Wuliangye (000858) semi-annual report comment: the proportion of high-quality wine has significantly improved and there is only room for subsequent reforms

Event: 杭州夜网 The company released its semi-annual report for 2019 and achieved operating income of 271 in the first half of the year.

5.1 billion, an annual increase of 26.

75%; net profit attributable to mother is 93.

36 trillion US dollars, an annual increase of 31.

30%, and the revenue disclosed in the company’s performance forecast increased by 26 per year.

About 5%, the net profit attributable to mothers grows about 31% every year, and the performance is in line with expectations.

High performance growth, and the proportion of premium wines increased significantly.

In the first half of 2019, the company’s revenue and net profit achieved higher growth, mainly benefiting from the increase in volume and price of the main product line, which exceeded the company’s initial expectations.

Among them, the second quarter revenue and net profit growth were 27.

08% and 33.

72%, an increase from the previous quarter, and the profit growth rate is faster than the income growth rate.

In terms of products, the company’s high-quality wine accounted for a significant increase in the first half of the year. The first-class wine (Wuliangye) completed 128% of its target tasks, an annual increase of 46%.

Mainly because the eight generations of Wuliangye were successfully introduced, the marketing team organized a large number of tasting activities, and repurchase has been widely formed, entering a normal state of dynamic sales.

The revenue growth rate of series wines was the lowest, mainly due to the company’s adjustment of the organization structure of series wines, and further consolidation of product lines, focusing on large single products.

The gross profit margin increased, the expense ratio decreased during the period, and the change in payment methods affected the performance of advance receipts.

In the first half of 2019, the company’s gross profit margin was 73.

81%, an increase of 0 every year.

The 97 singles are mainly due to the company’s initial increase in the seventh-generation terminal price, the launch of the collector’s edition, and the eighth edition of the cargo control strategy to achieve an orderly increase in the ex-factory price and market price, which increased by about 12% and 18%, respectively.

Through digital construction, the company improved marketing efficiency and refined management level, and overall expenses in the first half of the year.

01%, a decrease of 1 per year.

There are 11 single ones, of which the sales expense ratio and management expense ratio are 9 respectively.

76% and above 4.

8%, a year-on-year decrease of 0.

3, 0.

72 units.

Under the dual effects of higher gross profit margin and lower expense ratio, the company’s net profit decreased by 1 in the first half of the year.

28 units, up to 36.

12%, profitability continued to improve.

In the first half of the year, the company’s advance accounts were 43.

54 ppm, a decrease of 1 per year.

47%, mainly due to the implementation of the monthly payment policy for the eighth generation Wuliangye in June, but the actual demand is good. If this factor is excluded, the actual revenue growth rate will resume.

Production can still grow in the medium and long term, and there is still room for reform.

1. Mid- and long-term crops have increased and demand is good.

The company plans to put about 5,000 tons of eight-generation Puwu in the third quarter of 2019, but multi-channel feedback or supply is less than demand; 30 Tao Tao Chen Chen Kuku Phase I project is steadily advancing, and is expected to be completed and put into operation within the year.It is expected that the background of the shortage of high-end liquor supply will be difficult to change, and the sales volume will still be put into operation.

2. The product structure still has room for optimization.

In the first half of the year, the company launched new versions of Puwu and 501 ultra-high-end Wuliangye with good acceptance. It is expected that the 37-degree wine design plan will be completed within the year and the main product will be further enriched. At the same time, the company carried out 129 high-imitation products of 42 brands with overdraft brand valueRetreat and delisting to strengthen the status of the main brand.

3. The reform has achieved initial results, and there is still room for follow-up.

Wuliangye’s all-channel, digital operation platform has been basically completed. The “100 cities, thousands of counties and ten thousand stores project” will start the third phase of consumer club construction; the company set up an e-commerce management department in the first half of the year to initially integrate online and offline resources, andChengdu Wushang Supply Chain Management Co., Ltd. officially signed a contract to develop a professional supermarket channel and standardized management.In addition, the three wine cellar sales companies are combined into one, with 13 headquarters-scale departments and 15 marketing areas with staffing in place. Follow-up brand building, product sales, and expenses are expected to improve significantly.

Investment suggestion: The company’s Luzhou-flavor liquor leading company is steadily consolidated, new products are introduced smoothly, demand is good, there is still room for reform, and performance is highly certain.

It is expected that the operating income for 2019-21 will increase by 25% / 18% / 16%, net profit attributable to mothers will increase by 29% / 21% / 19%, and EPS will be 4 respectively.

5 yuan / 5.

4 yuan / 6.

4 yuan, corresponding to PE is 32 times / 26 times / 22 times.

Maintain “Buy” rating.

Risk reminders: food safety issues; company performance exceeded expectations; corporate reforms were less than expected; RMB exchange rate risk; domestic interest rate rise risks; China’s macroeconomic data was less than expected; changes in the Federal Reserve’s monetary policy; internal capital market fluctuation risks.