As said, Kweichow Moutai’s investment in Guizhou’s main highway operator is not the first time the group has supported the impoverished provincial government. The market reacted negatively to the news, with Kweichow Moutai’s stock price falling 3.16% on September 17 to close at 1,670.5 yuan ($245.60), bringing down the stock prices of similar businesses at the same time. Total retail sales in China resumed growth in the last two months, with spending on alcohol and cigarettes rising 17.6% in September. While its net profit margin was only 1% in 2019, the pandemic caused its bottom line to be negative in the first two quarters of this year. It has been continuously borrowing money from banks to build highway infrastructure and has 260 billion yuan ($38.2 billion) of interest-bearing debt.

“It is quite common for liquor companies, such as Kweichow Moutai Group, Wuliangye Yibin and Luzhou Lao Jiao, to support the local economies, and in turn receive policy support from the local governments,” Cai from Hefei Zhiqu said. Kweichow Moutai Group, on the other hand, has had a strong financial performance, with abundant cashflow and high solvency. Have a confidential tip for our reporters? The name has helped the airport raise its profile and in turn increased the liquor company’s influence. The group owns 58% of shares in the Shanghai-listed liquor maker, and liquor business account for 99% of its revenue.

It was once the favoured drink at all government gala events but sales shifted to general consumers last decade as it became one of the targets of Xi Jinping’s anti-corruption campaign. 1 brand in Guizhou Province, Kweichow Moutai Group has an inherent responsibility to support the harmonious development of the local economy. S&P 500 Tumbles Most in a Month on Virus Spread: Markets Wrap, Czechs Impose Curfew; Warnings in U.S. Midwest: Virus Update, Bond Defaults Deliver 99% Losses in New Era of U.S. After its performance began to pick up in 2018, Yibin Paper Industry’s net profit declined again in 2019. Its flagship product Flying Fairy continued to see the price of a half-liter bottle rise to about 3,000 yuan even after China’s discipline inspector for the Communist Party warned about high liquor prices and urged regulators to further crack down on illegal extravagant activities. And like Moutai, there is also an airport in Yibin named after Wuliangye although the company did not need to make any investment in its construction. “This action of Kweichow Moutai Group has no relation with the listed company, and will not affect the production and sales of the Moutai liquor. When we also consider that Moutai is publicly traded on the stock exchange – and is the most valuable liquor brand in the world – sales at high prices can leave China in a healthy financial position.

Photo: C.Yong / Imaginechina, AFP. Concerned that the surging price of high-end liquor will spur new rounds of corruption, China’s Central Commission for Discipline Inspection published an article on its website this week, warning CPC members against bribery and squandering public funds on holiday banquets. While wealthy SOEs are called on to help their struggling peers get out of financial difficulty, a more common practice is a debt-to-equity conversion with local banks. As an important economic entity in Guizhou Province, Kweichow Moutai Group is more and more becoming a lever to orchestrate the province’s local economy,” Cai Xuefei, a liquor industry consultant and General Manager of Hefei Zhiqu Cultural & Creative, told ATF. Stock analysis for Kweichow Moutai Co Ltd (600519:Shanghai) including stock price, stock chart, company news, key statistics, fundamentals and company profile. Its planned investment in these projects over the next three years amount to 31.6 billion ($4.6 billion) in total. This should help Kweichow Moutai to integrate better with the local ecosystem and play an even more important economic role,” he said. Last year, Moutai also became the first Chinese company since 2005 to see its stock price hit 1,000 yuan (about $145). In 2017, as part of an effort to deepen state-owned enterprise (SOE) reform and optimise resource allocation, the government of Yibin city in Sichuan Province, Wuliangye’s home town, decided to transfer its 37.8% ownership in Yibin Paper Industry Co Ltd at no cost to Wuliangye Group.

Download Reset. These banks were given licenses to establish investment subsidiaries, so they could hold stakes in SOEs indirectly in a special arrangement.
Instead of paying for the acquisition from its own pocket, Kweichow Moutai Group has chosen to raise funds through a bond issuance. Total revenue for the period jumped 7.2% to 23.9 billion yuan.
Once a leading paper mill that produced China’s first paper for newspaper printing, Yibin Paper Industry’s business was struggling, and the government was hoping the liquor giant could help revitalise the business. Officials also suspect it could be central to new rounds of corruption. The highway operator had reportedly exhausted its financing options when most of its highway operation rights were given to banks as collateral. warned about high liquor prices and urged regulators to further crack down on illegal extravagant activities. This is how much Moutai is worth based on the industry EV/EBITDA average or Moutai’s 10-year historical average. The bonds, offered for the first time by Kweichow Moutai Group and carrying AAA credit rating, will mature in not more than 7 years. This year, both of its sales volumes and prices decreased in the Covid-19 stricken international market, causing the company to register a total loss of 620 million yuan ($91 million) in the first half. According to a social responsibility report published by Kweichow Moutai Group in July, the group paid 43 billion yuan ($6.3 billion) in tax in 2019, which was about a fifth of Guizhou Province’s entire tax revenue.

This increased Wuliangye Group’s ownership in the paper company to 53.8%, making it its controlling shareholder. With holidays coming up, this popular drink is expected to rush of sales. It plans to temporarily invest unused proceeds from the bond offering in stable and high-liquidity financial products, such as treasury bonds, policy bank bonds and local government bonds, according to its prospectus.

is expected to rush of sales. China kicked off an initital round of debt-to-equity conversions  in 2016, when it got large banks such as China Development Bank, Bank of China, Industrial and Commercial Bank of China, and China Merchants Bank involved. This does not leave the authorities with any real motivation to drop the price of Moutai. Find the latest KWEICHOW MOUTAI (600519.SS) stock quote, history, news and other vital information to help you with your stock trading and investing. Profit has grown even as overall consumption contracted.

Moutai’s stock has climbed 45% this year. Zhao Guofang, a food and beverage industry analyst at Industrial Securities, believes the market has overreacted to the news. Learn about 600519 with our data and independent analysis including price, star rating, valuation, dividends, and financials. People queue for flights at Zunyi Maotai Airport in Guizhou province in February 2020. The liquor group’s former top executives have also constantly appeared in the press for corruption scandals. Officials also suspect it could be central to new rounds of corruption. Chinese liquor giant Kweichow Moutai Co. posted a 6.7% gain in net income for the third quarter, as a recovering economy and holiday-season demand continued to boost drinkers’ appetite for ultra-premium baijiu. A financing vehicle “Kweichow Maotai's strong brand value has led to a strong premium in the capital market. (ATF) Hong Kong: Financial markets were in retreat amid a surge in coronavirus cases in the United States, France and …, China's government is reportedly discussing permits for millions of tonnes of additional corn imports over the next year, amid a …, Apple's top iPhone assembler, Taiwan-based Foxconn, has set up a task force to fend off the growing clout of Chinese …, (ATF) China's quick economic recovery has made it the only major economy to post growth in 2020, and the PBoC's …. Zhao from Industrial Securities expects Kweichow Moutai Group’s investment in the highway operator to help the group and the listed subsidiary establish a more favourable public image. Its net profit margin has remained between 46% to 49% over the last three years.

Just last month, Kweichow Moutai Group’s former vice chairman Liu Zili, was sentenced to 11 years and six months in prison for taking bribes. Kweichow Moutai Group recorded revenues of 66.3 billion yuan ($9.7 billion) in the first half. Wuliangye is also a tier-1 maker of “baijiu”, a fiery distilled spirit, that is a distant second after the popular Moutai. Moutai’s stock has climbed 45% this year. They will be targeted at professional investors and available for trading on the Shanghai Stock Exchange. Funds were put into two local tea companies the following year, while over 100 more projects in liquor, tea, bamboo, and grain businesses were considered for investment support. — With assistance by Charlie Zhu, Daniela Wei, and Jing Jin. According to a prospectus filed to the Shanghai Stock Exchange Corporate Bond Information Platform, the holding company, Kweichow Moutai Group, plans to use the funds raised to acquire a partial stake in Guizhou Expressway Group from a unit of Guizhou government that administers state-owned assets. Wuliangye has also been enlisted by local officials to propel business development. Cai from Hefei Zhiqu also believes the deal will help boost the liquor maker’s business to a certain extent in the long term. These totalled 500 billion yuan ($73.4 billion), according to Wang Hailin, head of the Financial Supervision Department under the State-owned Assets Supervision and Administration Commission (a division of the State Council).


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