---
endpoint: analytics
pattern: Consumer
status: done
latency_ms: 208727
conversation_id: f379d8fe-f235-4324-8912-05750ef1298a
citations: 15
created: 2026-05-31 21:44:01Z
---

# What is the investment thesis for Kweichow Moutai in the current market environment?

# Kweichow Moutai (600519 CH) — Investment Thesis in the Current Market Environment

**As of late June 2025, the investment debate on Kweichow Moutai has shifted from "premium consumption growth story" to "policy-pressured franchise at distributor-cost wholesale prices."** The long-term scarcity-asset thesis remains intact, but the near-term setup is the most challenging since 2013 anti-corruption. This note synthesizes CLSA's internal research (expert calls, baijiu weekly trackers) with Moutai's FY2025 statutory disclosures.

---

## 1. Core Bull Thesis — Why the Long-Term Franchise Still Holds

| Pillar | Evidence |
|---|---|
| **Brand moat & geographic monopoly** | Feitian Moutai is the originator and archetype of Moutai-flavor (Maotai-flavor) baijiu, a national geographical indication product, organic food, and national intangible cultural heritage. Marketing network spans 66 countries and regions [15]. |
| **Distribution: direct + wholesale** | Dual channel — self-operated stores plus "i Moutai" digital platform alongside dealers/supermarkets/e-commerce, giving Moutai unusual control over premium price discovery vs peers [15]. |
| **Exceptional ROIC even in down year** | FY2025 weighted-average ROE of **32.53%** (vs 36.02% in FY2024) — still best-in-class for global consumer staples even after compression [12]. |
| **Cash-return policy is accelerating** | Proposed FY2025 cash dividend of **Rmb27.993/share**, totalling **Rmb35.03bn** on 1.252bn shares outstanding (ex-repurchase). This is a meaningful step-up in shareholder returns as growth moderates [11]. |
| **Sell-side maintains constructive stance** | CLSA's Elsie Sheng has Moutai at **Outperform (O-PF)** with reference price Rmb1,486.11 in the 10 Jun 2025 expert-call note [5]. |
| **Long-term demand intact** | Per CLSA's expert-call read-out: "Although the long-term demand for baijiu is still intact, a recovery would need to wait until the policy execution starts to ease" [1]. |

---

## 2. Bear Case — What the Numbers Say About 2025

### 2.1 First "down year" since the post-2013 recovery

Moutai posted its first top-line and bottom-line decline of the modern era in FY2025 [13]:

| Key P&L (RMB) | FY2025 | FY2024 | YoY |
|---|---|---|---|
| Operating revenue | 168,838m | 170,899m | **-1.21%** |
| Total profit | 114,755m | 119,638m | **-4.08%** |
| Net profit attributable | 82,320m | 86,228m | **-4.53%** |
| Net cash from operations | 61,522m | 92,464m | **-33.46%** |
| Basic EPS (Rmb/share) | 65.66 | 68.64 | **-4.34%** [12] |
| Weighted-average ROE | 32.53% | 36.02% | -3.49 ppt [12] |

### 2.2 Quarterly cadence shows the policy hit

Q1 was front-loaded; revenue and profit then stepped down sharply once the May "no-alcohol" enforcement kicked in [14]:

| Rmb m | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Operating revenue | 50,601 | 38,788 | 39,064 | 40,384 |
| Net profit (attributable) | 26,847 | 18,555 | 19,224 | 17,693 |

Q2 revenue fell **-23% sequentially vs Q1**, with Q3/Q4 stabilising at a lower run-rate — consistent with CLSA's channel checks of distributor de-stocking and slowed sell-through.

---

## 3. The Policy Shock — Why This Cycle Is Different

CLSA's June 10 expert call with a Henan-based baijiu expert is the most important internal document on the situation:

- **Trigger event**: A local official in a Henan county died from drinking alcohol on duty in May, which caught the attention of the Central Inspection Team and triggered "very strict supervision" [3]. Since May, public servants in Henan "seldolmly drink alcohol or attend banquets," and the strict execution also reaches State-Owned Enterprise (SOE) employees [3].
- **Scope of the rule change**: The May 18 directive shifted policy from **"no high-end alcohol" to "no alcohol"** for party/government organizations — a step-change tightening relative to the 2013-vintage rules that capped serving baijiu above Rmb300/bottle [4]. The expert expects the change "will continue to affect baijiu consumption" [4].
- **Demand impact**: In Henan — the province with the strictest execution — **baijiu sell-through fell 30% YoY in May**, especially for high-end premium brands [2]. CLSA notes prepayment/shipment to distributors is still in line with last year, but channel inventory has risen sequentially [2] — i.e. the sell-out hit has not yet fully propagated to sell-in.
- **Timing**: The Central Inspection Team is scheduled to leave late June through July, but "whether the execution will ease after that is key to watch" [1]. The expert does not expect a Mid-Autumn Festival recovery beyond what the low base implies.

---

## 4. The Wholesale-Price Tell — Now at Distributor Cost

The single most important signal in real time is Feitian Moutai's secondary-market wholesale price. CLSA's 27 June weekly:

> "Feitian Moutai wholesale price dropped further to around Rmb1,800 per bottle due to the continued strict enforcement of alcohol restrictions in China. Based on our channel checks, Rmb1,800 is around the weighted average cost for Moutai distributors; thus, it is very important for Moutai to maintain its wholesale price at above this level." [7]

Per CLSA's pricing table dated 27 June 2025 [8]:

| Moutai SKU | 27 Jun Price (Rmb) | WoW | YoY |
|---|---|---|---|
| Feitian 53° Bulk | 1,800 | **-5.3%** | **-21.4%** |
| Feitian 53° Original Box | 1,870 | -4.1% | **-26.7%** |
| Fine Moutai | 2,410 | -3.6% | -20.5% |
| Zodiac Moutai (Snake) | 2,200 | -3.1% | n.a. |
| Moutai 1935 | 720 | flat | -18.2% |

The fact that Feitian is **trading at the distributor breakeven** is the line in the sand — below this level, distributors begin pulling back, which historically forces management intervention (volume control, channel pricing support).

**Digital channel evidence is even starker**: CLSA estimates iMoutai YTD sales value was **down 83% YoY as of 25 June** [9] — partly a methodology issue (iMoutai stopped disclosing lottery volumes from 21 Oct 2024), but the trajectory is unambiguous.

---

## 5. Sell-Side Target Price History — What's Been Priced In

CLSA's Moutai recommendation/target price trajectory (Elsie Sheng) tells the de-rating story [6]:

| Date | Rating | Target (Rmb) |
|---|---|---|
| 18 Apr 2023 | BUY | 2,116 |
| 27 Feb 2024 | BUY | 2,106 |
| 01 May 2024 | BUY | 2,187 |
| 19 Jun 2024 | BUY | 1,818 |
| **28 Jun 2024** | **O-PF (downgrade)** | **1,818** |
| 26 Nov 2024 | O-PF | **1,718** |

CLSA downgraded to Outperform in June 2024 and cut the TP from Rmb2,326 (Jan 2024) to Rmb1,718 (Nov 2024) — a **~26% cut**, well before the May 2025 policy shock. The current reference price of Rmb1,486.11 [5] sits **~14% below the standing TP**, but the implicit upside has narrowed considerably from prior cycles.

### YTD Stock Performance (as of 27 June 2025) [10]

| Company | YTD % |
|---|---|
| **Moutai** | **-3.0** |
| Fen Wine | -1.0 |
| Luzhou Laojiao | -5.5 |
| Wuliangye | -13.0 |
| Yanghe | -23.0 |
| Shede Spirits | -28.0 |
| Yingjia | -29.5 |

Critically, **Moutai is outperforming the baijiu group by 10–20 ppts YTD** despite the policy headwind — i.e. the market is treating it as the flight-to-quality name within a battered sector, not as the worst victim. This is the empirical anchor of the "best house on a bad block" thesis.

---

## 6. Investment Thesis Synthesis

### Bull case (12-18 month horizon)
1. **Policy mean-reversion**: 2013-style cycles have historically lasted 18-36 months before normalising. CLSA's expert flags late-June/July as the inflection point on Central Inspection Team withdrawal [1]; if execution moderates, demand recovers fastest at the ultra-premium end where gift-giving and business banquets dominate.
2. **Floor at Rmb1,800 wholesale**: At distributor cost [7], the company has every incentive (and capability — given direct channel control and dealer leverage) to defend the price. A stabilisation here removes the largest overhang on the multiple.
3. **Capital return upgrade**: Rmb35bn dividend (~Rmb27.993/share) [11] represents an ~43% payout on FY2025 attributable profit, a meaningful step-up. With sub-1.3bn shares outstanding and a fortress balance sheet (Rmb244.6bn shareholder equity, Rmb303.8bn total assets) [13], the path to higher payouts is visible.
4. **Best operator in a structural category**: Even a "down" Moutai delivered 32.5% ROE [12] and ~49% net margin (Rmb82.3bn / Rmb168.8bn) — economics no other consumer name globally produces at scale.

### Bear case (next 1-2 quarters)
1. **Policy execution is the binary risk**: CLSA explicitly suggests "remaining cautious near-term" with continued pressure on wholesale price, demand and sector performance over the next 1-2 months.
2. **Channel inventory is rising while sell-out drops**: This is the classic precursor to a sell-in cut, which would mean FY2026 revenue growth could remain weak or negative — Moutai has never guided down two years in a row.
3. **Wholesale at distributor cost = no margin of safety on the next leg**: Any further policy tightening (e.g. expansion beyond party/SOE to private sector banquets) breaks the Rmb1,800 floor and triggers distributor capitulation.
4. **YoY base effects in 2H25**: Q2/Q3 2024 were already weakening; the 2025 step-down to ~Rmb39bn quarterly revenue [14] sets a low base, but the optical recovery in 2026 won't arrive until policy normalises.

### Recommended Positioning
- **Bias**: Constructive but disciplined — consistent with CLSA's O-PF rating [5] rather than Buy. The franchise quality argues against avoiding the name; the policy uncertainty argues against pressing it.
- **Entry trigger**: Stabilisation of Feitian wholesale price at or above **Rmb1,800** [7] for 4+ consecutive weeks, combined with evidence of Central Inspection Team withdrawal post-July.
- **Risk trigger**: Feitian wholesale breaking **Rmb1,700** (i.e. below distributor cost) — this would force management intervention and likely a formal volume/sell-in cut, dragging consensus 2026 estimates lower.
- **Hedges**: Within baijiu, Moutai is the relative outperformer YTD [10]; pair-trading bearish baijiu exposure via Wuliangye, Yanghe, or Shede (-13% to -28% YTD [10]) is logical for those wishing to keep Moutai exposure while sector-shorting.

---

**Sources**
[1] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — 607961641LinqAlpha.PDF
[2] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — 607961641LinqAlpha.PDF
[3] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — 607961641LinqAlpha.PDF
[4] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — 607961641LinqAlpha.PDF
[5] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — Companies mentioned block — 607961641LinqAlpha.PDF
[6] CLSA — China baijiu: Expert call on baijiu policy (10 Jun 2025) — Moutai recommendation history — 607961641LinqAlpha.PDF
[7] CLSA — China baijiu weekly (Baijiu weekly wrap) (27 Jun 2025) — 607962969LinqAlpha.PDF
[8] CLSA — China baijiu weekly (27 Jun 2025) — Wholesale prices table — 607962969LinqAlpha.PDF
[9] CLSA — China baijiu weekly (27 Jun 2025) — iMoutai sales tracking — 607962969LinqAlpha.PDF
[10] CLSA — China baijiu weekly (27 Jun 2025) — YTD price changes table — 607962969LinqAlpha.PDF
[11] Kweichow Moutai — Annual Report 2025 (Profit distribution)
[12] Kweichow Moutai — Annual Report 2025 (Key financial indicators — EPS, ROE)
[13] Kweichow Moutai — Annual Report 2025 (Key accounting data — Revenue, Profit, Net Assets)
[14] Kweichow Moutai — Annual Report 2025 (Quarterly key financial data)
[15] Kweichow Moutai — Annual Report 2025 (Business scope; 66-country marketing network)

## Citations

- [1] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [2] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [3] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [4] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [5] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [6] **607961641LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961641LinqAlpha.PDF>
- [7] **607962969LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962969LinqAlpha.PDF>
- [8] **607962969LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962969LinqAlpha.PDF>
- [9] **607962969LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962969LinqAlpha.PDF>
- [10] **607962969LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962969LinqAlpha.PDF>
- [11] **贵州茅台2025年年度报告（英文版）** · external
- [12] **贵州茅台2025年年度报告（英文版）** · external
- [13] **贵州茅台2025年年度报告（英文版）** · external
- [14] **贵州茅台2025年年度报告（英文版）** · external
- [15] **贵州茅台2025年年度报告（英文版）** · external

