Kweichow Moutai: Special DPS Lifts Investor Confidence; Our Valuation Is Intact

Wide-moat Moutai’s special dividend of CNY 19.11 per share is a slightly positive surprise to the market. The company’s profitability and cash flows are robust, so the move is easily afforded by Moutai. This is the second time that Moutai is paying a special DPS, following the first in November 2022. The total payment of the planned special DPS is equivalent to CNY 24.0 billion. Together with our forecast 2023 final DPS payment of CNY 30.11 per share, or CNY 39.1 billion in total, the combined amount will be CNY 63.1 billion, equivalent to 83.8% of our forecast full-year 2023 net profit. The total DPS for 2023 will be CNY 50.22 per share, implying a yield of 2.9% based on the Nov. 20 share price.