© 2020 Financial Post, a division of Postmedia Network Inc. All rights reserved. Expansion plans are being constrained by environmental factors and production factors. The distillery business has high CAPEX and each of them might have different depreciation policy on its machineries. So how do I buy this Moutai stock?”. 1 National Liquor of China’ as it is commonly served at lavish state banquets or presented as a diplomatic gift to government officials. As of FY 2019, Moutai’s EBITDA is approximately RMB 57 billion. In 2020, Maotai’s market cap hit a record high of US$220 billion, doubling that of Diageo’s US$76 billion market cap. Because of government restrictions on pricing of high-end alcohol in China, Yuan wanted Moutai to diversify into many different sub-brands. 365 Bloor Street East, Toronto, Ontario, M4W 3L4. Earnings only increased by about 15% compared to the consensus of 22%. Practically everyone drinks this in large-scale events and it can be seen as a status symbol in China’s culture. There was one reply from Moutai’s vice president and general manager Liu Zili that sums up the moat of Moutai. Read more about cookies here. At the current price, you are literally buying at the historical all-time high. If we were to take the average P/E of all the main competitors, it is about 18.7x. EBITDA removes all these differences as it is earnings before interest expenses and depreciation expenses. 1 National Liquor of China’ as it is commonly served at lavish state banquets or presented as a diplomatic gift to government officials. But it is more or less…, Michael Saylor On Buying Bitcoin With His Balance Sheet, http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html, https://www.scmp.com/magazines/post-magazine/long-reads/article/2170165/inside-fortress-maotai-secrets-china-hard-liquor, https://asiatimes.com/2020/03/ex-transport-boss-grabs-reins-of-kweichow-moutai/, https://www.facebook.com/moutaiglobal/photos/a.1558180341072420/2360089954214784/?type=3&theater. Do not take the final valuation too seriously as these are just some quick calculations to get a rough estimate of where might be a good price to enter. In China’s business culture, the sociological concept of “saving face” is extremely important. (adsbygoogle = window.adsbygoogle || []).push({}); Is it possible to quit my job, and make a living trading stocks? That is how the origins of Kweichow Moutai came about. Kweichow Moutai is a top blue chip stock on Chinese stock market. Generally speaking, ROE of 10-15% is considered fair, 15%-25% is considered good and anything more than 25% is excellent. This is going to be my growth portfolio that is separate from my current dividend portfolio. After the victory in the war, the government then consolidated all the local distilleries into one state-owned company called Kweichow Moutai. The grain, moisture, water, humidity, temperature, wind, biological community and air to produce Moutai has to be in the town of Moutai itself. To make things simple, I would just extrapolate their cash position from 2019 into 2020. He set up many subsidiaries, business customisation and started making less-expensive line of baijiu to cater for the larger mass population. So I hope I am not making the wrong call here. Would like to visit guizhou too. These two factors make up 60% of their preference while taste only makes up 22% of it. However, some investors are not happy with this decision as many think that the new business structure shifts profits from the listed company to its parent company, Kweichow Moutai Group. More than 1,200 dealers are being cut off now and the company is approaching retailers directly to issue tender contracts to hold Moutai’s products. If you are interested in buying Kweichow Moutai shares, you have to open an account through one of China’s stock borkers. In the meantime, I would definitely put Moutai under my watchlist. Similarly to the P/E ratio, it is the highest among all and Moutai is nowhere near cheap. It is still uncertain about how the recent transition in leadership plays out on Moutai’s financial performance. But again, premium things (e.g. Due to their strong pricing power, revenue can keep up with cost easily as people would still buy. Comparing to both the industry average (18.7x) or Moutai’s historical average (20.2x), the current price is nowhere near cheap. They have a monopolistic moat as it is government-owned. ** The consumer staples sector fell 1.35%. Moutai forward P/E as of April 2020 is about 33.4x, the highest among the other baijiu companies. ** Investors’ focus is on a key policy meeting this week, starting Monday, where China’s top leaders will chart the country’s economic course for 2021-2025, seeking to balance growth and reforms to avoid stagnation. The latest Q1 results of RMB 24.4 billion is in also in line with the target as it is about 26% of the forecasted sales revenue. Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc. How to manually change ExpressVPN’s protocol to IKEv2. ** The largest percentage losses in the Shanghai index were Jinhui Liquor Co Ltd down 9.99%, followed by FuJian YanJing HuiQuan Brewery Co Ltd losing 9.97% and Everbright Securities Co Ltd down by 9.94%. The next question that is probably on everyone’s mind is “Okay. It could even be a sober reality for Moutai’s hungover share price as investors would have to rethink if current valuations support future earnings growth prospect. The stock trading symbol of Kweichow Moutai is 600519. This might indicate a broader economic slowdown in China’s consumption market. Using the industry EV/EBITDA average of 15.2x, Moutai’s enterprise value would be around RMB 953.5 billion. While the entire Shanghai composite is tanking from 2015 due to China’s economic slowdown and trade war tensions, Moutai’s share price skyrocketed by 360% to a peak of RMB 1250. Kweichow Moutai sells high-end baijiu, a distilled Chinese liquor spirit made in the town of Maotai in China’s Guizhou province. Here is how the layout looks on SAXO’s platform. I have not seen any company that is this strong. (adsbygoogle = window.adsbygoogle || []).push({}); Posts tagged How to buy Kweichow Moutai stock? : Forcasts, revenue, earnings, analysts expectations, ratios for KWEICHOW MOUTAI CO.,LTD. They are in a business where they are making something for 10 cents and selling it for a dollar! Institutional investors have said Kweichow Moutai is their number one alpha generator and some even go as far to say it is the only Chinese stock you should own. Gross profit margins are staggering high (above 90%) as the cost of producing a bottle of Moutai is low but they are selling it at a very high premium. It was only until 2016 when the middle-class start emerging and fuel demand for higher-end liquor consumption. Visit our Community Guidelines for more information and details on how to adjust your email settings. Maotai is known as the ‘No. This blog is created solely for educational purposes and is not a call to buy or sell any financial assets. A toast to the world! Does a corporation have to go public? What is more impressive is this level of growth is not spurred by leverage. Maotai is known as the ‘No. This stock is currently listed on China’s ShangHai Stock Exchange. (a quick introduction). All in all, even the most basic Moutai take at least five years to be made. The EV/EBITDA ratio removes all capital structure and accounting policy differences. Everything looks good so far. Assuming that by the end of the month, Moutai’s share price rose to RMB 1400. SHANGHAI — China stocks ended lower on Monday, dragged down by the consumer sector after the country’s largest liquor maker Kweichow Moutai posted slower-than-expected growth in quarterly profit. ($1 = 6.6876 Chinese yuan) (Reporting by Winni Zhou and Andrew Galbraith; Editing by Aditya Soni). This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. This is a mammoth company accelerating at break-necking speed. The stock trading symbol of Kweichow Moutai is 600519. If I were to buy 10 Moutai Shares at RMB 1280, that would cost about $2,560. If you also want to open an account with SAXO and get a share of the referral awards ($), do send me an email at [email protected] (*Don’t miss out on this one!). We ask you to keep your comments relevant and respectful. Personally, I am using SAXO Investor platform to buy US or China shares. To determine the market cap of the company, we would take its enterprise value minus minority interest, debt and add back cash. What is a corporation? Has the Covid-19 pandemic affected Moutai earnings? Can I pay with PayPal, Alipay or Wechat? Kweichow Moutai is also partially state-owned by Kweichow Moutai Group (60% direct interest), which in turn is owned by the Guizhou Provincial People’s Government. That would give us approximately RMB 880. That shows you the strength of their pricing power as they are earning really fat margins from selling Moutai. Kweichow Moutai sells high-end baijiu, a distilled Chinese liquor spirit made in the town of Maotai in China’s Guizhou province. To get the market cap value, we take its enterprise value of RMB 953.5 billion less minority interest (RMB 5.8 billion) and add back cash value of RMB 152.8 billion. He shut down many of the subsidiaries that were making non-premium brands to redivert production efforts on Moutai’s core products. The next issue of Top Stories Newsletter will soon be in your inbox. Recently in March 2020, Moutai abruptly changed its chairman again from Li to the former head of its transportation department Gao Weidong. In addition, the company also sets a new price for its Kweichow Moutai on an annual basis. This is unlike many of the other companies where revenue often failed to keep up with rising operating costs such as labour wage. That would give us a market cap of RMB 1.1 trillion. To put things into context, here is a look at the average margins of a beverage (alcoholic) company in the US. What is its stock ticker symbol? Assuming that Moutai is going to achieve its earnings target growth of 10%, we can use it to make some ballpark estimations on the fair valuation of Moutai. As of 2017, Moutai has the highest market share of high-end baijiu (63%) followed by Wuliangye (26%), LuzhouLaoJiao (6%) and others (5%). It was stated that Li Baofang is recommended not to serve as chairman and director of the group.

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