Description of the event
Since 2023, Wuliangye has improved both internally and externally, and the marketing implementation year has focused on increasing Wuliangye's brand value to promote a reasonable return of prices to brand value; the company has improved team building and incentive mechanisms, reduced and increased prices, raised Pu Wu's factory price to more than 1,000 yuan, strengthened market control, and strengthened “HeMei” marketing; and the Spring Festival sales have been good, and prices have emerged from a steady upward trend.
In the long run, the company's product structure is more complete, the structure continues to be optimized, and dividends and major shareholders are active, which is expected to further enhance market confidence.
Incident comments
In the short term, in 2024, Wuliangye will put price first, and the combo layout will drive value return. In terms of setting the tone, Wuliangye defines 2024 as the marketing execution year. It will focus on increasing the value of the Wuliangye brand to accelerate the return of prices to a reasonable value. The target batch price for the first phase is 970 yuan/bottle. In terms of action, Wuliangye 1) optimized the internal remuneration assessment system, and Jiang Jia, an experienced deputy general manager of the company, fully implemented and promoted marketing work; 2) Pu Wu's factory price increased by 50 yuan to more than 1,000 yuan to help boost dealer confidence and reshape the price system; 3) In 2024, some distributors' Pu 5 plans were reduced by 20%, which is conducive to reducing channel inventory, raising price levels, reducing pressure on dealers, and optimizing manufacturer relationships; 4) comprehensively strengthening market control over marketing such as the Spring Festival Gala; 5) Actively increasing brand influence and influence through “and the US” marketing such as the Spring Festival Gala. In terms of results, Wuliangye sold well during the Spring Festival, the wholesale price trend followed a steady, moderate and upward trend, successfully achieved a good start, and continuous improvement in operations.
In the medium to long term, Wuliangye has improved its product matrix, increased dividends, and increased the majority shareholders' holdings to boost investment confidence. On the product side, Eighth Generation Pu Wu is expected to continue to maintain its position as a core single product, further optimize the launch pace and product system, and gradually achieve a return to price and value under the protection of other products; 1618 and 39 degrees Wuliangye are expected to carry out more in-depth and accurate consumer cultivation work such as code scanning red envelopes, seize more share at banquets and low-alcohol circuits, respectively, reduce the growth pressure of Pu Wu; classic Wuliangye, gifts, and cultural and creative products are expected to meet higher levels of consumer demand, strategically occupy the high price band, and enhance brand potential; the company is expected to launch 68 and 45 degrees this year. Do five foods New liquid products, while meeting the diverse needs of consumers, cover various price ranges in more detail. On the production capacity side, the company's high-end wine production continues to grow, and production capacity preparations are sufficient, providing strong support for future development. On the return side, the company will steadily increase its dividend rate in the future, continue to increase investor returns, and superimpose Wuliangye Group's stock holdings to enhance market confidence.
Revenue and profit are expected to maintain a double-digit growth trend in 2024, and the dividend rate is expected to continue to rise in the future. Wuliangye led sales during the Spring Festival. Inventory was low after the holiday, low inventory control volume and batch prices picked up. In the future, product structure optimization and intensive channel cultivation are expected to continue to improve. Historically, changes in Wuliangye's wholesale price have had a certain impact on the trend of stock price changes. Under the upward trend in batch prices, the company's stock price trend also has positive feedback; currently, Wuliangye's PE-TTM level is at a 5-year low, making it relatively cost-effective. The company's net profit for 2023/2024/2025 is estimated to be 303/340/38.1 billion yuan, and EPS is 7.79/8.75/9.83, corresponding to the current PE price of 18/16/14 times, maintaining key recommendations.
Risk warning
1. Industry demand falls short of expectations;
2. Increased market price fluctuations, etc.