WLY(SZ:000858) Guoxin Securities·2024-05-27 07:02Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company's stock price has underperformed compared to the market and its peers, leading to a valuation discount. The report attributes this to macroeconomic constraints and a focus on short-term growth rates, which may overlook the company's long-term development quality [1][11]. - The brand strength of Wuliangye is significant, with a robust product foundation and an active development momentum. The company is positioned to enhance its market share through a comprehensive channel system and product optimization [1][22]. - The company is expected to maintain a stable revenue base, with its flagship product, the eighth generation of Wuliangye, projected to grow at a compound annual growth rate (CAGR) of 10-15% over the next five years [1][22]. Summary by Sections 1. Valuation Discount - The company's stock has underperformed the market since 2021, with a 48% decline compared to a 27% drop in the white liquor index and a 30% drop in the CSI 300 index [12]. - The price-to-earnings (PE) ratio of Wuliangye has been at 0.70 relative to Moutai, indicating a significant valuation discount [12][16]. 2. Brand Strength and Development Momentum - Wuliangye has a deep brand heritage and a strong product lineup, with a well-established channel system. The company is actively reforming to adapt to market changes, which is expected to activate its growth potential [1][22]. - The report highlights that the company has a rich reserve of quality products and is focusing on enhancing its channel and consumer engagement [22][23]. 3. Revenue Stability and Growth - The eighth generation of Wuliangye is expected to continue benefiting from a stable revenue base, with projections indicating that it will account for 82.2% of total revenue in 2023 [1][22]. - The report anticipates that the company will achieve a net profit of 338 billion, 376 billion, and 422 billion yuan for the years 2024 to 2026, reflecting a year-on-year growth of 12.0%, 11.2%, and 12.1% respectively [2][4].