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Original Title: What Happened to Kweichow Moutai Leading the Spirits Stock Downfall?
On February 22, liquor stocks fell again. The share price of leading liquor company Kweichow Moutai fell below 2,300 yuan to close at 2,288.02 yuan per share, a daily drop of 6.99%. It is worth noting that three business days after the Spring Festival, Kweichow Moutai’s share price fell 11.59% and the total market value fell below 3 trillion yuan to 2.87 trillion. yuan. With the exception of Kweichow Moutai, the stock prices of other liquor companies have fallen, with a daily drop of more than 5%. Some analysts believe that the decline in the spirits sector is mainly due to the large pre-holiday increase and there is some scope for callbacks; After the year, the market enters a small low season for alcohol consumption and the market seems to be on the sidelines.
Liquor stock prices collectively fell
On February 22, Kweichow Moutai’s share price fell below the 2,300 yuan mark and closed at 2,288.02 yuan per share, a daily drop of 6.99%. Regarding the continuing decline in the capital market, a reporter for the Beijing Commercial Daily called the secretary of the Kweichow Moutai Board of Directors, but as of press time, the company did not respond.
In fact, with the exception of Kweichow Moutai, spirits stocks fell yesterday, with many of them falling more than 5% daily. A reporter for the Beijing Business Daily learned from Oriental Fortune that Luzhou Laojiao closed at 271.37 yuan per share, a daily drop of 8.94%; Jinshiyuan closed at 52.69 yuan a share, a daily drop of 7.59%; Gujing Gongjiu, Yingjia Gongjiu, The daily Shuijingfang and Kouzijiao declines exceeded 6%.
According to the concept sector, the spirits index led the decline yesterday. At press time, the CSI Liquor Index is down 8.25%, which is also the biggest single-day drop for the CSI Liquor Index in 2021. It is worth noting that only yesterday morning, the value Total market share of the entire sector has evaporated 400 billion yuan since the previous trading day.
The continuing decline in Kweichow Moutai’s share price also made the keyword “Moutai drowned” the fifth most searched on Weibo. As of press time, it has had 1.11 million visits. A reporter for the Beijing Business Daily noted that some netizens said: “The Kweichow Moutai crashed later than expected. When choosing shares this year, we must carefully consider whether the share price is real or fake.” Some netizens speculated on the reasons for the stock’s decline, saying: “The decline in the spirits sector may be due to the anticipation that funds escaped first and changed other tracks, and subsequent funds fled one after another.” . As to whether Moutai shares can still be bought, 15,000 users believe that it is still possible to buy and said that every major drop in Kweichow Moutai is a good opportunity; While 6,400 users object, saying that the current price of Kweichow Moutai shares is too high for a long time, the risk is too high to be suitable for admission.
Chinese consumer goods marketing expert Xiao Zhuqing said the drop in spirits stocks is part of investors’ concerns that the liquor industry will usher in half a year of off-season sales after spring. However, in 2021, China’s liquor industry will usher in strong differentiation. One is the combination of Maotai flavored liquor versus other flavored liquors, and the other is the combination of famous top-of-the-line liquors in famous liquors of the region.
The rise in the early Spring Festival is too high
From the first trading day in 2021 to the last trading day before the Spring Festival, the Kweichow Moutai share price increased by as much as 30.05%; Luzhou Laojiao’s share price increased 30.37%; Jiuguijiu’s share price rose 8.16%. In 2020, the annual price of Kweichow Moutai shares rose 71.36%; Wuliangye’s share price rose 123.11%; Yanghe’s share price rose 119.53%; Shanxi Fenjiu’s share price rose 322.62%; Luzhou Laojiao’s share price rose 165.79%. Through the data, it is not difficult to find that the performance of the liquor sector in 2020 is striking, and the share prices of many liquor stocks have risen by more than 100% throughout the year.
Kweichow Moutai, as a leading spirits company, has seen its share price rise by 14.4% since its first trading day earlier in the year. Its share price peaked at 2,627.88 yuan per share, and its total market value exceeded 3 yuan. trillion on February 9. After the Spring Festival, Kweichow Moutai’s share price dropped dramatically and in just three business days, the share price fell 11.59%.
Yang Delong, managing director and chief economist at the Qianhai Kaiyuan Fund, said the decline in the liquor sector was mainly due to the pre-holiday surge. Before the holidays, first- and second-tier spirits, as well as third- and fourth-tier spirits, showed substantial growth. There will be differentiation in the liquor market. For well-performing top-of-the-line liquor, due to its strong profitability and brand equity, it will continue to rise and invest in the future. For third- and fourth-tier spirits with high-valuation bubbles and no performance backing, significant adjustments may occur.
Some netizens said the recent sharp drop in the liquor sector may be related to the continued fermentation of the Kweichow Maotai academic incident, which caused the market to worry about the future development of the liquor.
“The sharp decline in the liquor market is related to the continued fermentation of the Kweichow Maotai academic incident. Due to the continued fermentation of the incident, the market is concerned about the future development of the liquor.” Cai Xuefei, a spirits marketing expert, further stated that, on the other hand, it will enter after year. In the small off-season for alcohol consumption, the market seemed to be on the sidelines. Finally, the baijiu sector was overvalued years ago, and there is room for correction.
Liquor expert Ouyang Qianli said that the spirits sector has survived for a long time. The higher the position, the more investors will have to find a reason for tomorrow’s big increase. Kweichow Moutai sparked heated discussions due to “academic turmoil”, coupled with the reduction of Moutai’s holdings by funds, which brought instability to investors and amplified panic in liquor stocks. Furthermore, some of the liquor stocks have skyrocketed all the way, attracting many retail investors to enter the market, with some of the major players choosing high positions to lighten their positions, forcing liquor stocks to return to low positions to be able to re-enter the market.
Return of capital to value
The alcoholic beverages sector will increase by 134.14% in 2020, which is undoubtedly the most striking sector. In this context, many alcoholic beverage companies have performed well on the capital market and their share prices have grown by more than 100%. At the same time, voices of overvaluation of liquor companies and misleading stock prices also quietly appeared. Some netizens said that they could not understand the substantial growth of liquor companies in 2020. The netizen said: “The liquor sector continues to grow substantially and the striking increase is incomprehensible. It should be caused mainly by capital operations. Many liquors the companies have achieved unreasonable price-earnings ratios. To the point. “
In fact, after a striking performance in 2020, Kweichow Moutai’s price-to-earnings ratio (TTM) has reached 64.47 times; Gujing Gongjiu’s price-earnings ratio (TTM) is 62.52 times; Luzhou Laojiao’s price-earnings ratio (TTM) has reached 70.2 times; Jiuguijiu’s price-earnings ratio (TTM) is as high as 113.35 times. Industry experts said the price-earnings ratio is too high, indicating that the stock is highly valued and the price has seriously deviated from its true value. The value determines the price. Obviously, it is not worth that much money, but the price is set relatively high. This situation is usually short term. A stock with an excessively high price / earnings ratio means that the investment risk is relatively high. After all, the market is changing rapidly.
Cai Xuefei further stated that high-end liquor consumption is rigidly demanded, and dividends from liquor consumption will continue to accrue to famous and high-quality liquor companies, and the industry will become more differentiated. Faced with China’s huge consumer market, under the trend of improving consumption, there is no overvaluation of famous wine companies. For regional wine companies, it should be an urgent matter to strengthen marketing innovation, improve management and return the value of capital to corporate value.
Xiao Zhuqing said that looking at the major industries in the stock market, it is difficult to find an industry that can withstand shocks like the liquor sector. The stock price adjustment of the major alcoholic beverage companies is short-term behavior. From a long-term analysis, the major Chinese liquor companies and the flavor representative liquor companies remain the first investment options.
Beijing Business Daily reporter Zhao Shuping Zhai Fengrui
