On September 20th, Kweichow Moutai announced that the company will use its own funds to repurchase and cancel shares, with a minimum of RMB 3 billion (inclusive) and a maximum of RMB 6 billion (inclusive).
The upper limit of the repurchase price is RMB 1795.78 per share (inclusive), and the number of shares to be repurchased will be between 1,670,583 and 3,341,164 shares.
The proportion of the repurchased shares to the company's total share capital will be between 0.1330% and 0.2660%.
This is another significant positive announcement by Kweichow Moutai, one month after announcing a three-year cash dividend plan, implementing a cancellation-style repurchase to inject a strong stimulus into the capital market.
As the liquor industry enters an adjustment period, every move of the leading companies has become an important weathervane for the industry.
A series of actions by Kweichow Moutai also reflect the attention and importance given to the capital market.
This time, Kweichow Moutai supports the company's share price with real money and silver, which is beneficial to investors, and shows the company's optimistic expectation for the industry outlook, releasing a positive signal to boost the market's bullish sentiment.
Some investors said that from the increase in holdings by major shareholders in 2023, to the previously proposed dividend payout ratio of no less than 75% over three years, coupled with this repurchase, Kweichow Moutai has timely used market-oriented means to continuously strengthen market value management, convey confidence, stabilize expectations, and truly give investors a sense of return and gain.
It is worth noting that Kweichow Moutai's announcement also mentioned that the company's major shareholders currently have no plans to reduce their holdings, and if there are any plans to increase holdings in the future, they will fulfill their information disclosure obligations in a timely manner in accordance with relevant regulations.
From the perspective of market value management, repurchases, dividends, and increases in holdings are all tools, and the core is to bring practical and enterprising shareholder returns to investors through continuous performance growth and stable financial performance, keeping the company's market value and intrinsic value consistent.
An investor analysis shows that from the increase in holdings by major shareholders, continuous dividends to repurchase cancellation, it indicates that Kweichow Moutai has fully utilized the "toolbox" of market value management, bringing substantial benefits to the market and the company, allowing the company to better cope with market challenges, achieve stable, healthy, and sustainable development, and bring substantial returns to investors.
Industry insiders believe that Kweichow Moutai is currently achieving a synchronized increase in intrinsic value and market value through market value management, enabling investors to form a relatively stable expectation of the stock price and obtain relatively stable investment returns, and also contributing to the formation of a long-term investment and value investment atmosphere.
The first repurchase and cancellation by Kweichow Moutai is a good market value management with real money and silver.
As institutional investors evaluate, this repurchase and cancellation by Kweichow Moutai is not only a positive response to the "New National Nine Articles" but also has the confidence from good performance and market stability, which may have a significant positive impact on stabilizing the company's stock price.
This time, Kweichow Moutai has implemented the repurchase and cancellation with real money and silver, which is an active response to the demands of investors and a strong measure to do a good job in market value management.
On the one hand, it reflects substantial support and sharing of operational results, and on the other hand, it consolidates the position of controlling shareholders, helps to enhance the value of Moutai and the growth of shareholder returns, and promotes a win-win situation for all parties.
This is the first time in 23 years since its listing that Kweichow Moutai has implemented the cancellation of repurchase, becoming another measure to create a benchmark for market value management.
At the Kweichow Moutai 2024 semi-annual performance briefing held recently, when facing investors' concerns about "whether the company has the intention to repurchase stocks," Kweichow Moutai stated that it will combine the stock market situation and the actual situation of the company to conduct systematic research on different market value management measures, and if there are any relevant plans in the future, it will announce them in a timely manner in accordance with relevant regulations.
Eleven days later, the repurchase plan was officially launched.
Moutai's move can be said to be a positive response to the concerns of investors.
Repurchases, as a market value management tool and an important way of counter-cyclical capital operations, can convey to the market the signal that the company's value may be underestimated, boosting market confidence.
The cancellation-style repurchase taken by Kweichow Moutai this time is considered to be the most beneficial to investors.
Market insiders analyzed that after the share repurchase and cancellation, the company's share capital will decrease, and in the case of unchanged profit and dividend ratio, financial indicators such as earnings per share, return on net assets per share, and dividend per share will be improved, which theoretically helps to increase the distributable profit per share and is beneficial to the improvement of investor returns.
"For companies, cancellation-style repurchase means relatively higher costs, so the proportion of repurchase for cancellation in the capital market is very low."
Industry observers pointed out that Kweichow Moutai's first implementation of cancellation-style repurchase is not only setting an example in market value management but also has a more obvious role in helping the capital market to stabilize and recover.
From the perspective of book funds, the repurchase funds this time will not affect Moutai's cash flow.
The financial report for the first half of 2024 shows that Kweichow Moutai's cash and cash equivalents are RMB 145.267 billion.
Assuming that all the funds for this repurchase of shares, with an upper limit of RMB 6 billion, are used up, the repurchase funds account for 4.1303% of the cash and cash equivalents, which will not affect the company's daily operation, profitability, future development, and maintenance of the listed status.
Regarding the purpose of this repurchase, Kweichow Moutai stated that it aims to protect the interests of the company and the majority of investors, enhance investment confidence, and on the premise of ensuring that the company's normal operation and long-term development are not affected, the company plans to implement a share repurchase plan with its own funds in accordance with the relevant regulations of the China Securities Regulatory Commission, Shanghai Stock Exchange, etc., and the repurchased shares will be used for cancellation and reduction of the company's registered capital.
Market insiders believe that Kweichow Moutai's implementation of repurchase and cancellation this time is based on confidence in the future development prospects of the industry and recognition of growth value, conveying a positive signal of Moutai's development to the outside world, highlighting corporate value, and is more beneficial to the improvement of Kweichow Moutai's stock price and investor interest protection, marking an increase in the company's investment value awareness and boosting confidence in the capital market.
Major shareholders have repeatedly increased their holdings, injecting strong confidence into the capital market.
Since Kweichow Moutai went public, Moutai Group and its subsidiaries have increased their holdings in their own stocks four times.
The first increase was in 2010, when the liquor industry was affected by macroeconomic fluctuations, and market confidence was shaken, and Moutai Group increased its holdings in this context.
The second time was in 2012, when the liquor industry faced a trust crisis, and the stock prices of liquor companies fell sharply, and Moutai Group increased its holdings against the trend.
The third time was in 2013, when Kweichow Moutai rebounded to some extent, but the overall situation was still in a period of shock adjustment, and Moutai Group continued to increase its holdings in this context.
The fourth time was in 2023, when Moutai Group increased its holdings by 919,600 shares, and Moutai Technology Development Company increased its holdings by 37,600 shares.
Moutai Group and its subsidiaries have increased their holdings in their own stocks in different market contexts, fully demonstrating Moutai Group's firm confidence in the company's future development and recognition of long-term value.
Affected by the increase in holdings by major shareholders, funds continue to increase their holdings.
In the first quarter of 2024, the flagship fund of the American asset management giant Capital Group, "European Pacific Growth Fund," significantly increased its holdings in Kweichow Moutai, adding 3,869,080 shares compared to the end of 2023.
It is reported that E Fund Long-term Value increased its holdings by 136,800 shares in the second quarter, making it the fourth-largest heavy stock.
In addition, Bank of Communications New Growth increased its holdings by 89,800 shares, making Moutai the second-largest heavy stock; Yuanxin Yongfeng Xingnuo One-Year Hold, Yuanxin Yongfeng Youjia Life, Qianhai Open Source Shanghai-Hong Kong-Macau Advantage Selection, and other products also increased their holdings in the second quarter.
Data shows that at the end of the second quarter of this year, Kweichow Moutai was held by 1,265 funds, with a total of 80.75 million shares.
So far, many fund products still choose to increase their holdings in Kweichow Moutai, and people such as E Fund Guo Jie and well-known writer Zijin Chen are also "supporting" Moutai.
Investment bigwig Duan Yongping recently said on social media, "Looking back 20 years later, Moutai should be much better than gold," showing confidence in Moutai's long-term value.
In the view of some research institutions, looking good at Moutai is essentially looking good at the long-term development of China's economy, and the underlying logic is that the overall trend of China's affluent families and consumer population is still a high probability of spiraling upwards.
Solidifying the dividend ratio gives investors a "reassuring pill."
In response to the dividend issue that shareholders care about, Moutai adheres to a stable and continuous cash dividend policy to reward shareholders.
So far, it has paid more than 270 billion yuan in cash dividends, accounting for about 56% of the net profit since its listing, distributing more than half of the net profit to shareholders.
According to Kweichow Moutai's "2024-2026 Annual Cash Dividend Return Plan," from 2024 to 2026, the total amount of cash dividends distributed by the company each year will not be less than 75% of the net profit of the mother company realized in that year.
In principle, dividends will be distributed twice a year, and the dividend yield exceeds 3.5%.
This year, Kweichow Moutai has continuously optimized investor relations and created a benchmark for market value management through a set of "combination punches" of market value management measures such as increasing the frequency of communication between senior executives and investors, implementing a three-year dividend, and this repurchase and cancellation.
Establish a normalized mechanism for communication with investors.
From the May 28th shareholders' meeting, the July 1st offline investor exchange meeting, to the September 9th performance briefing, three exchanges full of "gold content" between "key minorities" such as senior executives and independent directors and shareholders, Moutai has responded to concerns frankly with investors, telling the future development plans and path goals.
Strengthen the production and operation of the front-line market research, and solid and stable production and operation become the key.
At the performance briefing on September 9th, the Moutai management also clearly stated that it will ensure that the annual target of a 15% increase in total operating income is completed on schedule.
This is why this year, the Moutai executive team has repeatedly gone deep into the front-line markets of various provinces and regions for research, held provincial and regional market work meetings, and communicated with representatives of channels such as distributors, e-commerce, group purchases, and provincial self-operated stores to understand market marketing, channel management, and terminal construction, and continuously improve a systematic and coordinated strategic and tactical system.
Observers pointed out that through the high-frequency market research of Moutai's senior executives, it is not only conducive to the decision-making layer to adjust market strategies in a timely manner in line with market realities and formulate a package of stable wine price measures, but also allows the outside world to see that Moutai will always focus on production and operation, market value management is just a tool, and more importantly, it is to do a good job in production and operation.Additionally, market value cannot be separated from the support of brand value.
In this September, Moutai rose to the second most valuable Chinese brand in the BrandZ rankings with a brand value of $87.298 billion, outperforming the overall market trend, and its share in the total value of China's top 100 brands continued to increase.
Moutai is also playing a leading role in the industry and is continuously expanding overseas.
