Guizhou Moutai Buyback: High-Profile Market Value, Defending Glory
This time, can Guizhou Moutai (600519.
SH) halt the continuous decline in its stock price?
On the evening of September 20th, Guizhou Moutai issued an announcement stating that the company plans to use its own funds of no less than RMB 3 billion (inclusive) and no more than RMB 6 billion (inclusive) to repurchase its shares through a centralized bidding transaction method, with a repurchase price not exceeding RMB 1795.78 per share (inclusive).
The company's previously released semi-annual report showed that as of June 30, 2024, the company's total assets were RMB 279.2 billion, the net assets attributable to the shareholders of the listed company were RMB 218.58 billion, and cash and cash equivalents were RMB 145.27 billion.
Assuming that the maximum of RMB 6 billion for this share repurchase is fully utilized, the repurchase funds would account for approximately 2.15% of the company's total assets, 2.75% of the net assets attributable to the shareholders of the listed company, and 4.13% of the cash and cash equivalents as of June 30, 2024.
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Moreover, to protect the interests of the company and the vast number of investors, and to enhance investment confidence, on the premise of ensuring that the company's normal operations and long-term development are not affected, the shares repurchased this time will be used for cancellation and reduction of the company's registered capital.
The announcement disclosed that as of the date when the company's board of directors approved this repurchase plan, the controlling shareholders, actual controllers, directors, supervisors, and senior management personnel have no plans to reduce their holdings in the company within the next 3 months or the next 6 months.
According to public information, this is the first time Guizhou Moutai has conducted a repurchase in 23 years since its listing, responding to investors' demands while also responding to the spirit of the new round of state-owned enterprise reforms that emphasize market value management.
The latest research report from Guotai Junan has raised the stock price of Guizhou Moutai to as high as RMB 2240, and previously Hua Chuang Securities even called for a high price of RMB 2600.
For Guizhou Moutai, facing the pressure of continuously declining stock prices is quite challenging.
As of September 20th, Guizhou Moutai closed at RMB 1263.92 per share, down 25.25% year-to-date, with the latest market value of RMB 1.59 trillion.
Looking back at February 2021, Guizhou Moutai set a historical record, with the highest price in the trading day breaking through RMB 2400 per share (ex-rights), and the market value exceeded RMB 3.2 trillion.
The current situation is indeed a bit embarrassing.
However, the liquor industry has shown a general decline in the past year and a half, with Shede Wine Industry and Shuijingfang all releasing repurchase plans within the year, but unfortunately, they have not been able to stop the downward trend.
As of September 20, 2024, in the past year, the median decline in the liquor industry reached 41%.
Among them, Shede Wine Industry's stock price has fallen nearly 70%, and the declines of Jiugui Liquor, Jinzhong Liquor, and Luzhou Laojiao have exceeded 50%.
A repurchase of up to RMB 6 billion is indeed a big move in the market, but compared to Guizhou Moutai's market value of RMB 1.59 trillion, it seems like a drop in the ocean.
Although Guizhou Moutai has continued to pay high dividends in 2022 and 2023, with dividend payout ratios of 95.78% and 84.01% respectively, investors still have many dissatisfactions with the continuously falling stock prices.
Wind data shows that the undistributed parent company profits at the end of the first half of 2024 were still as high as RMB 95.574 billion.
At the performance briefing on September 9th, some investors directly said, "The stock price is so low, does the company have any intention to repurchase?"
and many questions were directed at the repurchase.
Although the repurchase came unexpectedly, some investors also think that the amount of the proposed repurchase is "a drop in the ocean."
So, can Guizhou Moutai's big move and high-profile repurchase save the situation?
The sluggish secondary market of the liquor industry is just the tip of the iceberg.
If we trace back to the core issue, it is still a multiple dilemma of poor sales, difficulty in breaking through the market, and weak diversified development, with products, channels, and even brands facing the problem of breaking the pattern.
Taking Guizhou Moutai, once known as "liquid gold," as an example, the peak season is not prosperous, and even during the Mid-Autumn Festival and National Day holidays, the terminal prices continue to fall.
The day after the repurchase plan was released, the retail price of Feitian Moutai in 2024 fell to RMB 2300, and the original box wholesale price of Feitian Moutai in 2024 has already broken through the RMB 2400 mark.
On September 19th, voices of "singing down" iMoutai began to spread on social media, claiming that liquor merchants have started to stop collecting Moutai liquor, and there is no profit in buying wine on iMoutai, including a series of wines such as Moutai zodiac wine, and some product prices have been reversed.
Even the Longmao, which was once popular and priced at RMB 6000 per bottle, could not escape the disaster.
On September 21st, the price showed that the market price of the zodiac dragon Mao, which was publicly priced at RMB 2499, continued to fall to only RMB 2570, and some areas quoted lower, and people joked that "going to pick it up on foot is a loss."
The Moutai solar term wine launched in the "Xunfeng Digital World" jointly launched by Ding Xiongjun and NetEase has also become a fleeting innovation attempt.
Looking back to June, the price of Feitian Moutai per bottle even fell to RMB 2080 at one point.
The price changes affect the emotions of dealers and even consumers, and the performance of the terminal market to a certain extent means the psychological defense line.
In the face of the decline in the terminal price of Feitian Moutai, Guizhou Moutai is not in a hurry.
After the sharp decline in prices in June, a series of measures to control prices were quickly introduced, including stopping the release of large boxes of Moutai liquor, canceling the opening box policy and other measures to control the amount, as well as suspending the release of aged Moutai and boutique Moutai.
Although the above measures pulled the price of Feitian Moutai back above RMB 2400, they could not play a long-term role in price control.
As the demand for Moutai collection and finance gradually decreases, the future development is still unknown.
At present, the self-drink demand of Guizhou Moutai is relatively stable.
However, it cannot be ignored that consumers' pursuit or obsession with Moutai is largely due to its high-end and scarcity.
If the brand value is increasingly popularized and the investment value is difficult to maintain, then the once dazzling golden brand may also become a very ordinary small label.
Guoyuan Securities believes that in 2023, under the background of change and diversification, liquor consumption has entered the era of "rational consumption + rational price."
According to the "2024 China Baijiu Market Mid-term Research Report" released by the China Alcoholic Drinks Association, in the first half of 2024, the best-selling price bands for white wine in the market were RMB 300-500, RMB 100-300, and RMB 100 and below.
However, looking at the performance in the first half of 2024, Guizhou Moutai's profit indicators remain excellent.
In the first half of 2024, Guizhou Moutai achieved a revenue of RMB 81.931 billion, a year-on-year increase of 17.76%, and a net profit attributable to the company of RMB 41.696 billion, a year-on-year increase of 15.88%.
In the first half of the year, the goal of "planning to achieve a total operating income of about 15% growth over the previous year" for the whole year of 2024 was exceeded.
Since 2018, Guizhou Moutai has changed its leader four times in six years.
The new chairman, Zhang Deqin, has been in office for nearly five months.
In addition to the first repurchase and price control measures, there have been no significant actions and changes that have a major impact on the market.
In terms of sales channels, in the first half of 2024, Guizhou Moutai's direct sales revenue was RMB 33.728 billion, accounting for 41.28%; the wholesale agency revenue was RMB 47.986 billion, accounting for 58.72%.
During the tenure of the former chairman Ding Xiongjun, he had made every effort to promote the reform of direct sales channels.
However, shortly after Zhang Deqin took office, he said at a symposium that "dealers are the family of Moutai," which also made the market question the channel strategy he advocated.
The balance between direct sales and wholesale channels has always been a focus of attention.
At the performance briefing on September 9th, Zhang Deqin stated that the current Moutai liquor distribution channel sales policy has not been adjusted.
Another focus is innovation.
At the previous shareholders' meeting, Zhang Deqin said, "Our innovation must be based on adhering to the essence of Moutai.
This year, we have done a lot of 'foolish things'.
The enterprise has the ability to correct errors.
If we find something inappropriate, we will adjust it immediately."
The market interprets the correction of innovation as referring to the Xunfeng Metaverse platform and hot joint names.
At present, Guizhou Moutai under the control of Zhang Deqin has indeed been much more low-key, and perhaps internal error correction is still quietly underway.
The direction of reform and development trends still need to wait for time.
Although Guizhou Moutai is a huge entity and an excellent consumer target in A shares, it will not face major crises in the short and medium term.
However, the current market value management and terminal market are still two thorny issues.
So, whether Guizhou Moutai will continue to be a "wine king" with rules, or innovate and expand the market, is worth looking forward to.
And what kind of footprint can Chairman Zhang Deqin leave in Guizhou Moutai is the topic that the market is more concerned about.