Kweichow Moutai Records a Gratifying CNY 22.60 Billion Net Income
Despite the decline in the net profit growth of Kweichow Moutai, institutions are still raising the company's target price.
On July 28, Kweichow Moutai released its 2020 semi-annual report. The company recorded a CNY 43.95 billion revenue, a year-on-year increase of 11.31%; net profit was CNY 22.60 billion, a year-on-year increase of 13.29%.
With the gradual slowdown in Moutai's production capacity, there is a huge gap between the appeal of different sub-brands. Moutai Series and Moutai achieved operating income of CNY 39.26 billion and CNY 4.65 billion, respectively, a year-on-year increase of 11.39% and a year-on-year decrease of 1.63%.
Moutai output 48,100 tons liquor, of which the output of Moutai was 36,700 tons, an increase of 6.69% year-on-year, and the production of the Moutai Series was 11,400 tons, an increase of 4.59% year-on-year. Due to capacity constraints, the overall production growth rate of Moutai liquor missed the market expectation of 10%.
As the most expensive traditional Chinese spirit brand, Feitian Moutai is facing a quandary of swelling prices. Since 2006, the ex-factory price of Moutai has been rising continuously, going from CNY 268/bottle to CNY 969/bottle in 2017 – it stopped increasing in 2017. Meanwhile, Wuliangye and Guojiao 1573 have frequently raised prices to catch up with Moutai.
In the past three years, the year-on-year growth rate of Kweichow Moutai's net profit in the second quarter was 41.5%, 20.29% and 8.89%, respectively. A declining growth rate exposed the company to potential challenges.
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