Kweichow Moutai investors flock to distiller’s biggest ever shareholder meeting after outcry over sales unit plan

Kweichow Moutai, the world’s most valuable liquor distiller, is holding its biggest ever annual shareholders’ meeting on Wednesday, with about 1,500 investors flocking to a small town in China’s southwestern Guizhou province.

Another 3,025 shareholders took part by voting online to endorse the company’s 2018 work report and other resolutions, bringing the total number of shareholders involved to 4,500, the company said in a stock exchange filing late on Wednesday night.

Attendees are likely to be keen to quiz chairman Li Baofang and fellow executives on issues including the sustainability of the baijiu maker’s stratospheric stock market performance and its controversial new plan to set up a wholly-owned sales subsidiary.

With four times more registrations to attend than last year, organisers earlier in the week were forced to find a bigger convention centre to stage the meeting.

Investors will want to know the outlook for the share price, which has surged more than 50 per cent this year to an all-time high. Kweichow Moutai has chalked up an annual return of 32 per cent since its listing in 2001, compared with 2.5 per cent for the Shanghai Composite Index in the same period time, according to Bloomberg data.

World’s most valuable distiller under Shanghai’s regulatory spotlight

Shareholders will be looking for clues as to whether Kweichow Moutai can maintain the kind of stellar returns and earnings growth that warrants bullish calls by investment banks.

As the share price approaches the 1,000-yuan mark, which translates to more than 30 times earnings, analysts say the high-flying price can be digested by steady earnings growth. China International Capital Corp, which has the most bullish share-price estimate for Kweichow Moutai, said in a report this week that its revenues and profits will probably rise more than tenfold in the next decade as Chinese consumers opt for more expensive goods amid increasing affluence. The investment bank has a target price of 1,250 yuan for the stock.

Kweichow Moutai received a letter from the Shanghai Stock Exchange earlier this month asking the distiller to explain why its state-run parent, Kweichow Moutai Winery Group, had established its own sales network on May 5.

After ruling China’s alcohol market, where does baijiu go next?

The inquiry sparked a public outcry after Moutai’s shares plunged by almost 12 per cent in the next three days, wiping out 143.3 billion yuan (US$20.7 billion) in market value.

The company has not yet responded to the Shanghai Stock Exchange. Some investors said the move was intended to transfer profits from the listed company to the state-owned parent, given the huge gap between the factory gate and retail prices.

Investors are also expected to endorse Kweichow Moutai’s 2018 work report, the dividend payout and the budget for 2019 during the one-day meeting in the town of Maotai in Renhuai city,

Kweichow Moutai rose 2.7 per cent to 911.91 yuan at the close on Wednesday, valuing the company at US$165.7 billion. That compared with the market cap of US$100.5 billion for London-listed Diageo and US$58.7 billion for its major domestic rival Wuliangye Yibin.