Moutai May Become China’s First Over-1,000 Yuan Stock Feature
Kweichow Moutai Co., China’s premier distilled liquor producer, is the most valuable liquor company in the world, producing a soy sauce-like scent of the Chinese grain alcohol baijiu that is popular among the Chinese public. It is slated to become the first company to surpass the 1,000-yuan (148.30 USD) mark in stock value, blazing the trail ahead in China’s booming equity market.
Moutai’s baijiu brand is well regarded for its fiery, complex flavor and a unique purity — attributed to the locally sourced alcohol produced in the city of Maotai — that is known to prevent hangovers. Buyers across China, even in the liquor’s hometown of Maotai, line up to buy the distiller’s main brands, which have resulted in nationwide shortages.
Additionally, its stock has long been favored by foreign investors. In March alone, investors from across the world have poured about 12 billion yuan (1.8 billion USD) into Moutai’s stock via trading links, with foreign trading of Moutai stock accounting for an average of 36 percent of its daily turnover activity. Per figures provided by Bloomberg, Moutai’s stock has rallied 47 percent thus far this year owing to a surge of sales despite concerns about a consumer spending slowdown related to a maturing Chinese economy.
As of Thursday, April 25, Moutai shares are valued at 952 yuan (141.24 USD), edging ever closer to surpassing the 1,000-yuan mark . In comparison, China’s second highest priced stock, Changchun High & New Technology Industry (Group) Inc., is currently valued at 302.00 yuan (44.79 USD). Certain analysts predict that Moutai will continue to extend its current rally past expectations: stock value has already increased by 31 percent in 2019 and are predicted to gain an additional 6 percent over the next 12 months.
Analysts at Goldman Sachs, Macquarie Group Ltd., Citic Securities Co. and China Securities Finance Corp. have already estimated target prices to be at least 1,000 yuan. Goldman’s target at 1,016 yuan would rank Moutai as the fifth highest-priced stock in the world outside of the United States.
“Moutai enjoys the strongest branding power, highest margins, best return-on-capital and strongest free cash flow in China’s baijiu industry,” per Citigroup Inc. analysts Xiaopo Wei and Richard Wenjia Lin. Recent gains amidst tumbling expectations of a slowing Chinese economy put Moutai at sharp contrast with the trend, placing the baijiu brand as not only at the forefront of the international equity market, but also as one of the most valuable liquor companies in the world.