Jin Seed Wine (600199)
Rapid Expansion of Baijiu Business
Analysts from Great Wall Securities predict that the company’s earnings per share for 2009 and 2010 will be 0.28 yuan and 0.53 yuan respectively, equivalent to price-earnings ratios of 31.4 and 16.6 times for 2009 and 2010 respectively. The valuation is lower than the level of comparable listed companies, so they give it an "outperform" investment rating.
Analysts pointed out that the company's baijiu business is expanding rapidly. The company's baijiu business reached a peak in 1999 with sales revenue reaching 5.255 billion yuan and 1 million tons. Subsequently, revenues gradually shrank; In 2006, the company disposed of inefficient assets and established its industrial positioning with baijiu as the core main business. In recent three years, the regional market has expanded rapidly, and sales volume has grown faster. Sales volume reached 3,000 tons in 2006, around 5,000 tons in 2007, and more than 10,000 tons in 2008.
Analysts believe that there is still considerable growth potential for the company's baijiu in the provincial market. The scale of baijiu consumption within Anhui Province is about 8 billion yuan, and Kouzi Jiu, the first brand in Anhui Province, achieved sales of around 500 million yuan in Fuyang alone. The company currently only accounts for 4.27% of the market share in Anhui Province; Jin Seed Wine once reached a sales volume of 100,000 tons, with sales covering most provinces, having a certain degree of fame and consumer base, thus still having considerable growth potential in the Anhui provincial market.
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