Moutai’s Growth Outlook Looks Promising; Raise FVE to CNY 1,580 Per Share

We raise our fair value estimate of Kweichow Moutai to CNY 1,580 per share from CNY 1,490, as we see positive moves of Moutai that will strengthen its competitiveness and enhance earnings and long-term growth as well as boosting investor confidence. These include a more comprehensive product mix, which will help to attract more diversified consumer groups and sustain its leading market share. In addition, Moutai made its first disclosure of monthly operating performance on March 7, which will help to boost investors' confidence amid more transparent disclosure and improved company governance. As such, we lift our net profit growth assumption to a five-year CAGR of 14.3%, up from 13.9% in our previous forecast, driven by a growing mix of mid- to high-end product offerings.