What Does Guizhou Maotai Rely On For 10% Growth This Year?

Guizhou Maotai (600519. SH) 2020 annual report released on the evening of March 30 sets a number of records of the company.

The first listed company with 100 billion revenue will appear in China's liquor industry. Last year, Guizhou Maotai's operating revenue was 94.9 billion yuan, an increase of 11% over the same period of last year. The net profit attributable to shareholders of listed companies reached 46.7 billion yuan, up 13% year on year. This is the largest revenue and net profit of Maotai in Guizhou in the past year. Among them, Guizhou Maotai achieved 27.7 billion yuan of revenue and 12.8 billion yuan of net profit in the fourth quarter last year, which was similar to the volume of Guizhou Maotai liquor when it entered the adjustment period in 2012.

In other words, today's Maotai people can recreate the Guizhou Maotai eight years ago by working in one peak season.

In the situation of oversupply, last year, the cash received from the sales of goods and services in Maotai, Guizhou Province, exceeded 100 billion yuan for the first time, reaching 107 billion yuan, 12.1 billion yuan more than that in 2019, and the more than 10 billion yuan was equivalent to the total revenue of wine enterprises above the scale of China last year. Its monetary capital also soared from 13.2 billion yuan at the end of 2019 to 36 billion yuan at the end of last year.

Guizhou Maotai Group Finance Co., Ltd., a holding subsidiary of Guizhou Maotai, also made a new record of loans. The annual report shows that last year, the loan granted by the finance company to Maotai Group members increased from 48 million yuan in 2019 to 2.95 billion yuan.

When the growth rate of net profit was 3 percentage points higher than the index released by Guizhou Maotai at the beginning of the year, it was more noteworthy that the gross profit rate of Maotai liquor set a new record - 93.99%, 0.21 percentage points higher than that in 2019.

The increase of Maotai's gross profit rate is mainly due to the increase of liquor sales capacity through direct sales channels. Last year, for the first time, Guizhou Maotai's self-employed liquor sales exceeded 10 billion yuan, with a gross profit margin of 95.62%, nearly 5 percentage points higher than that of liquor sold through wholesale channels.

This year, when Guizhou Maotai announced that it would achieve a performance growth rate of about 10%, how much contribution would the self support part make?

Self operated large volume in the fourth quarter of last year

For the fourth year since 2017, Maotai in Guizhou has maintained double-digit progress in two major indicators. Last year, the company's revenue and net profit were double-digit year-on-year, even during the outbreak.

Guizhou Maotai in the annual report used "2020, extremely extraordinary, extremely not easy" to describe. The company said that in the face of the unprecedented new pneumonia epidemic and arduous reform and development tasks, the company has over fulfilled the annual main objectives and tasks in the face of adversity, centering on the work goal of "unchanged plan, no reduction of tasks, no adjustment of indicators and no decrease of income".

In fact, last year, the sales volume of Maotai liquor decreased instead of increasing year-on-year. The key to increase the gross profit rate and increase the profit of Guizhou Maotai liquor is to increase the self operated volume in the fourth quarter. According to the annual report, the company sold 34312.5 tons of Maotai liquor last year, down 0.72% year on year.

How to ensure the annual target of 10% growth in revenue and net profit of Maotai liquor with little growth?

In the third quarter of last year, the year-on-year growth rates of these two indicators in Maotai, Guizhou Province, both dropped to single digits. The reason lies in the decrease of delivery in peak season, the sales growth of Maotai liquor quota in the wholesale channels of traditional distributors is not much, the channels of e-commerce and supermarket are not liberalized in a large area, and the self-employed channels are not greatly expanded.

But in the fourth quarter of last year's sprint, Guizhou Maotai annual performance back to double-digit growth.

According to the annual report, Guizhou Maotai's direct sales revenue was 13.2 billion yuan last year, exceeding 10 billion yuan for the first time, accounting for 13.9% of the operating income. From January to September last year, Guizhou Maotai achieved revenue of 8.4 billion yuan through direct sales. By the fourth quarter of last year, the company's own revenue accounted for about half of its direct sales revenue in the first three quarters.

From the perspective of revenue per ton of wine, the improvement of self operated product structure has brought about a significant increase in the unit price of products. According to the calculation of 21st century economic reporter, the direct sales of liquor in Maotai, Guizhou, was 3.367 million yuan / ton last year and 2.73 million yuan / ton in 2019.

The large volume of self operated products is also an important guarantee for Guizhou Maotai to return to double-digit growth. Last year, in the absence of growth in total sales, Guizhou Maotai sold 1280.24 tons more wine through direct sales than in 2019.

Under the marketing reform, last year, Guizhou Maotai's liquor sales through wholesale agency channels decreased by 4% to 60123.8 tons. With the vigorous development of social channels in Maotai, Guizhou Province, including supermarkets, Ka stores, e-commerce, etc., the wholesale agency income reached 81.5 billion yuan last year, 4% higher than that in 2019.

However, by contrast, the revenue of wholesale agent per ton of liquor was 1.35 million yuan / ton last year, which was 2 million yuan / ton less than that of Maotai, Guizhou Province. Who is the champion of profit contribution? Obviously, it is self-employed.

Set revenue growth rate of about 10% this year

Maotai, Guizhou Province, proposed that the operating target of this year is to increase the total business income by about 10.5% compared with that of the previous year, and complete the capital construction investment of 6.821 billion yuan.

The established target of about 10% is consistent with the annual growth target set at the beginning of 2020. The performance growth rate of Guizhou Maotai is difficult to return to the growth of revenue of more than 20% and net profit of more than 60%?

Li Baofang, the former chairman of Maotai Group, once responded that the growth of Maotai Group was lower than expected and said: "it is not easy for a company to maintain a growth rate of more than 20% every quarter. Adjustment between the quarter and the month is also a normal phenomenon, and the growth rate of Maotai is not slow. "

Looking back on 2017, Guizhou Maotai achieved an amazing growth rate of revenue and net profit of 50% and 62% respectively year-on-year, which is positively related to the rapid growth of Maotai liquor sales. In the same year, the sales volume of Maotai liquor was 30000 tons, with a year-on-year increase of more than 30%.

It can be seen that under the market situation of short supply, the sales growth driving the growth of Guizhou Maotai's performance is the most simple and crude. Annual reports over the years show that from 2017 to 2020, the annual sales of Maotai liquor were 26000 tons, 32000 tons, 34500 tons and 34300 tons respectively. The growth of Guizhou Maotai's performance slowed down with the slowdown of sales growth.

As we all know, Maotai liquor was sold five years ago. In other words, the sales volume of Maotai liquor this year depends on the output in 2016. From 2016 to 2020, the production of Maotai base liquor will be 39000 tons, 42000 tons, 4967169 tons, 49900 tons and 50000 tons respectively, with year-on-year growth rates of 31.5%, 8.9%, 16%, 0.51% and 0.63% respectively.

In this regard, Guizhou Maotai explained that Maotai liquor is made of base liquor of different years, different rounds and different concentrations. Therefore, the base liquor of a certain year may appear as a product in the next few years. Therefore, the production and marketing rate of Maotai liquor can not be accurately calculated.

Although the company has not yet released this year's sales data of Maotai liquor, judging from the output of 2965 tons in Guizhou in 2015, which is less than that in 2016, the sales volume of Maotai liquor this year should be increased compared with last year.

In addition to enlarging the sales volume, since 2019, Guizhou Maotai has launched a marketing reform focusing on expanding social channels and increasing sales through self-employed channels, greatly increasing the settlement price of Maotai liquor to increase the profits of manufacturers. In the fourth quarter of last year, the increase of self operated channel investment is the second most powerful tool for Guizhou Maotai to speed up its development.

Last year, Guizhou Maotai's self operating revenue accounted for nearly 14% of the company's operating revenue, and the sales volume increased from 500 tons a year to 2600 tons in 2019, nearly 4000 tons last year. Gao Weidong, chairman of Maotai Group, summed up at the meeting of Maotai liquor dealers held in December last year that the company also set up self operated outlets, expanded terminal consumption channels, and promoted stable market and price.

This year, will the self operated channel continue to increase the proportion of revenue? Guizhou Maotai said that it is necessary to continue to do a good job in marketing, consolidate the achievements of deepening the reform of marketing system, strengthen channel construction and control, improve the degree of market flattening, build a new marketing system that is scientific, standardized and efficient, and continuously strengthen dealer management to maintain the normal market order of Maotai liquor. Self operated channel is an important part of the company's new marketing system. Similarly, the further expansion and expansion of new social wholesale channels such as Shangchao and e-commerce can also improve the performance growth.

To improve the structure of Maotai liquor and increase the development of characteristic and individualized Maotai liquor are also the common means to improve the profit of Guizhou Maotai in recent years. According to several dealers of Maotai liquor, the first batch price of Feitian Maotai reached a record high last year, and the terminal delivery prices of fine Maotai and vintage Maotai were higher than the manufacturer's guidance price. On April 1, Yu Chi and Chen Wenbo, researchers of CICC, published research reports that since this year, Guizhou Maotai has gradually increased the ex factory prices of Maotai's general distribution products, fine Maotai and zodiac Maotai, with price increases ranging from 20% to 80%, corresponding to the sales volume of about 400 tons.

Since there are various means to adjust profits, why did Guizhou Maotai set its growth target at about 10% at the beginning of the year?

For Guizhou Maotai, a local state-owned enterprise, in order to become the first world top 500 enterprise in Guizhou Province, it needs not only the speed of development, but also the responsibility of Maotai. Under the premise that the price of Feitian Maotai liquor, the main product, can not be raised easily, the annual report of last year showed that the company's external donation reached 440 million yuan, almost double that of 2019. The increase in non operating expenses has an impact on the total profit.

The company said in its annual report that during the "14th five year plan" period, Guizhou Maotai will adhere to the principle of seeking progress while maintaining stability, with the development idea of focusing on main business, adjusting structure, strengthening supporting facilities and constructing ecology, build three lifelines of "quality, safety and environmental protection", promote the construction of quality Maotai, green Maotai, dynamic Maotai, cultural Maotai and sunshine Maotai, and consolidate Maotai's position as the first brand of distilled liquor in the world To promote the high-quality development of Maotai.