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Yangtze Business Daily News● Yangtze Business Daily reporter Xu Jia

The A-share "king" Kweichow Moutai (600519.SH) suffered a rare heavy loss.

In the afternoon of July 29, the A-share liquor sector continued to weaken, with Kweichow Moutai's share price falling 1.7% to close at 1,398.02 yuan per share, falling below the 1,400 yuan mark, hitting a new low since December 2020. The share prices of Jin Shiyuan, Luzhou Laojiao, Gujing Gongjiu, Yingjia Gongjiu, and Shanxi Fenjiu all fell by more than 2%.

Some market analysts believe that the decline of the A-share liquor sector may be related to the downgrade of UBS Securities. On the same day, UBS Securities downgraded the ratings of Kweichow Moutai, Wuliangye, Luzhou Laojiao and Yanghe Shares from buy to neutral, and reiterated the sell ratings of Shuijingfang and Shanxi Fenjiu.

The Yangtze Business Daily reporter noticed that the popularity of Kweichow Moutai, which has been favored by public funds, has cooled down since the beginning of this year. According to data from Tonghuashun, as of the end of the second quarter of 2024, Kweichow Moutai was a major holding of 1,270 public funds, a decrease of 328 from 1,598 at the end of the fourth quarter of 2023.

Unlike its stock price performance, Kweichow Moutai has solid fundamentals. In 2023, Kweichow Moutai's operating revenue will exceed 150 billion yuan, and in 2024, its goal is to achieve a total operating revenue growth of about 15% over the previous year.

The stock price rarely falls below the 1,400 yuan mark

A major event occurred in the A-share liquor sector.

At around 13:11 on the afternoon of July 29, the share price of Kweichow Moutai widened its decline to 1%, and at 14:13 the decline reached as high as 1.7%. At the close of the market that afternoon, Kweichow Moutai closed down 1.7% at 1,398.02 yuan per share, falling below the 1,400 yuan mark. The share price hit a new low since December 2020, and it is still the only "thousand-yuan stock" in the A-share market.

At the close of the day, the total market value of Kweichow Moutai was approximately 1.76 trillion yuan, and a total of 410 billion yuan has evaporated so far this year.

According to the data from Tonghuashun, this is the sixth consecutive trading day that Kweichow Moutai's stock price has fallen since July 22. In the previous five trading days, Kweichow Moutai's stock price fell by 1.74%, 2.94%, 1.03%, 0.66% and 0.58% respectively.

The Yangtze Business Daily reporter noticed that it was not just Kweichow Moutai. The A-share liquor sector almost "fell across the board" on July 29. As of the close of July 29, the Tonghuashun Liquor Index (881273) reported 2750.03 points, down 1.14%.

Among them, Jinshiyuan, Luzhou Laojiao, Gujing Gongjiu, Yingjia Gongjiu, and Shanxi Fenjiu fell by 5.46%, 2.77%, 2.64%, 2.38%, and 2.03%, respectively, all exceeding 2%. Yanghe Shares, Wuliangye, Shede Wine, Kouzijiao, Jinhui Liquor, and Laobaigan Liquor fell by 1.67%, 1.66%, 1.36%, 1.21%, 0.95%, and 0.82%, respectively.

Some market insiders have linked the unusual movement of the liquor sector to the rating change of UBS Securities on the same day. Also on July 29, according to relevant media reports, UBS Securities downgraded the ratings of Kweichow Moutai, Wuliangye, Luzhou Laojiao and Yanghe Shares from buy to neutral.

UBS Securities said that the average earnings per share compound annual growth rate of the covered liquor companies is expected to slow down from 19% in 2020-2023 to 8% in 2023-2025. Given that leading liquor companies have not actively controlled supply and expanded production capacity, it is expected that the retail prices of ultra-high-end liquor companies will face greater pressure in 2024-2025. If the industry leaders fail to control supply, the pessimistic scenario shows that by the end of 2025, the wholesale prices of Moutai and Wuliangye may fall by 50% and 17% from the current level, and will stabilize in 2026.

At the same time, UBS Securities reiterated its sell ratings on Shuijingfang and Shanxi Fenjiu due to their high valuations, and listed Gujing Gongjiu as its top pick with a buy rating.

It is worth mentioning that on July 29, northbound funds had a net sale of 4.985 billion yuan, of which Kweichow Moutai had a net sale of 572 million yuan, ranking first.

Solid fundamentals, revenue growth of 18% in the first quarter

Different from the foreign investment trend, Kweichow Moutai has always been favored by domestic institutions.

Wind data shows that as of the end of the second quarter of this year, Kweichow Moutai was the largest holding stock of public funds, with a total market value of holdings reaching 118.505 billion yuan and the number of shares held reaching 80.7592 million shares.

However, judging from the trend of changes in shareholdings, a reporter from the Yangtze Business Daily noticed that since the beginning of this year, while the share price of Kweichow Moutai has fluctuated, the enthusiasm of public funds for Kweichow Moutai has cooled quarter by quarter.

According to data from Tonghuashun, as of the end of the second quarter of 2024, Kweichow Moutai was a major holding of 1,270 public funds, a decrease of 328 and 258 from 1,598 at the end of the fourth quarter of 2023 and 1,528 at the end of the first quarter of 2024, respectively.

Among them, the Fuguo Tianhui Select Growth managed by the well-known fund manager Zhu Shaoxing reduced its holdings of Kweichow Moutai by 269,900 shares in the second quarter. Kweichow Moutai is no longer among the top ten holdings of the funds managed by Xiao Nan, the E Fund High Quality Strict Selection Three-Year Holding, the Yinhua Wealth Theme managed by Jiao Wei, the Huatai Value Selection managed by Lao Jie'nan, and the Bank of Communications Selection managed by Wang Chong and Zhang Xuerong.

It is worth noting that in the past three months, the price of 53-degree Feitian Moutai has gradually recovered and stabilized after adjustments, which has also become an important factor affecting the changes in the stock price of Kweichow Moutai.

However, from a fundamental perspective, Kweichow Moutai, as the "king" of A-shares, has always performed steadily. In 2023, Kweichow Moutai achieved operating income of 150.56 billion yuan, a year-on-year increase of 18.04%; net profit attributable to shareholders of listed companies (hereinafter referred to as "net profit") was 74.734 billion yuan, a year-on-year increase of 19.16%.

Last month, Kweichow Moutai completed its profit distribution for 2023, paying a cash dividend of 30.876 yuan per share, totaling 38.786 billion yuan in cash dividends. According to data from Tonghuashun, Kweichow Moutai has distributed a total of 271.441 billion yuan in cash dividends since its listing.

At the beginning of this year, Kweichow Moutai proposed that its main goal for 2024 is to achieve an operating revenue growth of about 15% compared with the previous year and to complete fixed asset investment of 6.179 billion yuan.

In the first quarter of 2024, Kweichow Moutai achieved operating income of 46.485 billion yuan, a year-on-year increase of 18.04%; net profit of 24.065 billion yuan, a year-on-year increase of 15.73%.