Morningstar | Wuliangye’s Preliminary 1H18 Results Were Slightly Ahead of Forecasts; Our CNY 75 FVE Is Intact
Wide-moat Wuliangye Yibin reported strong preliminary first-half 2018 results that were slightly ahead of our projections. Revenue and operating profit increased 36% and 39% year on year, respectively, to CNY 21.2 billion and CNY 9.7 billion. This implied 34% revenue growth and 39% operating profit growth in the second quarter. We maintain our wide economic moat rating and retain our fair value estimate for Wuliangye at CNY 75 per share. We view the shares as slightly undervalued at current levels, trading at a 13% discount to our fair value estimate. In the longer term, we believe the company will continue to outpace industry growth and enjoy high returns on invested capital, given its leading position in the premium baijiu market.Demand for premium baijiu looked robust in the second quarter, as both Wuliangye and Moutai delivered strong top-line growth. While the ex-factory price of Moutai increased by 18%, the ex-factory price of Wuliangye was unchanged at CNY 739 per bottle. As we expected, sales volume for Wuliangye was higher than for Moutai liquor, given that Wuliangye is not facing supply constraint issues like those faced by Moutai. We retain our full-year 2018 28% revenue and 33% operating profit growth forecasts for now, but will revisit our model when the result is officially announced.
Wuliangye Yibin is engaged in manufacture and sale of "Wuliangye" liquors and other series of alcoholic drinks. Through its subsidiaries, Co. is also engaged in the supply of raw materials; packaging and publication printing; investment activities; provision of parking service; and manufacture and sale of industrial-used steams, fine chemicals, fruit wines, white wines, white carbon, and black and lactic acids.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.