Core views:
The total fixed asset investment in the beverage manufacturing industry has seen rapid growth in 24 years. According to Wind, the total fixed asset investment in China's liquor, beverage, and refined tea manufacturing industry achieved a cumulative high increase of 21.8% from January to April '24, indicating that capital expenditure in the beverage industry ushered in a high increase in 24, bringing room for demand for beverage packaging equipment.
Beverage sales continue to grow, and the number of companies is also increasing. According to Wind, monthly retail sales of beverages in China have basically maintained steady growth since the second half of '23. In April '24, monthly retail sales of beverages were 23 billion yuan, up 6.4% year on year, and the scale of terminal demand continued to expand. In terms of the number of enterprises, the number of enterprises in the alcohol, beverage, and refined tea manufacturing industry has returned to the expansion range since '21, and continued to grow from 5438 in February '21 to 5,905 in April '24. The increase in the number of companies in the industry will also bring demand for new production capacity expansion and the need to purchase new equipment.
Yongchuang Intelligence is a leading domestic packaging equipment company and is expected to fully benefit from the expansion of capital expenditure in the beverage industry. Yongchuang intelligent packaging equipment is mainly divided into standard stand-alone equipment and intelligent packaging production line products used in the field of liquid food such as beverages, milk, beer, etc. As the leading domestic packaging equipment, the revenue scale continues to expand. According to the company's annual report for the year 23, the amount of new orders signed in '23 was about 3.95 billion yuan. Among them, thanks to the increase in demand in the beverage industry and the increase in the company's market share, orders for the beverage smart packaging production line increased rapidly compared to 2022. We believe that the continued growth in the company's orders is expected to support future performance growth.
Profit forecast and investment advice: The company's net profit for 24-26 is estimated to be 295/3.46/409 million yuan, respectively. Considering that the company still has room to grow as a leading domestic packaging equipment company, the company was given a PE valuation of 20 times its net profit in 24 years, corresponding to a reasonable value of 12.10 yuan/share, maintaining a “buy” rating.
Risk warning: risk of declining industry demand; risk of increased industry competition; risk of declining gross margin.