Despite Slow Progress in Direct Sales, Kweichow Moutai Profit Growth Remained Solid in 1H 2019
We maintain our fair value estimate for wide-moat Kweichow Moutai at CNY 880, after the official release of the interim results. Despite slow progress in direct sales, profit growth of 26.6% in the first half was ahead of our projection, because of the increasing mix of the higher margin nonstandardized Zodiac liquor. Earlier this year, Moutai initiated a sales reform, aiming to shift more shipments from the traditional dealers to the direct sales channels (including self-owned stores, customize...Kweichow Moutai is engaged in the manufacture and sale of "Guizhou Moutai" series distilled spirits; manufacture and sale of beverages, food and packaging materials; development of anti-counterfeiting technologies; and research and development of relevant IT products. Through its subsidiaries, Co. is also engaged in the wholesale of agricultural vice-local products, building materials, decoration materials, metal materials, machineries, electronic products, telecommunication products, hardware, rubber products, general merchandises and furniture. Co.'s products include millesimes liquor, gift liquor, common liquor and other liquor series.
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