Toast of the day: Moutai gains most in 26 months to lead China stock gains

Kweichow Moutai, China’s biggest and most valuable liquor maker, rose the most in 26 months in Shanghai trading on Thursday, as profit growth accelerated in the third quarter and brokerages including Citic Securities raised its earnings estimates.

Shares of the Southwest Guizhou province-based distiller of the fiery liquor baijiu – also known as Chinese vodka – surged 7 per cent to a record close of 605.09 yuan. The gain was the steepest since August 2015. Trading volumes on the stock were almost three times its 180-day average, according to data compiled by Bloomberg.

Earnings for the first nine months increased 60 per cent from a year earlier to 19.98 billion yuan (US$3 billion) on sales that increased 62 per cent, Moutai said in its quarterly report. That compared with a 28 per cent profit growth rate in the first half.

Third-quarter earnings jumped 138 per cent from a year ago to 8.7 billion yuan, exceeding the median estimate of 5.1 billion yuan based on Bloomberg data.

Citic Securities lifted its estimates for Moutai’s per-share earnings by 13 per cent to 19.30 yuan this year and 18 per cent to 25.09 yuan in 2018, Dai Jiaxian, an analyst at the nation’s biggest brokerage said in a note on Thursday.

Dai set a price target of 702.5 yuan for the stock, representing a 16 per cent gain from its current level.

Overseas investors bought a total of 3.03 million shares in the company through the stock connect scheme in the third quarter, while China Securities Finance, a state-backed agency seen as the nation’s stabilisation fund, cut its holdings by 5.15 million shares in the period, according to Moutai’s quarterly report.

A gauge of consumer staples stocks on the CSI 300 Index climbed 3 per cent to an all-time high on Thursday, adding to a 62 per cent gain this year as the best-performing sector.

Wuliangye Yibin, the nation’s second-largest liquor maker, gained 3.2 per cent to 65.06 yuan in Shenzhen, and Shanxi Xinghuacun Fen Wine Factory added 2 per cent to 56 yuan after saying profit surged 79 per cent in the first three quarters.