Investment suggestion
The rating will be upgraded to recommended, with a target price of 84.9 yuan, an income growth rate of about 17% in the next three years, and a compound net profit growth rate of 30%. The reasons are as follows:
The growth rate of raw pulp in sub-high-end years for 8 years and above is expected to be 49% in 2018, leading the upgrading of market consumption in Anhui Province will continue to grow high. 1) at present, the overall level of liquor consumption in Anhui Province is still low, and the industry structure is upgrading rapidly. The daily banquet liquor consumption in Hefei and other cities quickly upgraded to 200 yuan 300 yuan, and the business banquet consumption upgraded to 300 yuan 600 yuan. The demand for high-end banquets and gifts in the county has also begun to upgrade to more than 200 yuan. 2) the company has a strong brand power and developed marketing system in the province, the first in the provincial sub-high-end price scale, clear brand advantages, leading the upgrading of consumption in the province. 3) the year of raw pulp has maintained high growth for 8 years or more, and the growth rate in 2019 is still 42% and 38%, accounting for 30% of Gujing brand income and 36%.
The 100-yuan price of raw pulp for 5 years and the gift version maintained a growth rate of about 12%, and the growth of famous wines resumed in 2018. 1) the company has significant advantages in scale and brand at the price of 100 yuan, benefiting from the upgrading of daily consumption of the urban masses and the upgrading of consumption in a broad county and township market, and the income growth rate is expected to remain at about 12% in the next three years. 2) the adjustment of Gujing famous wine products and channels has been basically completed, and low single-digit growth can be maintained through regional monopoly and promotion of new products.
The improvement of the benefit structure of the sales expense rate and the optimization of the cost policy began to decline, and the scale effect will also lead to a reduction in the management expense rate, with a profit CAGR of 30% in the next three years.
What is the biggest difference between us and the market? Optimistic about the high growth and sustainability of the company's sub-high-end prices, the sales expense rate is declining substantially through structural improvement and policy adjustment.
Potential catalyst: higher-than-expected growth in sub-high-end prices.
Profit forecast and valuation
Increase the revenue in 2017 by 0.1% to 70.4 million 8.26 billion yuan, increase the net profit by 6.1% / 15.8% to 1.09 billion yuan, introduce a 19-year EPS forecast of 3.70 yuan, and the current share price corresponds to 18max 17x Pmax E in 19 years. The increase in the target price of 16.0% to 84.9 yuan was mainly due to an increase in earnings, which was upgraded to the recommended rating corresponding to 18Universe 1930x / 23x Pamp E.
Risk
The company is currently lack of high-end brand building, in the long run, the brand high-end and national expansion are limited.