BIZCHINA / Top Biz News |
Moutai liquor shares backed by local consumption(China Daily)Updated: 2007-01-17 09:02 Chinese food? Yes. Chinese tea? Yes. Chinese liquor? Probably not. It is certain that not all things that are "made in China" will be popular. For hundreds of years, the drinking of baijiu, or Chinese liquor, has remained a particularly Chinese taste and culture. Chinese liquor makers, indeed, have built their success stories not on "made in China", but rather on "sold in China". But this does not prevent Moutai, the oldest liquor brand in the country, from selling to the rest of the world. Only this time it is not spirits that will be sold, but shares. On Monday, Moutai's share price reached 102 yuan, making it the highest-priced stock of all A-share companies in the past six years. It is also the first time a domestic listed company's share price surpassed 100 yuan since China began its stock market reform. Clearly, the lack of affinity for Chinese liquor overseas will not prevent foreign investors buying its shares. Even though Moutai's shares are currently trading at more than 30 times their issue price, the company's growth prospects remain strong. The positive outlook for Chinese households' buying power is fueling investor interest in liquor stocks. As the number of wage earners grows in urban China, it is the basics they will most surely buy, such as food, clothing and, yes, liquor. Moutai is an example of an industry leader in the consumer sector. As the top brand among Chinese liquors, the company has been continually moving up the quality ladder, reflected in price increases in various liquor products. These price rises have helped the company enjoy a 25 percent average annual growth in net profit without losing its loyal clients. Moutai's Chairman Yuan Renguo said earlier the company's strategy in the near future will be to continue expanding its range of liquors, while producing as much as 15,000 tons of liquor in 2007. Sales are expected to reach 8.9 billion yuan. Since its liquor products cannot keep pace with market demand, the chairman emphasized that the company remains committed to producing as much liquor as it can. With the traditional Spring Festival approaching, the peak season to drink Chinese liquor is also coming. That means Moutai does not have to worry about selling its liquor, nor its shares. (For more biz stories, please visit Industry Updates) |
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