Steady Growth Of Performance, Soaring Channel Price, A-Share "Drunk" Market Will Continue?

After short-term adjustment, liquor stocks took off again.

On January 12, the turnover of Shanghai and Shenzhen stock markets exceeded one trillion yuan for seven consecutive days, and the liquor sector took the lead again. The liquor index rose by 3.68%, and Jiugui Liquor rose to a new high. Luzhou Laojiao rose by more than 6%, Wuliangye and Guizhou Maotai rose by 2.9%.

The night before last, Luzhou Laojiao's performance forecast was announced, and it is estimated that the net profit attributable to shareholders of Listed Companies in 2020 will be 5.57 billion yuan to 6.035 billion yuan, with a year-on-year increase of 20% to 30%. This increase was close to the performance of the first three quarters. Luzhou Laojiao reported a net profit of 4.815 billion yuan in the third quarter of 2020, with a year-on-year increase of 26.88%; and its operating income was 11.599 billion yuan, with a year-on-year growth of 1.06%.

Since then, the performance forecasts of the four top liquor companies of "maowu Lufen" have been announced. The 21st century economic reporter noted that the growth of the four leading liquor companies met or exceeded expectations.

Prior to that, the valuation of liquor industry in the capital market had already gone up, especially since the second half of 2020, A-share became the main venue of liquor. Since 2020, the liquor index has increased by 132.86%. As of January 12, the latest P / E ratio of the CSI liquor index has reached 67.44 times, a new high.

In the wake of the global economic recovery in the post-2021 epidemic era, there are some concerns about the deviation between the valuation of liquor sector and the fundamentals. However, with the release of annual reports of some leading liquor companies and the rising prices of liquor consumption due to the Spring Festival, this dispute may be easing.

"I will always be optimistic about the investment opportunities of leading liquor companies. In the past two years, the stock price of liquor enterprises has continuously reached new highs, which reflects the recognition of the industry by investors. Because the rate of return on assets, gross profit rate and net interest rate of liquor enterprises are the highest in various industries, on the whole, I am still optimistic about the long-term performance of leading liquor enterprises. " On January 12, Yang Delong, chief economist of Qianhai open source fund, was interviewed.

The performance of leading liquor enterprises increased steadily

In 2021, the annual reports of leading liquor companies have been announced.

Guizhou Maotai was the first to announce its business data as early as January 1, 2021: in 2020, the company produced 50000 tons of Maotai Liquor Based liquor and 25000 tons of series liquor based liquor; it is expected to achieve a total operating revenue of about 97.7 billion yuan, with a year-on-year growth of about 10%, and a net profit attributable to shareholders of listed companies of about 45.5 billion yuan, with a year-on-year growth of about 10%.

This performance, in the eyes of many market participants, is in line with expectations. Ouyang Yujian, food and beverage analyst of Chuancai securities, pointed out that the company's performance growth was in line with the expectation, and the overall performance was stable. "From the perspective of products, the series of liquor is expected to achieve sales volume of 29500 tons, with a total operating revenue of about 9.4 billion yuan, a slight decrease of 1% over the same period last year; Maotai Liquor's revenue growth is expected to exceed 10%, mainly due to the company's increasing the proportion of direct marketing channels and gradually optimizing the product structure."

Wuliangye, the leading liquor maker in Shenzhen, is expected to have a revenue of about 57.2 billion yuan and a net profit of about 19.9 billion yuan in 2020, an average increase of 14% over the same period last year, which is consistent with the performance trend of the first three quarters.

Wuliangye said that in 2020, the company's operating revenue and net profit attributable to shareholders of listed companies will increase compared with the same period last year, mainly due to the increase in sales of core products.

However, the performance of Shanxi Fenjiu and Luzhou Laojiao was significantly better than market expectations. Shanxi Fenjiu is expected to increase its revenue by 1.911 billion yuan to 2.211 billion yuan in 2020, with a year-on-year growth of 16.08% to 18.6%; and its net profit is expected to increase by 866 million yuan to 1.156 billion yuan, with a year-on-year increase of 41.56% to 55.47%. The overall net profit growth of Luzhou Laojiao in 2020 will also exceed 20%.

Ye Qianyu, food and beverage industry analyst of Everbright Securities, pointed out: "from the perspective of splitting, the single quarter profit range of Luzhou Laojiao in the fourth quarter of 2020 is RMB 755-1.215 billion, and the growth range is - 11% - 43%. Considering the good sales of high-end liquor in the fourth quarter, it is expected that the single quarter net profit level will continue the performance of the third quarter."

According to Ye Qianyu, Guojiao 1573, a subsidiary of Luzhou Laojiao, performed well in the second half of 2020, benefiting from the recovery of demand for famous liquor, and its proportion was further increased; the medium and low-grade liquor was greatly impacted by the epidemic, and recovered in the second half of the year, and the overall revenue was expected to decline slightly in 2020. From a regional perspective, the company's "Henan battle" in 2020 performed well, and is optimistic that the company will replicate its successful model to other regions.

Is liquor sector overvalued?

It is worth mentioning that, as early as before the annual report of leading liquor companies was released, the liquor sector had experienced a long time of valuation improvement.

In 2020, Maotai, Guizhou Province, rose by 70.86%. Wuliangye also broke through the trillion mark in November 2020, becoming the second liquor company with a market value of more than trillion yuan in the A-share market. In addition, the stock prices of Shanxi Fenjiu, Yanghe shares, Luzhou Laojiao and other national well-known liquor companies have reached record highs, rising 321.23%, 119.55% and 164.20% respectively. Over the same period, the liquor index also increased by 137.47%.

Wang Ran, head of Equity Research Department of Dongfang fund and member of investment decision-making committee, pointed out: "the main logic of liquor industry in 2020 is the high-end liquor volume under the long-term consumption upgrading. From the perspective of 2020, the liquor industry will also be affected by the epidemic situation. "

"Affected by the epidemic situation in the first quarter of last year, the yield rate of liquor plate was negative, and it was also lower than that of Hushen 300. The main reason is that the Spring Festival is a festival with a large volume of liquor, and some business demand and wedding banquet scenes have been seriously affected by the epidemic. In the second quarter, as the domestic epidemic situation was properly controlled, social production and work resumed, and channel inventory was well digested. Liquor enterprises stabilized the channel profits of distributors by actively controlling goods and price, controlling goods and raising prices. In the third quarter, when the traditional Mid Autumn Festival and national day double festival entered, the good dynamic sales boosted the morale of dealers. As a result, the liquor sector rose more than 60% in 2-3 quarters. Entering the fourth quarter, there is a certain price increase expectation of high-end liquor, so the increase is further expanded. " Wang Ran added.

However, in 2021, the A-share liquor sector is still showing a "invincible" trend, and some investors begin to worry that the liquor sector may have been overvalued.

According to the reporter's statistics, in just seven trading days in 2021, the liquor index rose by 4.61%, of which the highest increase reached 11.43%. Leading liquor enterprises such as Guizhou Maotai, Wuliangye, Luzhou Laojiao, Shanxi Fenjiu and Yanghe shares also reached their historical highs. In addition, the share prices of some small and medium-sized liquor enterprises were also wildly speculated by funds.

However, the reporter learned that in the eyes of most institutional investors, Baijiu plate still has certain investment attraction.

A private equity investor in South China pointed out to the reporter of the 21st century economic report: "the logic behind the rise of liquor stocks before the festival is mainly from the middle of January. Liquor sales enter the traditional Spring Festival peak season, which is also the key stage for dealers to make money and prepare goods. Recently, liquor prices in many places are rising."

According to channel data, driven by the just need for liquor consumption during the Spring Festival, Feitian Maotai (the price of a single bottle sold in a box) as a price vane of liquor has recently reached 2960-2980 yuan / bottle, and in some regions it has exceeded 3000 yuan / bottle.

"The Chinese liquor sector led by Maotai has been the best business model in the whole A-share market in the past. The continuous market for the past two years is the deepening and strengthening of our understanding of this fact. Therefore, even after two years of valuation improvement, the core leading varieties in the liquor industry still have very significant long-term investment value. We use the discount method or put the whole company in a longer time dimension perspective. In fact, there is no deviation between valuation and fundamentals. " The person in charge of the rights and interests of a public offering fund in Beijing pointed out in an interview.

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