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when the market logic begins to change, the company's valuation will be reconstructed.

on the evening of september 20, the "stock king" moutai threw a "king bomb" repurchase plan to the market.

according to the announcement, kweichow moutai will use its own funds to repurchase no less than 3 billion and no more than 6 billion company shares, with the upper limit of the repurchase price being 1,795.78 yuan per share.

it is worth noting that this is the first time that moutai has repurchased shares in its 23 years of listing, and all the repurchased shares have been cancelled.

although the repurchase amount of 6 billion is not much compared with moutai's market value of 1.59 trillion, but in the current market environment, this repurchase amount can have a multiplier effect, and the signal released is also very obvious.

as we all know, a-shares have long been a market that focuses on financing, but after more than 30 years of development, the leading companies in a-shares have become quite mature.therefore, giving back to investors and "feeding back" to the market should be the top priority of the future market.

nowthe market is no longer satisfied with cash dividends, and maintaining stock prices is also the most urgent need at the moment. in this context, repurchasing and canceling shares has become one of the must-have options for good companies.

we believe that with the help of this trend, after one or two years of guidance, when the market reaches a consensus, it will greatly promote the overall ecological restoration of the market.

in 2021, kweichow moutai reached a high of 2,489.11 yuan per share, and its market value once exceeded the 3 trillion yuan mark.

as the stock king of a-shares and the leading consumer brand at the time, kweichow moutai single-handedly started a trend of being crowned with "moutai". at that time, almost all companies that could be crowned with "moutai" were leaders in the industry, which was regarded as the highest recognition of the market.

this also indirectly proves thatthe unparalleled gold content of kweichow moutai.

but no one is good forever, and no flower is red forever.

in february 2021, after kweichow moutai hit a record high, it began to fluctuate and fall. despite this, its stock price can still fluctuate stably within the range, so moutai's position as the "stock king" is still stable.

after entering 2024, the market style began to change rapidly. high-yield stocks and bank stocks became the favorites of the market, while consumer stocks were completely pushed off the "altar".

when moutai is no longer a trend and the title "moutai" becomes a thing of the past, the faith in moutai will also "collapse".

after entering may, moutai's stock price began to fall rapidly, with a drop of more than 27%; according to statistics, moutai's year-to-date drop is 25%. in addition, the market value of china mobile, industrial and commercial bank of china, china construction bank, and agricultural bank of china also exceeds that of moutai. for moutai, this is an unbearable burden.

therefore, in this context, maintaining the stock price has become an inevitable choice for moutai to defend its position as the "number one".

falling from the “altar”?

as a "luxury" consumer brand, price increase has always been its core logic.

luxury brands such as lv, hermes, dior, and chanel will also maintain their industry status by raising prices.

but as we entered 2024, the logic of the consumer industry began to change significantly, especially in some high-end consumer sectors.

starting from april, the price fluctuations of feitian moutai began to become the focus of market attention.

in late may, the wholesale price of feitian took a sharp turn downward again and fell all the way to the recent mark of 2,200 yuan; by early june, the price of feitian moutai "broke through" the market's psychological defenses, with the wholesale price of loose feitian reaching as low as 2,080 yuan/bottle, and the wholesale price of original box feitian reaching as low as 2,370 yuan/bottle.

there has always been a saying in the industry that the price of feitian moutai on the market is 2,500 yuan, which is the "prosperity line", 2,000 yuan, which is the "warning line", and 1,500 yuan, which is the "life and death line".

as the price of feitian moutai continued to fall, moutai's stock price began to accelerate its decline. after falling below the 2 trillion mark, it fell below 1.9 trillion, 1.8 trillion, and finally below the 1.6 trillion mark.

at this point, the market's "faith" in moutai began to waver.

in order to maintain the price stability of feitian moutai, moutai chairman zhang deqin has repeatedly played the "price stabilization card".

this includes suspending the acceptance of applications for group purchases of flying moutai priced at 1,499 yuan by corporate customers through direct channels in some provinces. provinces that can still apply for direct supply are also raising the threshold for corporate review; this includes canceling the release of 12 bottles/box of flying moutai, and simultaneously stopping unboxing sales to reduce scattered circulation; and suspending the release of 15-year-old moutai and premium moutai in some areas.

at the end of june, zhang deqin's team went to shanghai, zhejiang, jiangsu, beijing and other places to investigate the market and held a market work meeting to boost dealer confidence.

in this regard, zhang deqin clearly stated that "we have the confidence, strength and ability to get through this cycle."

after a series of combined efforts, the price of feitian moutai began to stabilize and rebound, but it has become an indisputable fact that the overall market demand for famous liquors has weakened.

in a report, southern metropolis daily wrote that inventory pressure has led to a drop in terminal market prices, which in turn diluted the gross profit margins of wine merchants and reduced their enthusiasm for selling related products.

a wine merchant also said: "the profit margin of famous wines is too small now. we can only sell in large quantities. it is better to sell mid- and low-end products with higher gross profit margins."

unsurprisingly, although moutai stabilized the price of feitian moutai, it failed to stabilize the share price of moutai. after entering september, kweichow moutai began to fall rapidly, with a monthly drop of more than 12%, which aroused investors' concerns.

in this context, it is inevitable for kweichow moutai to introduce measures to stabilize its stock price, because if the stock price is not stabilized, the problems that may arise in the future may be systemic.

as the "belief" of the market, if moutai allows its stock price to fall, the consequences could be disastrous.

the core remains solid

from the current market environment, the weakness of the current consumer market is an indisputable fact, and it is normal for consumer companies to be affected. however, moutai has not been greatly affected, and its ability to make money is still strong.

according to its previously released interim report, in the first half of this year, kweichow moutai's revenue was 81.931 billion yuan, a year-on-year increase of 17.76%; its net profit was 41.696 billion yuan, a year-on-year increase of 15.88%. among them, moutai's business revenue reached 68.567 billion yuan, an increase of nearly 10 billion yuan from 59.279 billion yuan in 2023.

it is not difficult to see from moutai’s financial report that its gross profit margin of 91.76% and net profit margin of 52.7% both indicate that moutai is a veritable money-making machine.

in addition, according to kweichow moutai's "2024-2026 cash dividend return plan", from 2024 to 2026, the total amount of cash dividends distributed by moutai each year will not be less than 75% of the net profit attributable to the parent company in that year. in principle, dividends will be distributed twice a year, and the dividend yield will exceed 3.5%.

in other words, in terms of shareholder returns, moutai is also a high-scoring player.according to statistics, kweichow moutai’s cumulative dividends in the past 20 years have been 271 billion yuan.

due to its outstanding ability to make money and its solid core, kweichow moutai is also the first choice for institutions and investors. data shows that at the end of the second quarter of this year, a total of 1,265 funds held kweichow moutai, holding a total of 80.75 million shares. so far, most fund products still choose to increase their holdings of kweichow moutai.

investment tycoon duan yongping also said recently, "looking back 20 years later, moutai should be much better than gold."

according to statistics from the securities times, nearly 30 top companies have not raised funds from the capital market in the past 20 years, but have relied on endogenous growth to provide investors with rich returns. the cumulative dividends they have distributed in the past 20 years are more than twice their market value 20 years ago. among them, gree electric's cumulative dividends in the past 20 years are 21.13 times its market value 20 years ago; kweichow moutai's cumulative dividends in the past 20 years are 11.53 times its market value 20 years ago; shanxi fenjiu, china merchants bank, tbea, daan gene and other companies' cumulative dividends in the past 20 years are more than 4 times their market value 20 years ago.

china merchants bank, kweichow moutai and gree electric appliances alone have distributed 746 billion yuan in dividends to investors in the past 20 years. this shows the excellent quality of kweichow moutai.

kanjian finance believes that although the logic of the consumer market has changed in recent years and the demand for high-end consumer goods has decreased, in the long run, the core logic of moutai has not changed significantly, and its market position is still stable compared with the industry. at present, due to the overall weakness of the a-share market, some industry leaders have been temporarily affected, but this has also forced these companies to further place returning investors in an important position, such as the current a-share repurchase and cancellation wave.

we have reason to believe that with a group of excellent companies such as moutai taking the lead, with the support of repurchases and cancellations, the stock prices of industry leaders will be stabilized, and the market will favor these companies more in the future, allowing them to benefit more on the road to giving back to investors.