Introduction:The inventory has increased sharply, the pre-receivables have decreased year-on-year, and the Gujing Gongjiu, which is about to cross the threshold of 20 billion, is not without hidden worries.
Li Ping |AuthorStone Business Review |Produced
Unsustainably high valuations
A person's destiny, of course, depends on self-struggle, but it also takes into account the historical itinerary.
Approaching the end of the year, the cold air in the liquor industry is getting colder and colder, which is obviously not good news for Gujing Gongjiu, which is anxious to hit the 20 billion camp of liquor.
In most people's impression, Gujing Gongjiu, located in Bozhou, Anhui Province, is not prominent in the strong aroma liquor camp, and its popularity is far lower than that of national liquor brands such as Wuliangye, Luzhou Laojiao and Yanghe.
However, in the secondary market, Gujing Gongjiu in recent years has been a rare dark horse stock, bucking the trend in the liquor sector that continues to be sluggish. In April 2023, the share price of Gujing Gongjiu hit a new high of 300 yuan, with a total market value of nearly 160 billion yuan, and a price-earnings ratio of more than 50 times, becoming the liquor company with the highest valuation in the 10 billion yuan camp.
The high growth of performance has become the key to the price-earnings ratio of Gujing Gongjiu surpassing Kweichow Moutai. The data shows that from 2021 to 2022, Gujing Gongjiu's operating income will be 1327 billion yuan, 1671.3 billion yuan, a year-on-year increase respectively. 95%, and the net profit was 229.8 billion yuan, 314.3 billion yuan, a year-on-year increase respectively. 78%, the performance growth rate is among the best in the liquor camp.
According to the third quarter report of 2023, from January to September 2023, Gujing Gongjiu achieved an operating income of 1595.3 billion yuan, a year-on-year increase of 2498%；Net profit 381.3 billion yuan, a year-on-year increase of 4537%, the performance growth rate is still at a high level in the industry.
According to the data, in the fourth quarter of 2022, Gujing Gongjiu's revenue was 394.9 billion yuan. This means that as long as there is no year-on-year decline in revenue in the fourth quarter of 2023, Gujing Gongjiu's revenue in 2023 will exceed the 20 billion yuan mark.
In February 2023, Liang Jinhui, chairman of Gujing Gongjiu, publicly stated that in 2023, Gujing Group "will win 20 billion yuan and strive to achieve a higher goal". Obviously, the performance of the first three quarters has given Gujing Gongjiu the confidence to enter the "Liquor 20 Billion Club".
However, behind the high growth of the company's performance in the third quarter, Gujing Gongjiu's inventory, pre-receivables and other indicators are obviously under pressure. According to the data of the third quarterly report, as of the end of September 2023, the inventory amount of Gujing Gongjiu was 644.4 billion yuan, an increase of nearly 1.1 billion yuan over the same period of last year, and a record highThe amount of advance receivables (contract liabilities) is 331.5 billion yuan, a decrease of 4 over the same period last year4.8 billion yuan.
In mid-November, a "Notice on the Postponement of the 2023 Hangzhou International Liquor Expo" attracted great attention from the industry, which also made the inventory pressure of liquor companies the focus of the world. As of the end of the third quarter of 2023, the total inventory of A-share listed liquor companies was 1,3635.4 billion yuan, with a total amount of nearly 500,000 kiloliters, equivalent to 1 billion bottles of 500ml standard bottles of liquor.
Advance receivables are regarded as the "reservoir" of the performance of liquor companies, which is used to reflect the growth ability of the company's future performance. Although the performance growth rate of liquor companies in the first three quarters was generally under pressure, the amount of pre-receivables of leading liquor companies such as Wuliangye, Luzhou Laojiao, and Yanghe Co., Ltd. was still in a year-on-year growth trend.
Since entering November, the share price of Gujing Gongjiu has increased from 29488 yuan fell all the way to 213 yuan, a decline of nearly 30%, far exceeding the decline of the liquor sector in the same period.
If the surge in inventory is still a common problem in the industry, the decline in the pre-receivables of Gujing Gongjiu is even more abnormal. Judging from this data, the future performance growth momentum of Gujing Gongjiu will be weaker, which is also an important reason for the deep adjustment of the company's stock price.
Even after the deep adjustment of the stock price, the market value of Gujing Gongjiu is still as high as 112.9 billion yuan, and the rolling price-earnings ratio is as high as 28 times, second only to Kweichow Moutai (29 times) in the 10 billion camp, and much higher than the industry average level of 20 times. Obviously, in order to continue to maintain the current valuation level, Gujing Gongjiu must also really tell the company's future growth story.
Reluctant to be partial to the Hui wine faucet
Gujing Gongjiu Company, formerly known as Boxian Gujing Distillery, which was established in 1959, has a history that can be traced back to the Zhengde period of the Ming Dynasty and belongs to one of the "Old Eight Famous Liquors". In 1996, Gujing Gongjiu was successfully listed, and it was issued at the same time as A+B shares, and it was also the first liquor company listed on A+B shares in China. In 1997, the revenue of Gujing Gongjiu reached 9600 million yuan, becoming the third largest liquor enterprise after Wuliangye and Luzhou Laojiao, which can be described as infinite.
Since 1998, due to a series of mistakes such as blind diversification and management corruption, Gujing Gongjiu has missed the first decade in the liquor industry, and has retreated from a national liquor company to a regional liquor company, and its revenue has lagged significantly behind rivals such as Wuliangye and Kweichow Moutai. In addition, due to the company's early adoption of the strategy of "reducing degrees and reducing prices", Gujing Gongjiu did not keep up with the development trend of high-end liquor in time, and affected the brand image to a certain extent.
Since 2008, under the leadership of the new management, Gujing Gongjiu has completely stopped diversification and refocused on the main liquor business. In 2008, Gujing Gongjiu made efforts on the mid-to-high-end front and launched its fist product vintage puree series, and the vintage puree Gu 5 and Gu 8 series came out one after another. At the same time, Gujing Gongjiu fully implemented the "three-way project" in terms of sales channels, seized the opportunity of consumption upgrading in the liquor market in the province through refined sales channels, and gradually secured the position of the boss of Huijiu.
In 2014, Liang Jinhui, who is good at marketing, officially became the new generation of helmsman of Gujing Gongjiu. Since then, Gujing Gongjiu has vigorously laid out the sub-high-end liquor market, promoted the "vintage puree" in the country, and continuously increased marketing expenses, appeared in the Spring Festival Gala for 8 consecutive years, and named Anhui Satellite TV Spring Festival Gala and Jiangsu Satellite TV Spring Festival Gala many times, driving a rapid increase in sales.
In order to further develop the national market, Gujing Gongjiu has also adopted an extension development strategy of acquiring liquor brands. In 2016, Gujing Gongjiu signed a strategic cooperation agreement with Huanghelou Liquor, a liquor with the title of the only "Chinese Famous Liquor" in Hubei Province1.6 billion yuan to acquire 51% of the equity of Huanghelou Liquor. In 2021, Gujing Gongjiu announced the acquisition of Anhui Mingguang Liquor. So far, Gujing Group has three major brands: "Gujing Tribute Liquor, Yellow Crane Tower Liquor, and Mingguang Liquor".
In 2019, the revenue of Gujing Gongjiu exceeded 10 billion yuan for the first time, and Liang Jinhui, chairman of the company, put forward the strategic concept of "rebuilding a new Gujing", and planned to achieve a revenue target of 20 billion yuan in 2024. In February 2023, Liang Jinhui publicly stated that 2023 will be the year of deepening and upgrading the reform of Gujing Group, "to win 20 billion yuan and strive to achieve a higher goal".
For a long time, many people in the industry have regarded 50 billion yuan, 20 billion yuan and 10 billion yuan as liquor.
Criteria for the division of the first, second and third echelons. In 2022, among the 19 listed liquor companies, in addition to the first echelon of Kweichow Moutai and Wuliangye, only Yanghe, Shanxi Fenjiu and Luzhou Laojiao have revenues of more than 20 billion yuan, and many local liquor companies such as Jinshiyuan, Gujing Gongjiu, Shede Liquor, and Shuijingfang have been classified into the third echelon.
In addition, 20 billion yuan is regarded as a watershed that distinguishes national liquor companies from local liquor. In the liquor industry, which pays attention to cultural connotation and historical precipitation, "Mao Wulu" was the first to achieve nationalization with the help of high-end liquor. There are many local liquor companies that want to break through, but there are only a handful of successful ones, and Yanghe shares, which are good at marketing, and Shanxi Fenjiu, the "boss" of the fragrance type, are regarded as the only two local liquor companies that have successfully achieved nationalization.
So, can Gujing Gongjiu, which is unwilling to settle for Anhui, really enter the national liquor brand camp?
Controversial vintage puree
Stepping into the 20 billion yuan club, Gujing Gongjiu seems to have the strength to be among the first-line brand camps. However, compared with Yanghe shares and Shanxi Fenjiu, which have already accounted for more than 50% of the revenue outside the province, the current nationalization progress of Gujing Gongjiu is still not ideal, and it has not really gotten rid of the impression of "provincial liquor".
According to the data, since 2016, the revenue and gross profit of Gujing Gongjiu from Central China have remained above 85%, while the revenue of North China and South China has accounted for more than 10%. Obviously, the central China market centered on Anhui is still the main revenue of Gujing Gongjiu, and the proportion of the company's market outside the province has not changed too significantly.
In fact, in order to remove the label of "provincial liquor", Gujing Gongjiu has invested a lot of marketing expenses for brand promotion. From 2020 to 2022, the company's sales expenses were 312.1 billion yuan, 400.8 billion and 466.8 billion yuan, with a total of 117 marketing expenses in three years9.7 billion yuan, the proportion of marketing expenses to total costs is respectively. 5% and 345%, the sales expense rate is much higher than that of other famous wine companies.
Due to the continuous high cost investment, the profitability of Gujing Gongjiu is much lower than that of its peers in the industry. The data shows that in 2022, the annual net profit of Gujing Gongjiu will only be 31400 million yuan, while the net profit of second-tier liquor companies such as Luzhou Laojiao, Yanghe Co., Ltd., and Shanxi Fenjiu is above 8 billion yuan.
In addition, Gujing Gongjiu's flagship product, "vintage puree", has also been repeatedly controversial because of alleged false advertising. According to public information, as early as 1997, Gujing Gongjiu launched the "Ten Years of Puree" to transplant the concept of "vintage liquor" to liquor. In 2008, Gujing Gongjiu began to register the trademark of "Vintage Puree", and in 2015, it was successfully registered, and renamed "Ten Years of Puree" to "Gujing Gongjiu - Vintage Puree X Years", and then to "Gujing Gongjiu - Vintage Puree Gu X".
In the understanding of most consumers, "puree" means an unblended "base wine", and the number indicates that the product is a vintage of x years, for example, Gu 20 means that the product is a 20-year-old vintage.
However, this is just wishful thinking on the part of consumers. According to the official statement of Gujing Gongjiu, "vintage puree" does not represent vintage liquor, but only the unique brand name of Gujing Gongjiu, and the product number suffix does not represent the year of liquor brewing in the public perception.
In fact, there has been a long history of controversy over the vintage puree of Gujing Gongjiu. As early as after Gujing Gongjiu successfully obtained the trademark, well-known liquor companies including Wuliangye, Jiannanchun, Yanghe Co., Ltd. filed a lawsuit against Gujing Gongjiu's "vintage puree" trademark, on the grounds that "the use of vintage puree on liquor products is easy to cause the public to mistakenly believe that vintage puree is a description of the age, storage time and other characteristics of liquor products".
In November 2023, at the 19th China International Liquor Industry Expo, Hu Yiming, director of the Vintage Liquor Management Committee of the China Liquor Industry Association, pointed out that the chaos of fake vintage liquor has seriously infringed on the interests of the general public, and is suspected of seriously violating consumer rights and interests protection, anti-unfair competition law, China Food Safety Law, Advertising Law and Criminal Law of the People's Republic of China, which has once again aroused public attention to the chaos of vintage liquor.
According to the annual report data, in 2022, the revenue of Gujing Gongjiu vintage puree series will reach 1210.7 billion yuan, accounting for about 72% of the total revenue, and the gross profit margin is as high as 8451%, which has become the key to the growth of Gujing Gongjiu's performance. Obviously, the resurgence of the true and false "vintage puree" turmoil has cast a layer of uncertainty on the future performance growth of Gujing Gongjiu.
Whether it is from the net profit data, the proportion of revenue in the market outside the province or the highly questionable vintage puree, Gujing Gongjiu does not seem to have really broken through from the local liquor camp. If you want to truly realize the leap of "class", Gujing Gongjiu still has a long way to go.