Steady growth expected in 2022

■ We attended Wuliangye’s virtual 1218 distributors conference in Shanghai. Management summarized the Company’s achievements in FY21 and provided more detailed guidance on the FY22F outlook and targets, with its distributor incentive policy expected to accelerate product structure optimization and digital marketing transformation.
■ Owing to the new Omicron threat, the stay-put policy for the upcoming Chinese New Year holidays will be widely applied in China, which we think it will affect baijiu sales in 1Q22F to some extent. But with Wuliangye’s brand power and distributor motivation, we expect its sales to grow by 14.7% yoy
and net profit to increase by 16.2% yoy in FY22F.
■ Reiterate Add with an unchanged DCF-based TP of Rmb301.