Raising Moutai’s FVE to CNY 400 as Strong Demand for Flying Moutai Persists; Shares Fairly Valued
Although wide-moat-rated Kweichow Moutai’s fourth-quarter 2016 earnings were lower than our forecasts, owing to higher-than-expected consumption duty, we reaffirm that the high-end baijiu industry is reviving from the anticorruption measures, given that Moutai’s first-quarter 2017 preliminary results beat our expectations. We are raising our fair value estimate for Moutai to CNY 400 from CNY 350 per share to account for our upward revision of the sales growth forecast and the time value of money...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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