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Wuliangye Yibin Co Ltd Class A - Stock Quote 000858

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Morningstar's Wuliangye Yibin Co Ltd Class A Stock Analysis

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Wuliangye's Growth Slows in Second Half of 2021; Uptick in Wholesale Prices Key to Watch

Jennifer Song Senior Equity Analyst

Analyst Note

| Jennifer Song |

Wide-moat Wuliangye’s full-year net profit of CNY 23.4 billion was in line with our expectations, which implies slower second-half growth, owing to channel destocking and weaker demand due to COVID-19 shutdowns. We think price hikes of both ex-factory and retail prices of the flagship 52-degree Wuliangye are a key catalyst for the group in 2022, while rising competition in premium baijiu at the price levels of CNY 1,000-CNY 1,500 per bottle should mean that Wuliangye will need to maintain disciplined volume supply to strengthen its pricing power. We tweaked our 2022 net profit forecast to CNY 26.8 billion, a 2% cut from our previous forecast, to reflect slightly lower sales volume for the year, but are maintaining our CNY 188 fair value estimate, underpinned by the assumption of a steady net profit compound annual growth rate of 14.2% during 2021-26. We think the shares are fairly valued presently.

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Wuliangye Yibin Co Ltd Class A's Company Profile

Business Description

Wuliangye Yibin is China's second- largest baijiu producer by revenue, with sales of CNY 66 billion in 2021 compared with over CNY 100 billion for Moutai. Founded in the 1950s, Wuliangye is located in Yibin, Sichuan province, in southwest China. Its core product, 52-degree Wuliangye, is widely known as the best rice-flavored baijiu in the market. The high-quality products, extensive history and brand strength have led to strong pricing power, allowing the company to enjoy high retail prices and profit margins.

No.150, Minjiang West Road, Cuiping District
Yibin, 644007, China, People's Republic of
T +86 8313567000
Sector Consumer Defensive
Industry Beverages - Wineries & Distilleries
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2021
Stock Type
Employees 17,446