Kweichow Moutai Earnings: Results in Line; Multiple Drivers to Support Solid 2024 Growth

We maintain our fair value estimate of CNY 1,780 per share for wide-moat Kweichow Moutai, following the firm’s in-line 2023 results and robust growth outlook. We expect it to post both a solid 19% year-over-year revenue and net profit growth in 2024, supported by multiple drivers that include resilient demand growth, ex-factory price hike from Nov. 1, 2023, rising share of sales through higher margin direct-to-customer, or DTC, channels, as well as expanding sales of premium Moutai products and high-end series product Moutai 1935. We think all these will further strengthen Moutai’s leadership in China’s baijiu market and enhance long-term earnings growth. After fine-tuning our model, our earnings forecasts are largely unchanged. We expect Moutai to deliver a five-year net profit CAGR of 12.7% through 2023-28.