The current situation of the company

According to media reports, Gujing Group achieved revenue of 5.85 billion yuan in the first half of the year, an increase of 30% over the same period last year.

In the past two years, Gujing listed companies accounted for about 80% of the group's revenue. We expect listed companies to have revenue of 4.77 billion yuan in the first half of the year, an increase of 30% over the same period last year, corresponding to 48% revenue growth in the second quarter, and a strong acceleration in the off-season. In addition to the release of advance income, the company generally shows a growth rate of 50% in the urban areas of the third, fourth and fifth lines in Anhui Province.

At the same time, the company proposed to accelerate the national market layout strategy, from 2018 to accelerate the distribution of investment in the national blank market.

Comment

In the short term, the core driving force of the company's growth still comes from Anhui Province, where the growth space of sub-high-end and medium-to-high-end prices is large enough, and liquor sales at prices above 80 yuan currently account for only about 14%. 1) the total consumption of spirits in Anhui Province is 500,000 to 600,000 tons, and the sales of mid-range and above ancient wells in the province are about 38000 tons in 2017, which has a lot of room for further improvement. 2) it is conservatively predicted that the scale of the sub-high end in the province will reach 9 billion yuan in 2021, with a compound growth rate of 35%. Gujing's high-end scale ranks first in the province, and its brand and marketing advantages promote it to maintain a high growth rate of about 50% in the next two years, leading the sub-high-end consumption in Anhui. 3) the annual revenue of raw pulp and gifts reached 3.1 billion yuan in 2017, and the price of 100 yuan was super large, which continued to upgrade the consumption of low-line cities, counties and townships in the province, and benefited from the continuous brand concentration of liquor consumption in the province at medium-and high-grade prices.

The new round of nationalization strategy shows ambition, but the actual effect remains to be seen. The year raw pulp brand is the foundation of the company's nationalization, and it is focusing on building, but at present, it is not enough to support the company to complete the national investment directly through the release of brand influence. Gujing is good at fine marketing and strong channel management ability, and expects the company to have innovative and more efficient channel expansion and management mode in this round of regional expansion, otherwise the traditional Gujing investment model is bound to be accompanied by high-intensity pre-marketing investment, and may affect the company's concentration in the highly competitive Anhui market.

Valuation proposal

Maintain the original profit forecast basically unchanged, maintain the target price of 131.7 yuan, corresponding to the 1819 40max 29x Pamp E, the target price has 39% room for increase, and the current price corresponds to 18max 19 29/21xP/E.

Risk

If the cost of the company's nationalization expansion increases significantly, the profit may fall short of expectations; the rapid nationalization strategy may distract the company's focus in the Anhui market.