Laojiao reported that its FY20 sales grew by 5.3% yoy to Rmb16.7bn, and net profit rose by 29.4% yoy to Rmb6.0bn, 4% above our estimates, owing to strong sales growth for premium and above products and good cost control. Laojiao’s 1Q21 sales rose by 40.9% yoy to Rmb5bn, and net profit grew by 26.9% yoy to Rmb2.17bn, also above our estimates. We now expect the Company’s sales to grow by 15% yoy, with net profit up by 20% yoy in FY21F, driven by the sales contribution improvement of its super-premium products and an ASP increase. Reiterate Add with a new DCF-based TP of Rmb291.
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