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Kweichow Moutai Co Ltd 600519

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Morningstar’s Analysis

Valuation
Currency in CNY
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Concerns on Policy Risk Led To Sell-Offs, but Premium Baijiu’s Competitiveness Remains Intact

Jennifer Song Senior Equity Analyst

Analyst Note

| Jennifer Song |

On Aug. 20, the State Administration for Market Regulation hosted a panel discussion with major baijiu companies. This raised market concern as to policy risk in the baijiu sector, leading to a sector-wide sell-off in shares. We think the meeting should be a general practice of the Chinese government, aiming to keep baijiu retail prices steady ahead of the upcoming Mid-Autumn Festival and National Holiday Golden Week. In addition, the authority may also intend to cool down the sharp rising capital investments in Jiang-flavored baijiu in Renhuai city, Guizhou province, to avoid disordered access to natural resources and overcapacity issues, and sustain the sector’s long-term healthy growth. We expect little impact to major baijiu companies’ operation and earnings outlooks, and the current low inventory level and uptick in retail prices of major mid- to high-end baijiu suggest demand for premium baijiu remains robust.

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Company Profile

Business Description

Kweichow Moutai is one of China’s largest liquor producers. The company was established in 1951 and its headquarters is located in Moutai Town, Guizhou province, southwest China. Its core product, 53-degree Feitian Moutai, is known as China’s national drink and has been consumed during many high-profile historical and political events. Given its historical and cultural significance, the company achieves the industry's highest retail prices and profit margins.

Contact
Guizhou Province, Maotai Town
Renhuai, 564501, China, People's Republic of
T +86 8522386002
Sector Consumer Defensive
Industry Beverages - Wineries & Distilleries
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 29,031

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