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Kweichow Moutai surpasses Shenzhen economy as meteoric rise sparks bubble concerns in China’s stock market
Zhang Shidong in Shanghai
Published: 4:45pm, 12 Jan, 2021
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Moutai liquor on store shelf in Beijing. The maker fiery baijiu from Guizhou province is expected to be worth more than the size of Shenzhen economy in 2021. Photo: Shutterstock Images
Corrected [5:08pm, 12 Jan, 2021]
China’s biggest liquor distiller
Kweichow Moutai
surpassed the nation’s biggest lender last year when its stock surged to an all-time high. With some analysts overwhelmingly bullish on its earnings power, the company is set to eclipse the size of Shenzhen’s economy later this year.
The stock rose 2.9 per cent to a record of 2,160.90 yuan at the close on Tuesday. It has risen 8.2 per cent in the new year, enhancing its ranking as the world’s most valuable liquor producer at 2.71 trillion yuan (US$419.1 billion). The Shanghai Composite Index has risen 3.9 per cent since December 31.
That capitalisation has already exceeded Shenzhen’s gross domestic product (GDP) of 2.69 trillion yuan in 2019. If some of the more bullish analysts are right, the maker of Mao Zedong’s favourite tipple will, at some point this year, be larger than the GDP of Shenzhen, the richest of 11 cities within the Greater Bay Area.
That would be a testament to China’s market economy reforms, ironically in the same test-bed city hand-picked by
Deng Xiaoping four decades ago
. The mainland A share market last year surged past US$10 trillion in total capitalisation, the peak last seen in 2015 before its subsequent crash,
and stoking bubble concerns.
Kweichow Moutai has “highly secured outlook on its production and expansion of direct sales,” said Ouyuang Yujian, an analyst at Chuancai Securities in Shanghai. “The company is expected to be able to achieve double-digit growth in revenue in the next few years.”
The distiller based in southwestern Guizhou province, the most actively traded stock and
fancied by domestic institutional funds
, trounced Industrial and Commercial Bank of China last year as the biggest stock on the mainland’s exchanges, following a 69 per cent run-up. There are
46 buy calls
and two sells on the stock, according to data compiled by Bloomberg.
China’s market-beating liquor stocks alert investors to valuation blunders
7 Dec 2020
A report issued by China International Capital Corp this month said that Kweichow Moutai market cap will probably reach 3.3 trillion yuan sometime in 2021, easily outpacing Shenzhen’s estimated GDP of 2.8 trillion yuan for 2020.
Shenzhen is also the mainland’s third richest cities, behind Shanghai and Beijing whose economies are valued at 3.9 trillion yuan and 3.7 trillion yuan, respectively. Shenzhen surpassed Hong Kong in terms of GDP for the first time in 2018.
MONDAY TO FRIDAY
Kweichow Moutai matches Shenzhen's GDP
Kweichow Moutai's market cap (in yuan)
Shenzhen's GDP (in yuan)
Source: Bloomberg
SCMP
Kweichow Moutai matches Shenzhen's GDP
Kweichow Moutai's market cap (in yuan)
Shenzhen's GDP (in yuan)
Source: Bloomberg
SCMP
HK Business Briefing
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The bullish sentiment on Kweichow Moutai may put its valuation under scrutiny. The stock trades at 49 times its estimated earnings, the most expensive level in at least a decade. Analysts forecast a 19 per cent rise in the group profits this year, almost twice the rate flagged by the company in an exchange filing earlier this month.
Kweichow Moutai’s capitalisation is 60 per cent higher than the GDP of its home province. Guizhou’s economy expanded 8.3 per cent from a year earlier to 1.68 trillion yuan in 2020, according to local government statistics, while the GDP of Zunyi, the city where Kweichow Moutai is located, was only 348.3 billion yuan.
From our archive
Zhang Shidong
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Zhang Shidong is based in Shanghai and reports on business for the Post. He joined the team in 2017, following stints covering China's stock market news for Bloomberg and at a local newspaper in Shanghai.
Kweichow Moutai
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Kweichow Moutai surpasses Shenzhen economy as meteoric rise sparks bubble concerns in China’s stock market
- China’s biggest company has a market value that exceeded the 2019 gross domestic product of Shenzhen, China’s third richest city
- The meteoric rise of Kweichow Moutai may be an early sign of froth since mainland A share market surpassed US$10 trillion last quarter
Zhang Shidong in Shanghai
Published: 4:45pm, 12 Jan, 2021
Why you can trust SCMP
181
Post
Moutai liquor on store shelf in Beijing. The maker fiery baijiu from Guizhou province is expected to be worth more than the size of Shenzhen economy in 2021. Photo: Shutterstock Images
Corrected [5:08pm, 12 Jan, 2021]
China’s biggest liquor distiller
Kweichow Moutai
surpassed the nation’s biggest lender last year when its stock surged to an all-time high. With some analysts overwhelmingly bullish on its earnings power, the company is set to eclipse the size of Shenzhen’s economy later this year.
The stock rose 2.9 per cent to a record of 2,160.90 yuan at the close on Tuesday. It has risen 8.2 per cent in the new year, enhancing its ranking as the world’s most valuable liquor producer at 2.71 trillion yuan (US$419.1 billion). The Shanghai Composite Index has risen 3.9 per cent since December 31.
That capitalisation has already exceeded Shenzhen’s gross domestic product (GDP) of 2.69 trillion yuan in 2019. If some of the more bullish analysts are right, the maker of Mao Zedong’s favourite tipple will, at some point this year, be larger than the GDP of Shenzhen, the richest of 11 cities within the Greater Bay Area.
That would be a testament to China’s market economy reforms, ironically in the same test-bed city hand-picked by
Deng Xiaoping four decades ago
. The mainland A share market last year surged past US$10 trillion in total capitalisation, the peak last seen in 2015 before its subsequent crash,
and stoking bubble concerns.
Kweichow Moutai has “highly secured outlook on its production and expansion of direct sales,” said Ouyuang Yujian, an analyst at Chuancai Securities in Shanghai. “The company is expected to be able to achieve double-digit growth in revenue in the next few years.”
The distiller based in southwestern Guizhou province, the most actively traded stock and
fancied by domestic institutional funds
, trounced Industrial and Commercial Bank of China last year as the biggest stock on the mainland’s exchanges, following a 69 per cent run-up. There are
46 buy calls
and two sells on the stock, according to data compiled by Bloomberg.
China’s market-beating liquor stocks alert investors to valuation blunders
7 Dec 2020
A report issued by China International Capital Corp this month said that Kweichow Moutai market cap will probably reach 3.3 trillion yuan sometime in 2021, easily outpacing Shenzhen’s estimated GDP of 2.8 trillion yuan for 2020.
Shenzhen is also the mainland’s third richest cities, behind Shanghai and Beijing whose economies are valued at 3.9 trillion yuan and 3.7 trillion yuan, respectively. Shenzhen surpassed Hong Kong in terms of GDP for the first time in 2018.
MONDAY TO FRIDAY
Kweichow Moutai matches Shenzhen's GDP
Kweichow Moutai's market cap (in yuan)
Shenzhen's GDP (in yuan)
Source: Bloomberg
SCMP
Kweichow Moutai matches Shenzhen's GDP
Kweichow Moutai's market cap (in yuan)
Shenzhen's GDP (in yuan)
Source: Bloomberg
SCMP
HK Business Briefing
SIGN UP NOW
By registering, you agree to our T&C and Privacy Policy
The bullish sentiment on Kweichow Moutai may put its valuation under scrutiny. The stock trades at 49 times its estimated earnings, the most expensive level in at least a decade. Analysts forecast a 19 per cent rise in the group profits this year, almost twice the rate flagged by the company in an exchange filing earlier this month.
Kweichow Moutai’s capitalisation is 60 per cent higher than the GDP of its home province. Guizhou’s economy expanded 8.3 per cent from a year earlier to 1.68 trillion yuan in 2020, according to local government statistics, while the GDP of Zunyi, the city where Kweichow Moutai is located, was only 348.3 billion yuan.
From our archive
Zhang Shidong
+ FOLLOW
Zhang Shidong is based in Shanghai and reports on business for the Post. He joined the team in 2017, following stints covering China's stock market news for Bloomberg and at a local newspaper in Shanghai.
Kweichow Moutai
Shenzhen|
Retailing|
A-shares|
China stock market|
Stocks
