Incident: The batch price of Flying Moutai bottles/full boxes has dropped slightly. Recently, the company has implemented a series of policy adjustments, showing the company's determination to stabilize market prices and its confidence in protecting brand value. It was announced that the launch of the 12-bottle Flying Moutai (commonly known as the “big box”) was canceled, and the unpacking policy was ended, that is, dealers are not allowed to unpack and sell single bottles. In addition, the company also suspended shipments of 15-year-old Maotai and boutique Maotai. We believe these measures are a signal for Maotai to stabilize the market and price.
The company's unpacking policy for large boxes is mainly aimed at oversupply of bulk products (known as “scattered” in the market). The purpose of this measure is to reduce the supply of bulk Maotai in the market and avoid price fluctuations, thereby maintaining the overall stability of market prices. According to our grassroots research and feedback, in some regions, the shipment of Flying Moutai in June will be carried out in batches, which also shows the company's determination to stabilize prices.
Furthermore, suspending delivery of 15-year-old Maotai and premium Maotai is a further adjustment to the market supply strategy. It not only controls the circulation volume of ultra-high-end products in the market, increases their scarcity, but also boosts product value and brand image.
The company established the Maotai 1935 Liquor National Dealers Association as an important initiative for Maotai Sauce-flavored wine makers to “build and share, manage and win together”. Fully mobilize all dealers to participate in the 1935 market construction, play a role in common governance, and carry out more professional and focused work in the 1935 brand market. Manufacturers work together to build a more united and harmonious community of interests, feelings, and destiny. At the same time, a “Wine Upgrading Assessment Meeting” was also held. The Maotai 1935 product upgrade also reflected Maotai's commitment to “putting quality first” and continuing to pursue product quality during the Maotai Shareholders' Meeting. Build on the basis of stabilizing existing consumers, attract new customer groups, and further expand market influence.
Reflect the company's sensitivity to market fluctuations and long-term considerations for brand value protection, and build a healthier and more sustainable market environment by controlling product supply and improving the market sales structure. In the long run, it will not only help stabilize consumers' and investors' confidence and expectations about Maotai's pricing, but will also strengthen Maotai's leading position in the global high-end liquor market. Since entering May, the new chairman Zhang Deqin has continued to visit and research the market, showing that the company pays close attention to market dynamics and its ability to adjust strategies in a timely manner. This flexible and prudent marketing strategy aims to maintain the brand's long-term market competitiveness and consumer trust.
Currently, the macroeconomy is in the middle of a shift. Combined with hot weather, the liquor consumption scenario has decreased. The traditional liquor industry is in a low season, leading to a decline in market demand for high-end products, while demand for high-end liquor remains resilient in some regions during the Dragon Boat Festival period. In the past 2 years of trading, scattered batch prices have all fluctuated between 2,600 and 2,800 yuan. Their financial and investment attributes have gradually weakened, which is conducive to the digestion of social inventories. We believe that Flying Moutai's recent price correction is only due to the misalignment between supply and demand caused by e-commerce subsidies and scalper sales during the off-season, and prices are expected to rise steadily in the short term. Looking ahead to the Mid-Autumn Festival and National Day, liquor sales are expected to pick up. As a leading high-end liquor company, demand is expected to grow during the peak season, and demand will take the lead in recovering as the industry recovers.
Profit forecast and investment advice: Optimistic that the company will stabilize market expectations and prices, boost merchant confidence, and continue to enhance competitiveness through market policy regulation and product structure optimization. Currently, the valuation has a margin of safety. We expect to achieve revenue of 1742.35/2004.91/230.125 billion yuan in 24-26, net profit of 868.29/1013.39/115.865 billion yuan, corresponding to a PE value of 21.28/18.23/15.95x, maintaining a highly recommended rating.
Risk warning: risk of macroeconomic growth falling short of expectations; risk of increased industry competition; risk of food safety.