Kweichow Moutai late at night announcement： price increase, implement immediately!

　　On the evening of October 31st.

　　Kweichow Moutai issued an announcement

　　After research, it was decided

　　Since November 1, 2023,

　　Up-regulate 53%vol Kweichow Moutai (Feitian, Wuxing)

　　ex-factory price

　　The average increase is about 20%

　　This adjustment does not involve the market guidance price of the company’s products.

　　The announcement also stated that

　　This price adjustment will affect the company’s operating performance

　　Have a certain impact

　　Investors are advised to invest rationally and pay attention to risks.

　　First price increase in six years

　　According to the Securities Times, this price increase is the first price increase of Maotai in nearly six years. Since the ex-factory price of 53-degree 500ml Feitian Maotai was raised from 819 yuan to 969 yuan in January 2018, and the terminal retail price was adjusted to 1499 yuan, the price increase expectation of Feitian Maotai has been fermented in the capital market, but it has not received a clear response.

　　According to incomplete statistics, Kweichow Moutai had previously raised the price of its products in 2006, 2009, 2010, 2012 and the end of 2017. Among them, 2006 was mainly aimed at Maotai vintage wines, and did not involve Feitian Moutai, which was the most concerned by the market.

　　On the day of December 28, 2017, the last time Kweichow Moutai announced the price increase, the share price of Kweichow Moutai rose by 8.21%.

　　The reporter learned that the products involved in the ex-factory price increase of Kweichow Moutai are mainly "Pumao" that consumers are familiar with, including five-star 53% vol.
500mL Kweichow Moutai, Feitian 53%vol 500mL Kweichow Moutai, and other milliliter products of Feitian series, such as Feitian 53%vol.
50mL Kweichow Moutai, Feitian 53%vol 200mL Kweichow Moutai, Feitian 53%vol 375mL Kweichow Moutai, Feitian 53%vol.
1L Kweichow Moutai, etc. 100 ml of 53-degree Feitian Moutai, as well as fine products, treasures and premium products, have not been adjusted.

　　Moutai products contribute nearly 85% of the income of Kweichow Moutai, and most of the income of Moutai comes from Pumao products such as 53-degree flying Maotai. This price increase will significantly improve the performance of Kweichow Moutai in the fourth quarter of this year and next year.

　　On the evening of October 20th, the third quarterly report of Kweichow Moutai revealed that the operating income in the first three quarters of 2023 was 103.268 billion yuan, up 18.48% year on year, and the net profit was 52.876 billion yuan, up 19.09% year on year. Among them, the operating income in the third quarter was 33.692 billion yuan, a year-on-year increase of 14.04%; The net profit for the same period was 16.895 billion yuan, up 15.68% year-on-year.

　　"In the absence of price adjustment for more than five years, raising the ex-factory price conforms to the trend of the country’s vigorous promotion of consumption recovery, which is conducive to boosting the confidence of the liquor industry and stimulating and stimulating consumption growth. At the same time, it also meets the expectations of investors and effectively boosts the capital market’s confidence in Kweichow Moutai and the liquor sector." Xiao Zhuqing, Chairman of Wuhan Jingkui Technology, analyzed.

　　Direct selling has been disguised to raise prices.

　　This round of price increase acts on dealer channels.

　　"Maotai will fully follow the market rules and respond to market demand." Ding Xiongjun, chairman of Maotai Group and Kweichow Moutai, made a statement at the shareholders’ meeting in the first half of this year, which finally echoed.

　　Since the beginning of 2018, the ex-factory price of 53-degree Feitian Moutai has been maintained at 969 yuan a bottle. During this period, the price of large head items of many wine companies has been continuously raised, even exceeding the ex-factory price of Feitian Moutai. After the price increase of about 20%, the ex-factory price of Feitian Moutai exceeded 1100 yuan, which widened the ex-factory price gap with other famous wines again.

　　What investors are concerned about is: How much will this increase in ex-factory price improve profits?

　　First of all, it can be clear that the ex-factory price of Moutai is increased by about 20%, which does not mean that the profit is directly increased by 20%.

　　Since the beginning of 2018, the average price of Moutai products has increased by about 18%, and the ex-factory price of 53-degree 500 ml Feitian Moutai has increased to 969 yuan. The annual report of that year showed that the gross profit margin of Moutai increased from 92.82% in the previous year to 93.74% in 2018, an increase of 0.92 percentage points.

　　At that time, about 90% of Kweichow Moutai’s income still came from wholesale channels, and the relationship between increasing ex-factory price and increasing profit was more clear. In 2018, the revenue of Kweichow Moutai increased by 26% year-on-year, the net profit returned to the mother increased by 30% year-on-year, and the profit increase rate was 5 percentage points higher.

　　However, since 2019, the proportion of direct sales revenue of Kweichow Moutai has greatly increased, and the direct sales channel has been sold at a market guidance price far higher than the ex-factory price, which is equivalent to the direct sales channel has already raised the price in disguise.

　　This adjustment does not involve the market guidance price, so the profit increase of listed companies in Kweichow Moutai mainly comes from the ex-factory price increase of dealer channels, while the profits obtained by listed companies through direct sales channels are not affected by this price increase. In the first three quarters of this year, Kweichow Moutai’s revenue from wholesale channels accounted for 55%, and the price increase is equivalent to half of its revenue, which is expected to increase its profit accordingly.

　　Balance of interests behind Maotai’s price increase

　　In the last ten years, every price increase of Moutai has aroused strong repercussions. With the market price of Moutai breaking through 1,500 yuan, 2,000 yuan, 2,500 yuan and 3,000 yuan all the way, the more the management of Maotai raises the ex-factory price in the future, the more it needs to consider various interests.

　　On the one hand, as a state-owned enterprise and the number one enterprise in Guizhou, Maotai’s ex-factory price increase is directly related to its contribution to local finance, and it faces the demands of local performance growth. On the other hand, after rising to the largest listed liquor company and listed state-owned enterprise by market value, the increase of ex-factory price will drive the increase of profit, which will have a great impact on the income of state-owned shareholders, institutional investors and small and medium-sized investors. But in turn, the price increase will affect the profit space of dealers and test the relationship between Maotai and channels.

　　For this reason, every time Maotai raises its ex-factory price, it is cautious and will continue to observe the consumption situation of liquor and the terminal price trend of Moutai.

　　In the case that the proportion of direct sales revenue is almost beyond mention, and the sales volume of Moutai can not increase rapidly for the time being, raising the ex-factory price has become a natural choice for Kweichow Moutai to ensure its performance improvement.

　　This time, Maotai chose to wait, and it was not until the wholesale price of Feitian Moutai stabilized in the fourth quarter that it finally announced the price increase. According to today’s wine price data, the original case of 53-degree 500ml Feitian Moutai this year is maintained at more than 2,900 yuan. Although the price is slightly lower than that of more than 3,000 yuan in the previous two years, it is still at a relatively high level in history, leaving enough profit space for dealer channels.

　　Xiao Zhuqing reminded that at present, the market price of Feitian Moutai has been realized in recent years when Maotai has continuously increased the supply of direct sales channels at a guide price of 1499 yuan, which is enough to show that Moutai is still in short supply.

　　"Considering that the revenue contributed by the entire direct channel is close to 50%, in this case, the increase in the ex-factory price of Moutai has little impact on the traditional dealer channels, but it is a boosting effect for increasing the profit of Maotai and increasing the income of shareholders. It is a shot in the arm for the stock market." Xiao Zhuqing said.

　　In addition, Kweichow Moutai once again raised its ex-factory price, which had a particularly significant impact on the liquor industry.

　　On the one hand, it is the significance of indicators. When the price of Feitian Moutai was raised in 2015, the last round of liquor industry adjustment period had not yet ended, and the industry still had the meaning of cold winter, but Maotai took the lead in sensing the warming trend of Feitian Moutai at the terminal and took the lead. Then in 2016, the liquor industry started a new round of upward cycle. The relationship between the price increase of Maotai and the inflection point of the industry cycle is often talked about by investors.

　　On the other hand, it is practical. After the ex-factory price of Feitian Moutai is raised, it will also open up the price increase space for other famous wines. The ex-factory price and market guidance price of Maotai liquor, in a sense, determine the anchoring objects of many famous and non-famous products.

　　However, it should be pointed out that the price and status gap between Moutai and other liquors in previous years is not so big. Whether the market of Maotai can accurately reflect the market of other liquor brands now may require further observation.

　　It remains to be seen how the capital market and liquor industry will give feedback.

　　Comprehensive | 21st century business herald, Securities Times, Interface News