Pacific: Gave Gujing Tribute Wine a buy rating with a target price of 280.92 yuan

2021-11-02Pacific Securities Co., Ltd. Huang Fusheng, Cai Xueyu, Li Menghu conducted a study on Gujing Gongjiu and released a research report "Gujing Gongjiu: Continuous Upgrading of Structure, Strong Cash Flow and Advance Receipts", this report gives a buy rating to Gujing Gongjiu, believing that its target price is 280.92 yuan, the current stock price is 230.6 yuan, and the expected increase is 21.82%.

Gujing Tribute Wine (000596)

Event: The company released the third quarter report of 2021, achieving revenue of 10.102 billion yuan (+25.2%) and net profit attributable to the mother of 1.969 billion yuan (+28.0%) in the first three quarters of 2021. 2021Q3 operating income of 3.095 billion yuan (+21.4%), net profit attributable to the mother of 590 million yuan (+15.1%).

Q3 Revenue growth was solid, cash flow was strong and advance receipts performed well. 2021Q3 operating income of 3.095 billion yuan, +21.4% year-on-year, net profit attributable to the mother of 590 million yuan, year-on-year +15.1%. In terms of advance receipts, the company's contract liabilities + other current liabilities in the first three quarters of 2021 were 3.619 billion yuan, an increase of 731 million yuan from the previous quarter, an increase of 2.092 billion yuan from the beginning of the year, an increase of more than that year-on-year, showing the good willingness of the channel to collect money. In 2021Q3, the company received sales of 3.843 billion yuan (+66.3%) and strong cash flow performance. In the first three quarters of 2021, the company's receivables financing + notes receivable were 1.734 billion yuan, a decrease of 269 million yuan from the previous quarter, mainly due to the decrease in the receivables of Gujing Yunshang. The report quality is healthy and full of staying power.

The management expense ratio increased and the net profit margin fell slightly. 2021Q3 company net profit margin of 19.1%, year-on-year -1.0pct, gross profit margin of 75.2%, year-on-year -0.3pct, it is estimated that the impact of the adjustment of the statistical caliber of transportation costs, and the structural upgrade under the same caliber is estimated to drive a positive change in gross margin, with a sales expense ratio of 28.3%, a year-on-year -1.1pct, a gross sales difference of 47.0%, a year-on-year increase of +0.8pct. The company's business tax rate was 14.6%, -1.2pct year-on-year, management expense ratio was 9.0%, +2.3pct, and financial expense ratio was -2.4%, +0.4pct.

In 2024, the target is 20 billion, the production is scheduled to be increased, and the expansion inside and outside the province is parallel. The company raised 5 billion yuan in non-public offerings to expand and upgrade production, and expanded and upgraded from the current 115,000 tons to 245,000 tons of production capacity after reaching production, promoting the expansion of sub-high-end price band products while effectively ensuring the supply and quality of base wine, which will strongly support the development of more than 10 years in the future. In the medium and long term, the revenue of the 14th Five-Year Plan reached 20 billion yuan (about 14% of the 5-year CAGR), the product structure continued to upgrade, the proportion of products with ancient 8 and above accounted for 40%, and the proportion outside the province continued to increase. Gujing is expected to continue to use high-quality products, brands and channel advantages to achieve product upgrading in the province and accelerate expansion outside the province. We slightly adjusted the profit forecast, and expect the revenue growth rate from 2021 to 2023 to be 22.99%, 19.00%, 16.00%, and the profit growth rate is 29.12%, 25%, 22%. The target price is given at $280.92, maintaining a "buy" rating.

Risk warning: Channel development is not as good as expected risks, and industry competition has intensified.

A total of 29 institutions have given ratings in the last 90 days, with 25 buy ratings and 4 overweight ratings; the average target price of institutions in the past 90 days is 264.91; the Securities Star Valuation Analysis Tool shows that Gujing Gongjiu (000596) good company rating is 4 stars, good price rating is 2.5 stars, and valuation comprehensive rating is 3.5 stars.