Morningstar

Sichuan Swellfun Co Ltd Class A 600779

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Stock XSHG Rating as of
¥37.95 +3.45 (10.00%)
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As of Delayed Price Closed

Company Report

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Yanghe Sees Soft Sales Growth in 2024, Amid Demand Headwind for Subpremium Baijiu

Jennifer Song

Narrow-moat-rated Sichuan Swellfun, or Swellfun, is one of the key subpremium baijiu brands in China with aged cellars dating as far back as the late Yuan dynasty. Diageo’s takeover in 2006 has further strengthened Swellfun’s strategic focus in the midrange to subpremium markets. This positions the company well amid the sector’s premiumization trend, allowing it to generate economic profits well into the future, in our view.

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Price vs Fair Value

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600779 is trading at a 312% premium.
Price
¥37.95
Fair Value
¥43.00
Uncertainty
High
1-Star Price
¥342.20
5-Star Price
¥73.30
Economic Moat
Tqcfh
Capital Allocation
Pfyztykdy

Bulls Say, Bears Say

Bulls

Premiumization is a long-term tailwind for Swellfun, leading to stronger sales of higher-end products and widening profit margins.

Bears

The frequent change of leadership remains a key concern, which has historically led to slower sales growth and stagnant product mix upgrade.

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Trading Information

Previous Close Price
¥34.50
Day Range
¥34.18–37.95
52-Week Range
¥30.31–65.10
Bid/Ask
¥37.95 / ¥0.00
Market Cap
¥18.53 Bil
Volume/Avg
13.3 Mil / 3.2 Mil

Key Statistics

Price/Earnings (Normalized)
14.73
Price/Sales
3.59
Dividend Yield (Trailing)
2.41%
Dividend Yield (Forward)
2.41%
Total Yield
2.41%

Company Profile

Located in Chengdu, Sichuan Swellfun, or Swellfun, is one of the six most famous baijiu distillers in Sichuan province. The company produces rich-flavored baijiu, with a strong focus on midrange to subpremium markets. The global distiller giant Diageo is the controlling shareholder with 63% of equity stake as of December 2023, which makes Swellfun the only foreign-controlled baijiu producer in China.
Sector
Consumer Defensive
Industry
Beverages - Brewers
Stock Style Box
Mid Core
Total Number of Employees
1,953
Website
https://www.swellfun.com

Competitors

Valuation

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Metric
600779
000568
002304
Price/Earnings (Normalized)
 14.7312.6212.73
Price/Book Value
 4.504.362.43
Price/Sales
 3.595.583.76
Price/Cash Flow
 12.5212.0011.76
Price/Earnings
600779
000568
002304

Financial Strength

Metric
600779
000568
002304
Quick Ratio
 0.372.352.94
Current Ratio
 1.113.094.96
Interest Coverage
 5,105.6238.201,384.85
Quick Ratio
600779
000568
002304

Profitability

Metric
600779
000568
002304
Return on Assets (Normalized)
 15.74%21.69%15.65%
Return on Equity (Normalized)
 31.74%35.77%19.55%
Return on Invested Capital (Normalized)
 31.20%26.67%18.33%
Return on Assets
600779
000568
002304

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