标题：Gujing DistilleryLimited S-T boost from the acquisition of mid/small liquor players
发布日期：2016-03-03 8:07:53
内容： What happened On February 29, Gujing announced its plan to acquire Wuhan Huanghelou. The two parties have come to an initialagreement and will soon start due diligence investment and evaluation. Comments Limited boost to S-T value from the acquisition of regional brand. Not factoring in M&As, we expect revenue & earnings to reach Rmb5.95bn & Rmb770mn in 2016. According to mediareports, the company’s gross revenue could peak at Rmb1bn. Assuming 2015 revenue of Rmb500mn and earnings ofRmb50mn, the acquisition could drive up revenue and earnings by 8.4% and 6.5%. Like the Anhui market, Hubei is subject to fierce competition and dominated by the three major brands (Baiyunbian,Zhijaing and Daohuaxiang). After acquisition, Gujing will further increase market investment and the S-T earningscontribution should not be positive. Gujing Distillery’s key value lies in its nationwide expansion of large products and its productinnovation; the outdated product mix and channel model still need to be addressed. The competitiveness ofregional brands is unlikely to improve in the short term. Strategically, the company needs to maintain its focus to avoidgrowth risks. Advantages in channel management; limited synergies. Huanghelou is a regional Luzhou-flavor liquor brandpriced between Rmb50 and Rmb200. Considering Gujing Distillery’s low share in the Hubei market, the channelsynergies should be limited. The company’s acquisition of Huanghelou could help in national expansion. However, weneed to focus on the adjustment to nationwide strategy (i.e. nationwide deployment in multiple brands throughM&As) considering the current sector and the company’s mix upgrading. The strategic adjustment could bringmajor uncertainty to the company’s value. Watch future announcements. Keep TP of Rmb38.47, implying 25x 2016e P/E. Maintain BUY.
发布日期：2016-03-03 8:07:53
内容： What happened On February 29, Gujing announced its plan to acquire Wuhan Huanghelou. The two parties have come to an initialagreement and will soon start due diligence investment and evaluation. Comments Limited boost to S-T value from the acquisition of regional brand. Not factoring in M&As, we expect revenue & earnings to reach Rmb5.95bn & Rmb770mn in 2016. According to mediareports, the company’s gross revenue could peak at Rmb1bn. Assuming 2015 revenue of Rmb500mn and earnings ofRmb50mn, the acquisition could drive up revenue and earnings by 8.4% and 6.5%. Like the Anhui market, Hubei is subject to fierce competition and dominated by the three major brands (Baiyunbian,Zhijaing and Daohuaxiang). After acquisition, Gujing will further increase market investment and the S-T earningscontribution should not be positive. Gujing Distillery’s key value lies in its nationwide expansion of large products and its productinnovation; the outdated product mix and channel model still need to be addressed. The competitiveness ofregional brands is unlikely to improve in the short term. Strategically, the company needs to maintain its focus to avoidgrowth risks. Advantages in channel management; limited synergies. Huanghelou is a regional Luzhou-flavor liquor brandpriced between Rmb50 and Rmb200. Considering Gujing Distillery’s low share in the Hubei market, the channelsynergies should be limited. The company’s acquisition of Huanghelou could help in national expansion. However, weneed to focus on the adjustment to nationwide strategy (i.e. nationwide deployment in multiple brands throughM&As) considering the current sector and the company’s mix upgrading. The strategic adjustment could bringmajor uncertainty to the company’s value. Watch future announcements. Keep TP of Rmb38.47, implying 25x 2016e P/E. Maintain BUY.
