Investment advice
Optimistic about the company's new round of national expansion, the annual puree has outstanding comprehensive advantages such as brand quality, scale and channel operation capacity at the price of 100 to 300 yuan. It is significantly superior to major rival regional enterprises. It will fully benefit from the continuous expansion and concentration increase of high-end Chinese liquor. The company is growing into a new leader in popular prices. The current revenue scale of 5 to 6 billion yuan per year has only just begun.
rationales
We expect the sales volume of liquor at the price of 100 to 300 yuan to reach 2.9 to 3 million tons in 2026, an increase of about 2 million tons in 10 years. Currently, leading brands of nationalization and pan-regionalization are lacking, and concentration is low. Cost-effective liquor of 100 to 300 yuan satisfies the mainstream social and banquet needs of the public. Consumption is frequent, sales continue to expand, and the increase comes from regions other than Tier 1 and 2 cities, which account for 78% of China's population. Currently, supply mainly comes from local companies, which lack leading national brands. The number one brand at this price level accounts for only 2.7% of sales.
The brand, quality, and channel capabilities of vintage puree at a price of 100 to 300 yuan have built comprehensive competitiveness for expansion outside the province, with outstanding comparative advantages. Gujing Gongjiu is one of the Eight Famous Liquors of the Old Age. As its leading brand, Vintage Puree has the genes and popularity of famous wines. Through the segmentation of the subhigh-end, middle and high-end segments of the public, it has formed a single brand gradient advantage with high and low bands. The high quality, light and rich fragrance is supported by the strength of the product. Furui excels at marketing, can export excellent channel management advantages, and has the ability to invest continuously. The main competitors of vintage puree at this price are regional enterprises. Most of them are small and medium-sized enterprises. The company's competitive advantage is obvious, and it has better avoided direct competition with high-end and sub-high-end national brands above 400 yuan in markets outside the province.
On July 24, the company's marketing conference made it clear that the brand revival of Gujing Gongjiu will adhere to the “annual puree strategy”, accelerate the national layout and sub-high-end product layout, and accelerate the investment layout in the national blank market from 2018, matching competitive remuneration incentives and flexible operating models. Some provinces such as Guangdong and Shanghai have formed a good growth trend.
It continues to lead the overall upgrade of liquor consumption in Anhui Province to more than 100 yuan, the product structure has improved rapidly, and the profit growth rate will remain above 30% in the next 3 years. The leading scale of the provincial base market will continue to reinforce the brand value of the year's puree, and rich profit returns will support the company's continuous national marketing promotion and channel expansion.
Profit forecasting and valuation
Maintain the original forecast and target price of 127.6 yuan for 12 months. Corresponding to 38/29xPE in 18/19, the target price has room for a 65% increase. The current price corresponds to 23/17xPE in 18/19, maintaining the recommendation.
risks
If the macroeconomic growth rate decelerates markedly, the expansion may fall short of expectations.