Despite a Slightly Weaker Q3, Moutai’s Demand Remains Robust, With Decent Cash Flow a Highlight

Moutai’s headline third-quarter results were slightly disappointing, with net profit growth slowing to 15.8% year over year from 20.8% growth in the first half, but we think this largely reflects a transitory impact of a higher business tax. Excluding the tax impact, Moutai’s bottom line should have risen 19.9% year over year, revealing resilient demand for premium baijiu, despite sporadic lockdowns, in line with our expectations. In addition, cash flows were decent and advanced payment rose to CNY 11.8 billion, up 22.4% from the prior quarter and almost 30% from a year ago, suggesting demand remains robust. We keep both our fair value estimate of CNY 1,580 per share, and full-year net profit forecast of CNY 62.6 billion, representing 19% year-over-year growth in 2022.