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source: times finance author: xing wenwen

kweichow moutai officially launched the “stock price defense battle”.

on the evening of september 20, kweichow moutai (600519.sh) issued an announcement stating that in order to safeguard the interests of the company and the majority of investors and enhance investment confidence, it plans to use its own funds to repurchase shares through centralized bidding.

this is not only the first time that kweichow moutai has repurchased the company's shares in its 23 years since its listing, but also the largest repurchase amount by a listed liquor company in recent years.

specifically, the repurchase price is no more than rmb 1,795.78 per share (inclusive), and the upper limit of the price is no higher than 130% of the average trading price of the company's stock in the 30 trading days before the company's board of directors passed the resolution to repurchase shares. the number of repurchased shares is approximately 1.6706 million shares to 3.3412 million shares, accounting for 0.13% to 0.27% of the total share capital of kweichow moutai, and the repurchase amount is approximately 3-6 billion yuan.

kweichow moutai said that this plan still needs to be submitted to the company's shareholders' meeting for review. the repurchase period is within 12 months from the date of approval by the shareholders' meeting. the repurchased shares will be used to cancel and reduce the company's registered capital.

regarding the repurchase pricing, shen meng, executive director of xiangsong capital, said it was within the normal premium range.

due to adjustments in the wine industry and weak consumption of liquor, the liquor sector, which is regarded as the best track, has weakened overall this year, and kweichow moutai, which has always performed strongly, is no exception.

since may, the share price of kweichow moutai has fluctuated downward, falling below the 1,300 yuan mark on the first trading day after the mid-autumn festival (september 18), falling to a nearly two-year low. the market value has evaporated by 580.4 billion yuan since the beginning of the year.

shen meng pointed out that the recent slump in kweichow moutai’s share price is due, on the one hand, to investors’ lack of confidence in a-shares, and on the other hand, in the current environment, the financial attributes of moutai liquor have been greatly reduced, while future demand growth is limited, and investors’ valuation logic for kweichow moutai has changed.

as of the first half of this year, kweichow moutai's total assets were 279.207 billion yuan, net assets attributable to shareholders of listed companies were 218.576 billion yuan, and cash and cash equivalents were 145.267 billion yuan. kweichow moutai said that assuming that all 6 billion yuan has been used, the repurchase funds accounted for about 2.15% of the company's total assets as of the first half of this year, 2.75% of the net assets attributable to shareholders of listed companies, and 4.13% of cash and cash equivalents.

generally speaking, share repurchases and dividends are positive signals for companies to manage their market value. shen meng also believes that kweichow moutai's move is intended to convey the confidence of management to the market, while also optimizing its own cash asset returns to a certain extent.

from the perspective of the entire liquor industry,zheshang securitiesthe report points out that the liquor industry is strongly correlated with economic growth. at present, the macro-economy is in a critical period of transformation from old to new drivers, and kweichow moutai is in a new stage where demand for traditional industries is weakening and demand for emerging industries is being cultivated. although the chinese liquor industry is facing a situation where multiple issues such as price, sales, and demand are intertwined, the industry's downturn is short-term and temporary. "the current demographic dividend of liquor has not disappeared. it is expected that the size of the population aged 20-50 will remain stable from 2025 to 2032. therefore, we believe that liquor will still have support in the mainstream drinking population in the next 6-7 years."

in addition, from the end of 2023 to the beginning of this year,wuliangye（000858.SZ）、luzhou laojiao（000568.SZ）、shanxi fenjiu（600809.SH）、shede wine（600702.SH）、shuijingfang(600779.sh) and many other liquor companies are also increasing their holdings or repurchasing shares to increase investor confidence. at that time, many brokerage institutions believed that the current valuation of the liquor sector was lower than that of overseas consumer product leaders and its own valuation level was at the bottom of the historical range, and the sector valuation might be undervalued at a certain stage.

in the first half of 2024, kweichow moutai's revenue and profits continued to maintain double-digit growth, recording operating income of 81.931 billion yuan, a year-on-year increase of 17.76%; net profit attributable to shareholders of the parent was 41.696 billion yuan, a year-on-year increase of 15.88%, setting the best half-year performance since its listing.

as of september 20, the closing price of kweichow moutai was 1,263.92 yuan per share, with a market value of 1.59 trillion yuan.