Kweichow Moutai, the Chinese company known for creating the popular national spirit, baijiu, now is the According to information from Refinitiv, the largest public company in mainland China by market capitalization after its shares have risen 23% so far this year.
It is currently valued at more than 1.8 trillion yuan ($ 259 billion), beating one of the country’s leading banks, the Industrial and Commercial Bank of China (IDCBF), which is worth just under 1.8 trillion yuan ($ 253 billion).
For comparison, the Chinese tech giants Tencent (TCEHY) and Alibaba (SLIME) They are worth around $ 605 billion and $ 614 billion respectively. The first is listed in Hong Kong, while the second is listed in New York and Hong Kong.
In 2017, it became the world’s largest spirits manufacturer by market value, outperforming Diageo (DEO), the British firm that owns Johnnie Walker and other major brands. Diageo’s current market value is approximately £ 65 billion ($ 81 billion). AB InBev (OUTBREAK), the world’s largest brewer, is worth around € 78 billion ($ 88 billion).
Last year, Moutai also became the first Chinese company since 2005 to see its share price hit 1,000 yuan (about $ 145). The stock is now trading at 1,460 yuan.
Chinese authorities mistrusted the company’s high valuation in the past. In 2017, the state media called the company after its shares more than doubled in just 11 months, urging investors to adopt a “rational view” of the company and not engage in “myopic speculation.”
That stabilized the stock momentarily, although it remained a favorite choice among analysts.
Hao Hong, head of research at BOCOM International, the securities arm of the China Bank of Communications, said there was no single factor driving the stock’s recent performance.
But he said investors may have been more risk averse during the coronavirus pandemic, prompting them to buy Moutai shares, despite the high price.
The company has a “very clear” formula for success, Hong said. For years, he has enjoyed solid earnings growth, a preferred brand, and a cash flow rarely seen among Chinese companies, helped by a steady rise in prices.
“I challenge you to find another company that is so predictable,” Hong added. “Big margins, well-loved brand … people still buy it like there’s no tomorrow.”
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