Key points of investment

Share buybacks show confidence in future development

On September 20, the company announced that it plans to use its own funds to repurchase the company's shares. The repurchase price of the shares shall not exceed 1795.78 yuan/share, amounting to 3-6 billion yuan (inclusive), corresponding to the number of shares 1.6706-3.3412 million shares, accounting for 0.13% to 0.27% of the total share capital. The repurchase will be used to cancel and reduce the company's registered capital, and the company's controlling shareholders, actual controllers, directors, supervisors and senior management have no plans to reduce their holdings of the company's shares for the next 3 or 6 months as of the announcement date, demonstrating the company's confidence in future development.

Statement fulfillment is high, and capacity expansion is progressing steadily

Currently, the economy is recovering weakly, and shipping prices have declined normally during the peak season. The company lays out terminal marketing in advance around new scenarios and new customer groups to actively expand “new business” consumer groups. During the peak season of the Mid-Autumn Festival, various types of activities were carried out in more than 30 provinces to promote market sales. The main brand upgrade and anti-counterfeiting were gradually introduced to the market. Corresponding Longmao products were fully launched on September 15. In terms of wine series, Maotai co-ordinated the formulation of “one business, one policy” in 1935 to enhance competitiveness in various areas such as products, brands, customer groups, channels, and services. The second major single product strategy is accelerated. Overall, the company's 15% growth target for the whole year is expected to be successfully achieved. Meanwhile, the company's annual production capacity expansion project of 0.0198 million tons is progressing steadily, and 31 winemaking workshops have been set up. It is expected that Chongyang will start production this year, laying a solid foundation for future market supply.

Take more measures to enhance shareholder returns and boost market confidence

The company has taken many measures to enhance shareholder returns. On August 8, the company announced a three-year branch plan. The total cash dividend distributed each year from 2024-2026 will not be less than 75% of the net profit realized in the current year, and the annual cash dividend will be implemented twice (annual and mid-term dividends) to boost market confidence. Under the assumption that the dividend rate is 75%, the company's dividend rate in 2024 is 4.06%. Based on the comprehensive dividend rate and performance growth rate, the company's allocation value is significant. This cancelled share repurchase will also effectively increase EPS.

The leading edge is further highlighted, and the “buy” rating is maintained

We expect the company's 2024-2026 revenue to be 173.409/192.441/211.799 billion yuan, up 15.18%/10.98%/10.06% year on year, corresponding to a three-year CAGR of 12.05%; net profit to mother will be 85.905/95.392/105.783 billion yuan, respectively, up 14.95%/11.04%/10.89% year on year, corresponding to a three-year CAGR of 12.28%, corresponding to 2024-2026 Annual PE valuations were 19/17/15X, respectively. The company's brand barriers are deep, and the competitive advantage of the leaders is further highlighted in the context of a weak recovery. It is expected that their share will continue to increase and maintain a “buy” rating.

Risk warning: Competition in the industry intensifies, the price of Maotai liquor fluctuates sharply, and the macroeconomy falls short of expectations