congqin proposed that in '24, Wuliangye will focus on improving brand value, continue to strengthen quality brands, consumer cultivation, and channel profits, and emphasized that in '24, Wuliangye should strengthen integrated manufacturer construction to truly achieve joint discussion, co-construction and sharing for Wuliangye's development. It is expected that the company's channel profits will be optimized in 24 years, while prices will quickly return to a reasonable return to brand value.
The Spring Festival sales can be expected, and it is expected to have a good start. Currently, favorable macroeconomic policies are frequent. It is expected that the Spring Festival in '24 will release part of the backlog of demand for gifts and banquets in scenes such as last year's Mid-Autumn Festival. The company's core product, Pu Wu, is representative of the strong fragrance at a price of 1,000 yuan, and there is still strong demand in the banquet and gift scene. Combining price increases to enhance end consumers' perception of the brand's high value power, as well as channel and terminal demands for high turnover, it is expected that Wuliangye can be expected to sell well during the Spring Festival this year, and it is expected to usher in a good start.
According to the company's summary meeting disclosure and actual price increase policy, operating income and gross profit margin were slightly lowered. We forecast the company's earnings per share for 2023-2025 to be 7.67, 8.54, and 9.78 yuan, respectively (the original forecast was 7.86, 8.95, and 10.16 yuan). Combined with comparable companies, we believe that the current reasonable valuation level of the company is 20 times the price-earnings ratio of 2023, and the corresponding target price is 153.40 yuan, maintaining the purchase rating.
Risk warning:
Economic recovery falls short of expectations, weakening channel profits, falling short of expectations, risk of food safety accidents