World’s most valuable distiller is under regulatory spotlight in China after a backlash against Moutai’s plan to streamline liquor sales wiped out US$21 billion
- Kweichow Moutai, China’s heavyweight blue chip, was urged by stock regulator to disclose more on possible related transactions
- Market cap shrank by US$21 billion in three trading days as investors dumped shares while analysts downgraded the stock
Kweichow Moutai, the world’s most valuable distiller and China’s first trillion-yuan company, has found itself under the regulatory spotlight after a plan by its new chairman to streamline sales of the highly sought-after rice liquor created a backlash and public outcry.
Moutai, based in Zunyi city in Guizhou province, received a letter from the Shanghai Stock Exchange at midnight, asking the distiller to explain why its state-run parent Kweichow Moutai Winery Group had established its own sales network on May 5.
The inquiry by the exchange was sparked by public outcry after Moutai’s shares plunged by almost 12 per cent in three days, wiping out 143.3 billion yuan (US$21 billion) in market value.
“The new sales company will take over the sales quota that was originally under the listed company, which hurts the economic benefits that would otherwise accrue to the listed company,” said Shenzhen Oriental Harbor Investment Management’s hedge fund manager Dan Bin, in a blog post on Sina.com. “As a leading blue chip, Moutai should play a leading role in corporate governance and discipline operation, not the opposite.”
It wasn’t always this way. The producer of the fiery liquor called baijiu was a staple for investors because of its weight on the country’s benchmark stock indexes, as the second-biggest stock ion CSI300, and the fourth-heaviest on the Shanghai Composite Index.