Moutai shares sees 6th day of de­clines

China Daily (Hong Kong) - - BUSINESS - By ZHU WENQIAN zhuwen­qian@chi­nadaily.com.cn

Shares of Kwe­i­chow Moutai Co, the best-known high-end Chi­nese liquor, have ex­pe­ri­enced con­sec­u­tive losses for six trad­ing days, as a re­sult of an ex­ces­sive surge ear­lier, with in­dus­try an­a­lysts re­gard­ing it as ra­tio­nal de­clines.

On Wed­nes­day, Moutai shares edged up 1.82 per­cent to close at 460.13 yuan ($67.7). Its share price is now the high­est among listed Chi­nese com­pa­nies. In the six trad­ing days be­fore Wed­nes­day, Moutai’s cu­mu­la­tive drop reached 6.76 per­cent, and its mar­ket value shrunk by more than 40 bil­lion yuan.

Last week, Moutai’s mar­ket value ex­ceeded 600 bil­lion yuan, as its share price had been con­sis­tently ad­vanc­ing this year, and its mar­ket value had topped that of other glob- al liquor pro­duc­ers.

Ear­lier this year, a num­ber of in­sti­tu­tions have been bullish about the growth po­ten­tial of Moutai stock, rat­ing it “rec­om­mend to buy” or “strongly rec­om­mended”. TF Se­cu­ri­ties ear­lier pro­posed that Moutai’s tar­get price could reach 615 yuan.

Huang Fusheng, an an­a­lyst at Pa­cific Se­cu­ri­ties, said in the past three years, the growth rate of Moutai’s net profit had been lower than 10 per­cent, its shares had been af­fected by spec­u­la­tive in­vest­ment.

In 2016, 2015 and 2014, Moutai’s net profit at­trib­ut­able to share­hold­ers grew by 7.84 per­cent, 1 per­cent and 1.41 per­cent, re­spec­tively, ac­cord­ing to the com­pany’s earn­ings re­port.

“The ear­lier growth and val­u­a­tion were too high, so the whole mar­ket was con­cerned about Moutai’s share price, and some peo­ple have been re­luc­tant to buy it,” Huang said.

“Moutai’s val­u­a­tion bub­ble, and the fluc­tu­a­tion of the mar­ket, as well as the de­crease of the growth rate, could be the sig­nals of the end of the boom­ing growth of the Chi­nese liquor sec­tor and Moutai, but that re­mains far off.”

Moutai’s mar­ket value last week, be­fore the cor­rec­tion. Its share price had been con­sis­tently ad­vanc­ing this year

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