KING’S LUCK(603369)：MAJOR OPERATIONAL DATA REVIEW：EXPECTATIONS MET ON TRACK TO REACH ￥10 BILLION GOAL

　　Events: Based on preliminary calculations, the company expects to achieve total revenue of approximately RMB7.85bn in 2022, indicating an increase of 23% YoY; 2022 net profit is expected to increase by 22% YoY to RMB 2.48bn.
　　Earnings in line with market expectations, Spring Festival got off to an excellentstart: The company’s revenue/net profit in 22Q4 is expected to reach RMB1.33bn/399mn, with 24%/21% YoY growth. As compared to 25%/26% YoY growth in the same period last year, revenue/net profit grew by 27%/25% to about RMB3.1bn/1.18bn in the first two months of 2023, suggesting that 23Q1 performance would meet market expectations. This year, Spring Festival homecoming rush led to a gradual recovery in consumption scenarios, such as banquets, gift-giving and visiting. From December to February, product shipments continued to grow. Danya series and V series shipments experienced rapid increase. Sikai series has also seen steady shipment growth. With payment collection and shipment progress exceeding 40%, the company is confident to meet its first quarter goal. In March 2023, the company announced that it would cease to accept quota sales orders for the Sikai series. For special procurement requirements, the pricing shall be determined by non-quota products, with an increase of RMB20 per bottle from the invoice price. By controlling sales volume and raising product prices, inventory is effectively consumed and market confidence will be restored.
　　Keep optimizing product structure and meticulously cultivating regional markets: In2022, the company took multiple measures to promote its development: 1） Products: Guoyuan series witnessed double-digit growth. In the first three quarters of 2022, special A+/A class products increased by 22.7% and 25.1% YoY, respectively. Product structure continued to be optimized. 2） Organization: The company set up brand-based divisions in 2022. The “Four Divisions & One Company” structure substantially improved organizational efficiency. （3） Region: In the first three quarters of 2022, Suzhong, Huaihai, Huai'an, and Nanjing markets showed impressive performance, with revenue up by 31.1%, 28.8%, 23.6%, and 23.2% YoY. Owing to continuous marketing of the Guoyuan series and the upgrading trend of business and banquet consumption, the company has maintained stable growth within Jiangsu province, and is likely to keep benefiting from capacity expansion and refined cultivation of the region’s upper-scale market.
　　High assurance in achieving equity incentive goals, clear strategic planning dedicatedto the RMB10bn target: King’s Luck was successful in achieving last year’s target of 22% revenue growth with the equity incentive plan implemented in July 2022. This year, the company will adhere to five initiatives: upgrading the high-end brand matrix, constructing a national breakthrough path, deepening the integrated supplier model, forging professional marketing organizations, and enhancing the depth of digital empowerment. Well-defined strategic plan and high morale ensures effective operations. Earnings Forecast & Rating: The company has a clear development plan, as well as sufficient momentum for its growth. We raise our net profit forecast to RMB2.481/3.022/3.729bn （previously RMB2.465/3.283/3.277bn）， with YoY growth of 22%/22%/23% （previously 22%, 15%, 16%）， corresponding to PE ratio at 30X/25X/20X.
　　We reiterate our Buy rating with King’s Luck.
　　Risks: Weaker-than-expected consumption recovery & expansion beyond Jiangsu
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。