On September 21st, Guizhou Moutai (600519) announced its first share repurchase plan since its listing.
The company intends to use no less than 3 billion yuan and no more than 6 billion yuan to repurchase its shares and plans to cancel these shares to reduce registered capital.
Financial Investment Daily reporters have noticed that the white liquor industry as a whole is in an adjustment period this year.
At the same time, the stock prices of the white liquor sector in the A-share market have continued to adjust.
Against this backdrop, Guizhou Moutai's plan to repurchase a large number of shares and cancel them has attracted high attention from the market.
Regarding the purpose of this repurchase, Guizhou Moutai stated that it aims to protect the interests of the company and the majority of investors and to enhance investment confidence.
So, what impact will the repurchase measures of the white liquor leader have on the white liquor market and the capital market?
The repurchase conveys the signal that the stock price is undervalued.
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Guizhou Moutai's announcement shows that the company plans to implement a share repurchase plan with its own funds, and the repurchased shares will be used for cancellation and reduction of registered capital.
The total amount of funds for this repurchase is no less than RMB 3 billion (inclusive) and no more than RMB 6 billion (inclusive), the repurchase price of shares does not exceed RMB 1795.78 per share, and the proportion of repurchased shares to total share capital is between 0.133% and 0.266%.
The repurchase will be carried out through centralized competitive bidding transactions, and the term is within 12 months from the date when the shareholders' meeting approves the repurchase plan.
The announcement also stated 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 the obligation of information disclosure in a timely manner according to relevant regulations.
It is worth noting that Guizhou Moutai's repurchase this time is another active market value maintenance measure after the company's commitment to the dividend payout ratio.
On August 8th this year, Guizhou Moutai made a commitment to the dividend payout ratio for the next three years, planning a cash dividend ratio of no less than 75% of the net profit attributed to the parent company from 2024 to 2026.
Repurchasing and canceling shares can reduce the number of circulating shares, and in the case of unchanged company profitability, it can increase the per-share return for shareholders.
Especially when the stock price is undervalued by the market, the repurchase can convey the signal that the stock price is undervalued.
At the same time, the lower the stock price, the more shares can be repurchased and canceled with the same amount of cash.
For long-term shareholders, it is almost equivalent to using the listed company's cash to "bottom fish", and the long-term return will be higher.
Guizhou Moutai has a very sufficient fund, and this repurchase will not affect the cash flow.
As of June 30, 2024, the company's total assets were 279.207 billion yuan, the net assets attributable to shareholders of the listed company were 218.576 billion yuan, and cash and cash equivalents were 145.267 billion yuan.
In the secondary market, the white liquor sector has encountered a continuous adjustment.
As of September 20th this year, as the leader of the white liquor sector, Guizhou Moutai has fallen by 25.25% in total, and Shede Winery has retreated by nearly 55%, while Jiugui Winery, Jinzhong Winery, Luzhou Laojiao, Shuijingfang, and others have also retreated by more than 40%.
At the same time, in the consumer market, Guizhou Moutai is also facing the pressure of product price decline.
On September 22nd, according to the latest batch price reference data from a third-party platform, the price of Feitian Moutai in the original box in 2024 was 2390 yuan/bottle, down 80 yuan/bottle compared to September 20th; the loose Moutai broke through 2300 yuan to 2270 yuan/bottle, falling another 30 yuan/bottle from the previous day.
Whether other liquor companies will follow is also a concern.
Guizhou Moutai's first implementation of cancellation-style repurchase once again made the white liquor sector the focus of market attention.
The market has the following consensus on the white liquor sector: first, the valuation of the white liquor sector is close to the low point at the end of 2018; second, the dividend rate of 4.0% to 5.5% of the leading liquor companies provides support for the sector; third, the competition in the white liquor industry has intensified, and the differentiation of sales driven by different prices continues, and it is recommended to grasp the liquor companies with excellent sales and strong certainty of repayment.
White liquor analyst Cai Xuefei said to the Financial Investment Daily reporter, "Repurchases are often accompanied by a series of reform measures of the company, which also conveys the confidence of Guizhou Moutai to face adjustments and change bravely, helping to enhance the company's overall brand and product market competitiveness.
It is also an active measure taken by Guizhou Moutai to stabilize market sentiment and activate market consumption during the adjustment cycle."
Cai Xuefei believes that as the relevant measures such as repurchase and dividend distribution are implemented one after another, Moutai aims to balance the supply and demand relationship, reorganize the channel price system, and maintain market consumption confidence.
This has created favorable conditions for the improvement of Moutai's overall sales situation, the enhancement of brand value, and the stability of operating performance.
Moutai's firm strategy to stabilize value is of guiding significance for the white liquor consumption market in the current adjustment cycle.
Regarding the impact on the entire white liquor sector, liquor industry researcher Ouyang Qianli said to the reporter, "Guizhou Moutai's repurchase and cancellation of shares is to ignite a fire for the new cycle of the liquor industry.
Whether the fire can burn or not depends on whether other liquor companies will follow.
At the same time, the repurchase and cancellation of shares are part of market value management, and the effect is a long-term process, and investors' adaptation is also a long-term process."
He also said that compared to investors, consumers are much more rational.
With the enhancement of Moutai's financial attributes, the consumer market often faces the classification of "Moutai" and "other liquors", and Moutai needs to provide more "value" to consumers (including investors and dealers).
On September 23rd, Wuliangye responded to the investor's question on the investor interaction platform, "Is the company currently very abundant in cash flow, and has the company ever organized a special meeting to study and discuss the repurchase of stocks or special dividends?"
Wuliangye said that the company is actively studying the above matters.
Pay attention to the feedback of the National Day white liquor market sales.
On September 23rd, when the market opened, the white liquor sector rebounded strongly, with Huangtai Winery rising by more than 4%, and Guizhou Moutai, Gujing Gongjiu, Wuliangye, Luzhou Laojiao, and Jinshiyuan also rose.
As of the close, Guizhou Moutai rose and fell, and finally closed down by 0.19%.
Yili Special also fell slightly by 0.07%.
Other stocks in the white liquor sector rose slightly, with Yingjia Gongjiu and Huangtai Winery rising by more than 2%, and Wuliangye and Jinshiyuan rising by more than 1%.
For the white liquor industry, Huatai Securities analysis believes that under the current background of some liquor companies' valuation cost-effectiveness becoming prominent, but the industry demand is relatively flat, Guizhou Moutai, as the industry leader, this market value management action has a certain industry demonstration effect, which is expected to boost market confidence.
The company's governance is becoming more market-oriented and refined, and high-quality development in the future is expected.
The implementation of active market value management measures highlights the company's long-term configuration value.
The latest research report from Minsheng Securities points out that during the counter-cyclical adjustment phase, Guizhou Moutai exchanges space for time, adjusts the total amount of the supply side and the product supply structure, and waits for the bottoming out of Feitian Moutai's batch price.
In the consumption peak season, attention should be paid to the performance of scenes.
Under the existing system, white liquor still has a strong social attribute and will also adjust and upgrade with the industrial structure.
Looking forward to the consumption peak season of the National Day, whether the leading white liquor can increase the volume and stabilize the price has become an important node for the entire industry and the capital market to judge whether the valuation of the white liquor sector has bottomed out.
Guojin Securities analysis believes that the recent changes in the fundamentals of white liquor are limited.
Considering the demand during the National Day holiday and the advance booking of banquets and gatherings, the National Day sales have basically been determined, and the sales feedback of mid-priced products will still be dominant; the demand for business gifts still needs to improve the demand atmosphere, and the decline of Feitian Moutai's batch price after the Mid-Autumn Festival is a regular demand from strong to weak price inertia.
For other brands and products that generally implement the price control model, it is recommended to pay attention to the repayment progress before and after the National Day.
Liquor companies need to balance the degree of goal achievement under the background of weakening demand, the channel rebate payment mechanism, the channel price plate and inventory pressure, the enthusiasm of the sales team, and other factors.
High inventory pressure will accelerate the channel exit and product pressure at the end of the contract year.