1H21 performance is lower than we expected.
The company's 1H21 realized revenue of 764 million yuan, which was 20.0% higher than that of the same period in 2019 / 2020, and the net profit of the company was 88 million yuan, which was 31.396 yuan higher than that of the same period in 1920. The gross profit margin / sales expense rate / management expense rate / return net interest rate were year-on-year changes respectively-0.9 pesque 1.4-0.7 0.1ppto this performance was slightly lower than we expected, mainly due to the overall weak recovery momentum of yellow rice wine category consumption after the epidemic.
Development trend
After the epidemic, the recovery pace of yellow rice wine category consumption is slow, and it is expected to improve quarterly in the second half of the year. We believe that the low cultivation of the yellow rice wine market led to the weak recovery of yellow rice wine consumption after the epidemic. Zhejiang / Shanghai 1H21 revenue increased by 23.7% respectively compared with the same period last year, and the pace of recovery inside and outside the province was basically synchronized. The company's 1H21 revenue has returned to 80% of the same period in 2019, and we expect revenue to recover steadily in the second half of the year with increased investment and the peak season of yellow rice wine consumption in the fourth quarter. At the same time, the upgrading of the company's product structure is gradually in progress, 1H21 medium and high-end / ordinary wine respectively increased by 34.04% 6max 18.80% year-on-year, single 2Q gross profit margin increased 8.3% year-on-year, product structure carding and high-end effect gradually appeared.
The company increases investment in e-commerce and advertising, and multi-measures are expected to improve the consumer atmosphere of the brand. After adjusting the transportation costs, the company's sales expenses also increased 1.3ppt, mainly due to the increase in publicity fees and e-commerce platform costs. At present, the company expands high-end communication channels through the "Yue Wine Banquet" + mode, and promotes the rejuvenation and nationalization of the brand by moving into Douyin and cooperating with professional media operators.
The company is actively focusing on the core items and promoting the laying of channels outside the province, suggesting that we should pay attention to the process of nationalization of yellow rice wine leader. After reducing about 80 SKU in 2020, the company continues to eliminate and integrate more than 200 products and continue to add high-end series. At the same time, the company accelerates its infiltration into the vulnerable areas of yellow rice wine in the form of tasting halls and specialty stores, and has set up specialty stores in Xi'an and other places. We believe that with the promotion of the focus of resources to large items and the laying of channels outside the province, the national growth space of yellow rice wine leader may be gradually opened.
Profit forecast and valuation
Due to the slower-than-expected recovery and the increase in the company's sales expenses, we reduced revenue and raised sales expenses, corresponding to a profit forecast of 11.3964.3% to 1.55 / 214 million yuan for 2021 / 2022. Due to the downward valuation center of the industry, we lowered our target price by 6.2% to 10.6 yuan, corresponding to 2021 / 2022 62/45XP/E. The current stock price is traded on 64.6/46.8X2021/ 2022 PE. There is 3.79% downside compared with the current share price, maintaining a neutral rating.
Risk
Other kinds of wine market put in aggressively, eroding the market share of yellow rice wine; if we increase the marketing investment but the accuracy is not enough, it is difficult to broaden the consumption scene and consumer groups; it is disadvantageous to cultivate and expand the market outside the province.
